As the chart above shows it was another great month for bond investors. Over the last 3 months, yields have dropped around 100bps across the curve which for many bond funds (duration of at least 3 years) results in capital growth of at least 3% is addition to the usual income of around 5%pa. This …
Monthly Archive: August 2011
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Aug 22
Asset Weighted Returns…an ignored concept
Around a year ago I was involved in a project looking at life cycle investing and I flippantly said that we should differentiate in the market place by offering the younger investors, say 25 years of age, 150% geared investment that reduces down to 30-40% risky assets at age 65. Older investors could lend to the …
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Aug 19
Another dodgy market update
Obviously a pretty difficult investment environment at the moment. Markets tanking again overnight and following on in Australia this morning. Watching Billabong drop around 25% this morning demonstrates the benefits of diversification…I’d hate to be an adviser with an overweight Billabong position in my client’s portfolio. Anyway I digress. Volatility in the sharemarkets will continue for many …
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Aug 08
So much for the downgrade…it’s all about growth expectations
So the US has just had its first trading day since S&P downgraded US debt to AA. A downgrade in anyone’s debt would normally result in an increase in yields as the debt is viewed as riskier so investors expect a higher yield to be compensated for that risk. What happened in the US overnight …
Aug 08
Market Panic…dodgy thoughts
Many many retail investors are panicking, withdrawing their funds and shifting into lower risk investments (mostly cash). Advisers and head office staff are looking for communications to calm investors down but unfortunately the current market situation is that there isn’t necessarily a right answer. Whilst I don’t believe the S&P downgrade of US debt is …
Aug 05
Australian Government Bond Yields…Kapow!
Source: Bloomberg This is the morning’s action on the bond market today. 3 year bond yields are close to 3.80% and I’d say Bill Evans (Westpac) will come out looking like a genius (perhaps I should too but unfortunately I doubt it) after predicting the next rate move will be down. With markets around the world …
Aug 03
Australian Government Bond Yields…getting ugly now
The above Australian government bond yield curve is only yesterday’s data and its looking grim (today’s much worse). I imagine that the Australian dollar/bond is looking quite attractive compared to European and US bonds so I’m sure that has some influence but its still indicative that the markets aren’t that positive about markets nor our …
Aug 03
De ja vu?…and a messy interest rate commentary
Maybe I’m missing a few details and hopefully I’m wrong but I remember in the middle of 2008 the RBA were talking up inflationary concerns due to the China effect, raising and threatening to increase rates despite overseas blow-ups (Bear Stearns, etc). Right now, it has a similar feel, the RBA is once again concerned …