An investment advisory firm is recommending investors lighten up their holdings of New Zealand shares.
JB Were strategist Bernard Doyle said he was underwhelmed by the rewards relative to the risks involved in investing in domestic equities.
That did not necessarily mean he believed New Zealand shares would decline in 2014; rather, he did not believe the risks would be adequately rewarded.
"A good example is our balance portfolio would have a 10% benchmark allocation to New Zealand equities, and we're taking that to 6%, so we still have investments here but we're substantially reducing them in proportion to what they were," he said.
The recommendation followed JB Were's assessment of what would go right and and what could go wrong in 2014.
"The fact that we've had a very strong run of returns and we are trading consistently at a premium to global equities immediately says to us that there's good news already baked into New Zealand equity market prices," Mr Doyle said.
However, standing out on the negative side were that the economy would be in a tightening cycle, which always created a headwind for equity market performance, and next year's general election.
Those two combined signalled New Zealand shares were overpriced compared with what could be bought in international markets, he said.