Damien Klassen

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Value Investing: A religious experience (part 1)

Farmers of seasonal crops are at the whims of the weather. Despite the work and effort put into ploughing and seeding the field, the harvest is, in the end, dependent on the outcome of the weather which delivers feast or famine years. Value investing (the process of buying stocks that are priced the cheapest) has

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MB Fund July Performance

July added another month of good performance to the share and bond market rallies that have driven markets higher throughout 2019. Our tactical portfolios continue to perform well vs other super funds: The issue we are facing in most of our portfolios is that we are positioned for negative outcomes, which means that we tend

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Bill Evans: RBA to hold next week

Via Bill Evans of Westpac: The Reserve Bank Board meets on August 6 to consider whether to extend the sequence of rate cuts in June and July for another month. We think it is quite unlikely that the Board will decide to do a third consecutive cut at this meeting. Following the cut in July,

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Podcast – SMSF Masterclass LIVE TODAY

In todays LIVE webinar (12:30pm AEST, Thursday 18th July), hear from MB Fund’s Head of Investment, Damien Klassen and Tim Fuller as we have a look at: The latest stats from Australian SMSFs and where they are currently invested 2 major mistakes SMSF trustees make in asset allocation Some key ways to avoid making these

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MB Fund May Performance

The rip higher in bond prices meant that our asset allocation portfolios outperformed the median super fund substantially in May – three of our four tactical funds beat the median fund by over 1% in the month: The bond movement though leaves us at an impasse. Bond markets are pricing disaster, equity markets are pricing

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MB Growth Fund rated “Recommended” by IIR

Independent Investment Research recently released a report into the fund underlying the MB Growth fund and rated it Recommended. Some of the highlights: Recommendation IIR ascribes a “RECOMMENDED” rating to the Nucleus Tactical Growth model portfolio. While the track record is relatively short, IIR views the quantum and pattern of performance as being consistent with

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MB Fund level hits key benchmark

We are closing in on two years of running client money for the MB fund and we have hit a number of funds under management targets at Praemium which unlocks lower administration costs. We are passing all of the cost savings on to investors. Some of the added benefits: Lower administration cost. Platform administration costs

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History is written by the victors

My day job is a mix of quantitative and fundamental investment analysis. What that essentially means is that I spend my time looking for situations where the numbers don’t match the narrative – and I can’t help but notice that in the Australian Federal election result the narrative and the numbers are miles apart. Scott

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Quant election odds update

Quick update to election odds from earlier this week after the final leadership debate: Both major parties improved odds in seats they were already favoured to win, but there was little major movement elsewhere. Things still look grim for the Coalition: If every single one of the 21 “Maybe” and “Toss-up” seat falls to the

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A quantitative take on election odds

I have a working theory that overall betting odds on elections are affected by what people wish would happen as much as what people think will happen. However, my theory is individual seat odds are less likely to be affected by the casual gambler and the betting odds are likely to be dominated by either

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MB Fund March 2019 performance

Global equities finished the month with the best quarterly performance since 3Q 2010. Of more interest to our investors though: we have had a change of heart and made some significant portfolio changes. Our assessment is that “we are not in Kansas anymore” and, while we will return to the real world before the end

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Stay long grifters, influencers and lobbyists

There have been a number of commentators who have made the point that we have inflation in things we need (housing, utilities, fruit&veg, hospital services) and disinflation in things that we want (ice cream, TVs, cars, washing machines etc): But this isn’t the full story. Of the eleven main categories that the Australian Bureau of

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Ethical super funds, unethical fees

From SuperRatings last week Lonsec has sustainable (AKA ethical or ESG) super funds charging high fees and underperforming: the median performance of ‘sustainable’ investment funds is lower than the median performance of the SuperRatings SR50 Balanced (60-76) Index, comprised of traditional balanced super funds. Furthermore, the ‘sustainable’ funds have higher median fees. The combination of the

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Bond yields: Are we there yet?

We have long been of the view that the Reserve Bank is misdiagnosing the economic environment and interest rates are not going up any time soon. Over the past few months, interest rate markets have joined our pessimism and bond yields have fallen – netting a tidy profit on longer-dated bond holdings. After today’s RBA

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Strong start to 2019 for most super funds

Chant West has the latest performance stats: Super funds have kept up their strong start to 2019, with the median growth fund (61 to 80% in growth assets) gaining 2.7% in February on the back of the ongoing rally in share markets. “World share markets have traded in a V-shaped pattern over the past few

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Hostplus: Avoid bonds and cash

From Bloomberg: Australia’s best-performing superannuation fund is going against the grain by avoiding cash and bonds, betting the 30-year investment horizon of its youthful members means it can ride out looming economic shocks. Hostplus, which represents swathes of the country’s baristas and restaurant waiters, had about 53 per cent of its $40 billion invested in

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MB Fund February 2019 performance

Stock markets continued to rally in February to recover most of the losses from late 2018, at the same time Australian government bonds have continued to price a slowing Australian economy which led to a strong performance from all of our portfolios. International +5.3%, Tactical Growth +3.4% and Tactical Foundation +2.0% were the best performers. We

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Coal: Game over

The RBA was out last night discussing climate change and posted the following chart of energy costs which confirms our view that it is game over for coal:   These numbers are largely in line with our numbers on electricity costs from various sources and since it has been over a year since I last

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2020 earnings growth false dawn

The Wall Street Journal was out yesterday with a comment expressing optimism on 2020 earnings forecasts that is wrong: While analysts have been downgrading their forecasts for this year’s revenues and earnings growth, projections for 2020 look more encouraging. The real way these things work is that analysts have forecasts, say for 10% growth for

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Why is MMT the new black?

Modern Monetary Theory or MMT seems to be being discussed everywhere lately, and a number of high profile debates between the economic establishment such as Paul Krugman, Ken Rogoff, Jerome Powell and Larry Summers on one side and MMT advocates (most of which are not economic luminaries) have broken out. The key difference in the

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AQR: New S.M.O.O.T.H. Fund fights the good fight

Quick shout out to AQR (a large US quantitative manager) who have a post out fighting the good fight against some of the big issues with funds with high levels of unlisted assets – this includes many of the large industry super funds in Australia. Three of the key issues they raise: 1. Reporting quirks

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Are you kidding yourself about diversification?

For years, the RBA has argued that an economic recovery is “just around the corner” with wages and inflation about to increase.  So far the RBA has been wrong – their preferred trimmed mean inflation has been below target for 3 years and counting. The issue is the penalty for being wrong during a housing

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MB Fund Performance: January 2019

Stock markets continued to rally in January and the start of February to recover most of the losses from late 2018, at the same time Australian government bonds have begun to price a slowing Australian economy which led to a strong performance from all of our portfolios. International +4.3%, Tactical Growth +3.4% and Tactical Foundation +2.2%

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MB Fund 2018 performance

Stock markets around the world bounced hard off their Christmas lows to give some respectability to what would have otherwise been another poor month for shares in December.  Being overweight bonds  came to the rescue in our tactical portfolios, in particular, our Income and Accumulation funds benefitted finishing up around 1% for the month. The