Cash return an investment challenge

Retail investors and professional funds managers will have to decide how to reinvest $15.7 billion in cash in the coming month. Thanks to the BHP Billiton takeover of WMC Resources; Fosters takeover of Southcorp; San Miguel’s takeover of National Foods and IFM's bid for Pacific Hydro, investors face an unusually large return of cash, as all these takeover offers do not have a scrip option. Not all the $15.7 billion will be ploughed back into Australia, as overseas hedge funds seek arbitrage opportunities worldwide. “The best place for it probably is the equity market,” says AMP Capital Investors head of investment strategy Shane Oliver, who still likes the valuations of resource stocks and general insurers. Fat Prophets recommends investors reinvest at least part of the money they receive from the WMC takeover in the enlarged BHP.