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Securitisation stays strong through market turmoil, propped by non-bank lending growth
Even the RBA is extolling the virtues of the role non-bank and private lenders play in Australia’s financial ecosystem, with the sector providing investors with another critical path to volatility protection through diversification.
For performance and impact in ethical investing, conviction is key
Ethical investing is rightly associated with driving change for people and the planet, but because it’s about being highly convicted on long-term themes, it also a means to drive better portfolio performance according to Australian Ethical.
‘The stock prices will follow’: Earnings key to big-picture portfolios
Understanding how macroeconomic changes may affect companies’ earnings profiles is key to Ausbil Investment Management’s top-down approach, which lets the fund manager invest with confidence in uncertain markets by focussing on the things it does know, says CIO Paul Xiradis.
The ‘sweet spot’ for commercial real estate debt in client portfolios
For capital allocators concerned about exposing their clients to too much risk in real estate debt, specialists say asset discernment and due diligence are key to protecting investments in a rapidly growing sector.
Credit to sail through cycles: The case for investment-grade debt
As we approach the bottom of the current cycle, fixed income is back to playing its traditional defensive role, says Yarra Capital Management’s Roy Keenan. To get equity-like returns without exposure to defaults, investment-grade credit should do the trick.
Funding the energy transition is all about the up-front spend. Then what?
The net-zero transition will bring about an economic transformation, with massive up-front investment leading to near-zero energy costs in the near future, ClearBridge Investments’ Nick Langley told industry leaders at The Inside Network’s ESG Retreat. But big challenges remain, with no easy answers.
Shareholder groups ASA and AIA merge to create ‘powerful entity’
The Australian Shareholders’ Association and the Australian Investors Association have agreed to amalgamate in the new year, seeking to grow their membership and influence as a unified leader in advocacy and education.
Quality over quantity: How Claremont Global avoids managed-fund pitfalls
Most managed funds simply hold too many stocks to provide reliably effective returns for investors, according to Claremont Global head Bob Desmond, who says a quality, high-conviction strategy makes diversification less crucial.
More spending guidance during ‘Glory Years’ required: Wattle Partners
Retirement’s approach requires a profound change in how investors approach markets and construct portfolios, including arranging their income needs around three distinct periods of retired life, the financial advice firm’s founders said.
$3 million super cap to cost SMSF members up to $80,000 in tax
The government’s plan to increase taxes on super balances above $3 million will have a costly impact on the SMSF sector, with thousands of members likely to face liquidity stress, according to new research from the University of Adelaide’s International Centre for Financial Services.
Alternative property surges as investors trade ‘relative illiquidity’ for income
Australians have an “amazing love affair” with property, but many are limited in their investment exposure. At AIA’s recent annual conference, investors heard how three alternatives to direct ownership provide portfolio benefits with less hassle, particularly for income-seeking retirees.
Prepare for ‘sweeping alteration’ of markets: Howard Marks
Repeating his warning that markets are undergoing a “sea change” that will see a new set of winners and losers emerge in short order, the famed distressed-debt investor said it’s time to consider a profound shift from asset ownership to lending and credit.
The art of investing through the AI revolution
The rise of AI is part of a global knowledge revolution that is reshaping every aspect of our lives, according to AI thought leaders at the Australian Investor Association’s recent investX conference. While it’s new territory, the same investment principles should apply in picking the winners from the losers.
‘Bonds are back’: Advisers shifting clients into fixed income as inflation persists
Financial planners have already started rolling their clients towards fixed income and defensive assets, a panel has heard, as high interest rates and inflation continue to upend investment models.
Once maligned, derivatives shine as investors rethink volatility
Derivatives should not be a “dirty word” for investors looking for better returns, capital protection and diversification at a time when volatility and higher inflation appear here to stay, according to Atlantic House Group’s Andrew Lakeman and Global X’s Evan Metcalf.
Eyeing end of rate rises, Thinktank sees cause for optimism
Ongoing volatility is linked to uncertainty over interest rates, which appears likely to be nearing an end, the non-bank property lending specialist said. Buoyed by a recent $500 million CMBS deal that was more than twice oversubscribed, it maintains a “cautiously positive” outlook for credit performance.
Credit primes as a defensive stalwart in higher-for-longer environment
As the impacts of rising interest rates continue flowing through the economy, credit remains one of the most reliable and attractive ways to add defensiveness to a portfolio, strategists from SQM Research and ICG told a recent Inside Network symposium.
Opportunity awaits agile investors in ‘new regime’: BlackRock
Rapid economic and geopolitical changes have led to a new investment regime in the latter half of 2023, according to the BlackRock Investment Institute. Investors should look to be agile and ready to respond to key themes, with the end of the set-and-forget era key among them.
