One of Australia's biggest listed investment companies is bracing for more volatility on global financial markets and modest returns for shareholders.
Argo Investments chairman Ian Martin expects the world economy will "muddle along" at modest growth rates amid a slowdown in China and continued nervousness about interest rates and the pace of recovery in the United States.
On top of that, emerging markets, including those in South America, look weak and vulnerable because of falling commodity prices.
"Therefore, all up, we expect a continued high level of uncertainty and financial market volatility, and most likely only relatively modest returns," Mr Martin told shareholders at Argo's annual general meeting on Monday.
"However, for its part, Argo will continue to use periods of weakness to selectively add to its portfolio holdings in its usual methodical and measured way."
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Managing director Jason Beddow noted that while there had been massive gyrations on the Australian share market in the past 12 months amid the global volatility, local stocks were down only slightly for the year.
"The recent falls across global equity markets have brought the Australian share market index back to a level which we believe is closer to fair value and longer-term averages, based on consensus forward earnings expectations," he told the meeting.
"We remain cautious due to challenges in the domestic economy, although the fall in the Australian dollar should provide some support as we move into 2016."
Since the start of the new financial year, Mr Beddow said, Argo had spent about $120 million buying shares in banking heavyweights Commonwealth Bank, Westpac, and ANZ along with Origin Energy and BHP Billiton.
But, he said, the big banks were likely to deliver more modest returns for the foreseeable future given recent regulatory changes forcing them to increase their capital reserves to protect against future financial shocks.
Argo in August unveiled a record annual net profit of $228.1 million, driven by increased dividends and distributions from the company's investment portfolio.
Shares in Argo Investments closed 13 cents higher at $7.83.
