May 31
Over the years having worked in consulting and research I have been sent countless portfolios for opinion. Virtually all portfolios have followed a pre-defined asset allocation aligned to a specific risk profile but occasionally that is where the alignment ends. This is because the investments selected bear little to no relationship with their desired characteristics …
Apr 27
Background After capital market forecasts and assessing investor objectives, the current method for portfolio construction starts with the asset allocation decision followed by investment selection. In the Australian financial planning industry, it widely accepted that the asset allocation decision is responsible for most of the portfolio performance variability, and it is, rightly or wrongly, regarded …
Feb 13
Background According to (Elroy Dimson, 2010) the “conventional view Is that, over the long run, corporate earnings will constitute a roughly constant share of national income, and so dividends out to grow at a similar rate to the overall economy. This suggests that fast-growing economies will experience higher growth in real dividends, and hence higher …
Aug 17
Background When disappointing performance occurs, alarm bells will typically ring in the minds of investors, advisers, asset consultants and perhaps the managers themselves. Investing has only ever been a long game but thanks to the internet, the 24-hour news cycle, social media, etc. etc., it appears that success is expected to occur quickly and this …
May 30
Background Over recent years many commentators and experts have spoken of the significant risks superannuation funds are carrying with respect exposure to Australian equities. Most notable were comments a few years ago from David Murray, former Chairman of the Future Fund, and Ken Henry, former Federal Treasurer, who both said they had concerns that Australian superannuation funds …
Mar 30
It’s well known that the Australian equity market is only around 2% of Global equity markets. When we have allocations that overweight the Australian equities asset class compared to the Global equities asset class in our portfolios, it is typically justified due to the benefits of franking credits, higher dividends, and perhaps familiarity. The primary risks associated with …
Feb 07
Like all economies, the Australian economy is always facing significant challenges. Since 1970 there has been the 1973 oil crisis and double digit inflation of the 1970s, the 1980-81 recession, further high inflation of the 1980s, crash of 1987, the recession we had to have in 1991, Asian crisis of 1998, global tech crash from …
Aug 26
What a fascinating investment world its been over the past few months. We’ve had concerns about Greece exiting the Euro, commodity price crashes, a Chinese sharemarket crash and now some of the biggest developed economy sharemarket declines since the dark days of the GFC. Volatility has been somewhat benign for a long time thanks to …
Feb 21
Following are my recent thoughts around markets with many charts to support these views. These views are far from complete but do represent a reasonable summary at this point in time. Income Assets Source: RBA, Delta Research & Advisory The above left chart suggests the market believes the cash rate is heading towards 1.5% …
Oct 11
Source: Morningstar Direct, Delta Research & Advisory Over the last 5 years their performance has been pretty much the same…with the obvious exception that equities has bee a much much wilder ride. The reality of bonds in this global economy is that the outlook is still not that great from the major players (US, Japan, …