For advice practices, getting the tech right is key to the bottom line
Financial advice practices will find it harder to grow and scale their businesses in an increasingly tech-driven world if they aren’t making smart technology decisions, says Finura’s Peter Worn.
Super tax break costs misrepresented: Mercer
The idea that superannuation tax concessions are costing the government more than the Age Pension is based on bad analysis, according to Mercer, which found that concessions will actually save taxpayers in the long run.
90% of FPA, AFA members have renewed with FAAA since merger
Of the 8,946 practitioner advisers who belonged to either industry group before their April merger, 8,093 have renewed their membership with the merged entity. The FAAA was “very pleased” with the 90 per cent renewal rate, its CEO said, urging stragglers to renew before a grace period ends next month.
Earnings outlook murky after mixed reporting season cards: Analysts
Despite continuing strong economic data for Australia, markets have forecast significant earnings downgrades, and results have been mixed so far. But a main highlight – CBA’s record $10 billion profit – may not be enough to improve investors’ outlook on the banking sector.
Analysts make the case for exposure timing and structured correlation
As an ever-more-connected world makes it harder to deliver uncorrelated portfolios, there are still strategies investors can use to add diversification. Industry leaders recently discussed opportunities in equities and fixed income at The Inside Network’s inaugural Investment Leaders Forum in Queenstown, New Zealand.
Process over performance with high conviction: Claremont Global’s Bob Desmond
Focussing on a concentrated portfolio of quality and growing stocks can expose investors to strong profit growth and some of the best companies in the world, Claremont Global’s Bob Desmond said at the Inside Network’s recent Investment Leaders Forum. It just requires thinking through the noise and understanding a company’s culture.
Post-zero rate lending market opens the path for non-bank lenders
Despite facing rising interest rates, a higher cost of capital and concerns about their borrowing base, non-bank lenders have made their place in the Australian economy in moments like this, when funding is needed and otherwise hard to get, says Thinktank’s Jonathan Street.
Howard Marks on market dislocation and remarkable credit opportunities
The legendary investor says we’re in the midst of the third major shift he’s seen in his 50-year career, as a decades-long low-interest-rate environment shifts to something most investors have not yet experienced. It’s a new world in which credit investors – and especially bargain hunters – should thrive.
FSC maps out alternative super spending path for retirees
The Financial Services Council commissioned the Retirement Income Policy Roadmap to help the superannuation system put greater emphasis on the drawdown phase. Industry leaders say the biggest hurdle is a deeply entrenched fear of running out of money.
Soft landing harder to find as economy proves resilient to inflation
Signs of rising economic optimism in Australia don’t change the narrative on the risk of recession, with chances remaining high for a deep downturn in Australia according to a new report.
‘Adapt or fail’: 16pc of asset managers to vanish by 2027: PwC
While PwC expects the asset and wealth management sector to see a rebound in assets under management by 2027, it predicts a vastly changed landscape in which the top 10 per cent of managers will control half of all mutual fund assets globally.
June shakeup for most-traded ASX stocks; tech boom driving US gains
After a three-month run as the most-traded ASX stock on Selfwealth’s platform, Neuron Pharmaceuticals ceded its spot to CBA in June as healthcare, mining and banking stocks jostled for investors’ attention.
Westpac’s Evans sees no rate cuts before May as pessimism digs in
Bill Evans, who will step down next year after three decades as Westpac’s chief economist, says “deeply pessimistic” consumer sentiment despite the RBA’s recent pause is a sign of further hikes ahead.
Crane activity dips but hovers near record high as property outlook stays strong: Thinktank
More cranes signal greater construction activity and point to a sound economic outlook. Property lender Thinktank examines the current skyline and what it means for the market.
Don’t get ‘stranded’ with fossil fuel stocks as transition gains pace: Australian Ethical
As Australia’s energy transition ramps up, spurred by a greater government commitment, the ethical investment manager says investors risk getting saddled with “stranded assets” if they don’t limit their exposure to fossil fuels.
India remains pricey, but potential growth remains: Mason Stevens
India’s booming population has many considering whether and how to get exposure to its market, despite its year-to-date underperformance. While it may not be the next China, India’s growth prospects remain attractive, driven by multiple tailwinds, and investors now have more points of access, Mason Stevens says.
Debt ceiling crisis likely avoided, but US has other debt problems to deal with
While analysts see a negotiated deal as the most likely outcome, a compromise is still not guaranteed. The bigger concern, they say, stems from ballooning government debt loads across developed markets in the wake of pandemic spending.
AMP firms fined $24 million for charging dead clients’ super accounts
Four AMP Group businesses deducted insurance premiums and advice fees from superannuation customers despite knowing they had died, a judge ruled, with two of the companies – AMP Life and AMP Financial Planning – hit with $24 million in penalties.
Budget delivers cost-of-living relief and surplus, but super tax provisions draw industry ire
The federal government plans to use part of the $4.2 billion projected budget surplus to provide cost-of-living relief for Australian households and small businesses. It’s also moving forward with controversial plans to change tax concessions for the superannuation industry.
DDO deficiencies ‘across the board’ for product issuers: ASIC
The regulator has issued 26 stop orders against 18 companies for failing to adequately target financial products to the appropriate market since the “design and distribution obligations” regime began, it said in an initial compliance review. And it warned that closer scrutiny is coming.
Kudos and credit: Thinktank ready to weather the next storm
After cutting its teeth as a commercial property lender during the GFC, Thinktank – thanks to strong strategic relationships and conservative credit policies – is well funded and prepared for the market to turn, says BDM Lauren Ryan.
Investment complexity pushing demand for advice: EY
The 2023 EY Global Wealth Management Research Report showed 37 per cent of Australian investors think managing their wealth has become more complex in the past two years, with nearly half reporting they are looking for more financial advice across investment services.
‘Hopefully, there isn’t much more pain to come’: AMP’s Mousina focusses on big picture
AMP recently promoted senior economist Diana Mousina to a new role, deputy chief economist, in recognition of her achievements and succession path. Like other economists, Mousina sees a recession on the cards for Australia, although the timeline may be longer than many hope.
Australia’s growth prospects darken as world enters ‘perilous phase’: IMF
With rising financial stability risk complicating the already uncertain outlook for global economies, the IMF warns a hard landing is becoming more likely, while Australia is set for particularly weak growth in the short-term. Inflation remains the prevailing concern.
For investors seeking value, cheapest really is best
Value stocks have been big outperformers over the past three years, especially those in the cheapest part of the market, says Schroders’ Simon Adler. To avoid value traps, it’s key to do one’s research.
Decarbonisation push boosts infrastructure outlook – but correlations matter
Diversification is invaluable, and this is especially apparent during times of disruption and uncertainty. Exposure to infrastructure assets can help investors take advantage of the current volatility, but keeping asset correlation in mind is key.
In the war over AI’s future, the big guns may have already won
Large language models like ChatGPT are part of a long technology continuum driven by Moore’s law, the observation that transistor capacity doubles every two years. To get in on AI’s surging growth, says Munro Partners’ Nick Griffin, investors should focus on the big – and not-so-big – names already poised to come out on top in the “race to shrink”.
Super fund satisfaction levels drop as market volatility bites
Australians across the board are less satisfied with their superannuation funds than they were a year ago, a new report from Roy Morgan showed, with share market volatility and industry consolidation acting as major drivers of the decline.
As energy transition gains urgency, ethical investing sees its moment
The clean-energy transition represents a huge opportunity for investors to earn good returns from investments that have a positive environmental impact – and ethical investors in Australia have particularly good cause for optimism, according to Australian Ethical.
Asia, small caps poised to benefit in changing market environment
Shifting market dynamics mean some of the investment themes that worked in recent years are set to give way to new opportunities. Man Group’s Andrew Swan and Prime Value’s Richard Ivers recently discussed the promising outlook for Asia and small-cap stocks, where it’s all about fundamentals.
AMP’s Oliver sees silver lining in bank failures
The uncertainty now blanketing the global banking sector adds to the risk of recession, but it comes with a silver lining, AMP’s Shane Oliver told The Inside Network’s Growth Symposium: it’s a sign that central banks’ battle against surging inflation may be nearing its end.
Income stocks still a smart defensive play, but look beyond miners and banks
Dividend investing can be a good source of defensive income in volatile times, but changing fundamentals mean resources companies and banks may be the weaker play in 2023, with opportunities emerging beyond these traditional Australian dividend payers – although valuation will be key.
Consider wider private credit universe to maximise diversification, returns
At The Inside Network’s Alternatives Symposium, Kyle McCarthy and David Lewis encouraged investors to define private credit very broadly to reap the benefits of diversification and strong risk-adjusted returns.
Follow the deals: To thrive in private equity, back a good fund manager
With private equity becoming more accessible, retail investors can now take advantage of the asymmetry-of-information and diversification benefits PE offers, while its safe-haven characteristics stand out in the uncertain macro environment, according to David Chan and Cameron Brownjohn.
Private-for-longer shifts opportunity set from public markets
The amount of capital being made available to private companies has surged in recent decades, making it possible, and often preferable, to keep companies private for much longer. Liberty Street Advisors’ Christian Munafo and Schroders’ Claire Smith discussed the opportunities and risks for investors as the private-for-longer trend picks up pace.
Super’s purpose is preservation, not solving other problems: Jones
Speaking at the SMSF Association’s National Conference, the assistant treasurer called out “modern-day Edmund Hillarys” seeking to raid Australia’s “Mount Everest of superannuation” as he pressed the need for an objective for super that prioritises preservation.
‘There’s a chance that we can do this’ – Lowe sticks to narrow path
Australia can still avoid a recession, RBA Governor Philip Lowe told Parliament in dual grilling sessions in Canberra – while he was keen to remind the country of the need for further belt-tightening and a drop in inflation expectations to keep the path to a soft landing open.
ASIC warns directors to up business risk disclosure in annual reports
The regulator’s financial reporting surveillance program has turned up numerous companies failing to make required risk disclosures in financial reports, as it reminds directors of their obligation to provide investors with key information about a company’s prospects.
Soft landing possible for Australia after more rate pain: IMF
While avoiding recession is possible, the continuation of restrictive macroeconomic policies for the near term is needed to fight inflation, according to the IMF’s annual economic report card for Australia – and tax reform and stronger housing policies would also help.
Super tax breaks for mega-rich to cost $53 billion as calls for reform grow
Superannuation tax breaks will cost the government nearly $53 billion this year, nearly matching the cost of the entire age pension program, according to a new analysis that says major reform is needed. Meanwhile, the government has signalled a tightening of super legislation.
Treasury floats NALI rule change to stop unfair penalties for SMSFs
The federal government is seeking feedback on proposed changes to rules aimed at preventing non-arm’s-length transactions by superannuation funds, in a bid to address concern that SMSFs and smaller funds that breach the provisions could be disproportionately penalised.
Death benefit litigation puts SMSF trustee role in focus
Litigation involving estate planning and superannuation is ramping up, with major impacts on self-managed super funds, and in particular trustee obligations. Cooper Grace Ward partner Hayley Mitchell discusses key case law SMSF trustees should be sure to know about.
Australian ‘green’ mining boom a pipeline dream as gas, coal funding soars
The Australian mining and energy sector drew a significant increase in investment in 2022, but a hoped-for green mining boom is currently a fantasy, with gas and coal still dominating the project pipeline, new bank research shows. A shift in focus to commodities needed for the energy transition would have to precede another super-cycle, but select opportunities exist.
Bonds surge back to relevance after hellish 2022
Credit and equity markets both suffered a very bad 2022, as the collapse of negative correlation between stock and bond prices left no safe haven for investors. But 2023 could be a big year for bonds, with analysts warning investors waiting on the sidelines that they risk missing out.
Death benefit litigation puts SMSF management in focus
Litigation involving estate planning and superannuation is ramping up, with major impacts on self-managed super funds, and in particular trustee obligations. Cooper Grace Ward partner Hayley Mitchell discusses key recent case law and what it means for estate planning and SMSF management.
With DDO stop orders, ASIC steps up marketing scrutiny
The corporate regulator reports it has issued 21 stop orders against companies over marketing of financial products since new design and distribution obligations went into effect last October, with the rate of enforcement picking up in recent months.
ASIC hits Vanguard funds over ‘greenwashing’ tobacco claims
The Australian Securities and Investments Commission is making good on promises to combat greenwashing, issuing its second set of fines against a company for misrepresenting the ESG bona fides of an investment product.
ESG, Markets, News, Regulation
Less millionaires, more money as $5M to $10M investible asset cohort grows
Recent research reveals high-net-worth investors have reduced in number this year while accumulating more investable assets, with this cohort taking a “more subdued outlook” for the coming year. Investors’ asset class preference is also evolving to favour defensive investments.
Consumer sentiment down, spending still climbing as rates, inflation bite
With inflation, interest rate hikes and other economic stress weighing heavily on Australian households, key recent data show consumer sentiment approaching new lows while overall spending continues to climb.
Rental property-based fund highlights bright spot in turning housing sector
While the greater housing market is already reflecting the pain of constricting economic conditions, a new property fund partnership between Trilogy Funds and Michael Birch’s Murray Darling Capital shows the potential of ‘rent roll’ portfolios of rental property management agreements to provide exposure to the supersized Australian property.
Proposed changes to off-market share buybacks rile franking system advocates
Treasury has released for public consultation draft legislation aimed at closing a tax loophole for off-market share buybacks, prompting renewed fears over the future of franking credits despite assurances that mum-and-dad investors will not be affected.
Australians’ retirement angst running high as economy wobbles
Sentiment around retirement prospects is declining across the board in Australia, with millionaires almost as likely as less affluent investors to believe it would take a miracle to retire securely. Recent reports highlight the correlation between the new economic uncertainty and reduced confidence in a comfortable retirement.
Vanguard aims to undercut competitors with lifecycle super fund
Vanguard Australia recently launched a superannuation product aimed at undercutting competitors, with a low-cost default fund option that adjusts automatically as savers age.