Damien Klassen

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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

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Impact investing is bullshit

Elizabeth Knight has a look today at impact investing and millennials: Whether or not you subscribe to the view that today’s youth are an entitled, smashed avocado-eating, device-obsessed group, it won’t be that long before they move from being just consumers to being investors. And this they will do very differently from their parents and grandparents.

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MB Fund November Performance

Stock markets around the world have fallen precipitously over the last 3 months, and our portfolios have not been immune to the effects. We have maintained our overweight cash and bond positions which helped to stem the losses and helped our portfolios outperform – although falling by less than competitors is rarely of much solace

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Six problems with super

With the royal commission awaiting the final report, we have been treated to a range of superannuation specific stuff-ups from major institutions. Most were through the master-trust structure that pools all the money and you end up in the situation where you as an investor find yourself paying for tickets to the tennis for HostPlus super clients,

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UBS: Labor franking reform to boost buybacks

Via UBS: …Labor’s proposed franking ‘scale-back’ also makes the near-term return of excess franking credits more attractive. Figure4 ranks the franking balances of companies relative to market capitalisation in the ASX150. Among the large caps, BHP Group and Rio Tinto have already announced off-market buybacks. Our survey of UBS analysts highlights that Woolworths and Wesfarmers

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Is your fund manager swimming naked?

Only when the tide goes out do you discover who has been swimming naked. Warren Buffett It is a market truism that a rising stock market can hide a lot of sins, and it is only when markets fall or become volatile that you can see who has been simply taking lots of risk in a

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Correction: MB Fund performance

Note – Chant West asked us to clarify the fund performance data below. In our original post it was unclear as to the source of the inception data. Chant West is out with its latest super fund returns: Chant West senior investment research manager Mano Mohankumar says: “Despite a disappointing October, growth funds still have a

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October 2018 MB Fund Performance

Global equities had the worst monthly fall since May 2012 when the euro sovereign debt crisis and Grexit loomed large. The sell-off was sparked by rising bond rates, some disappointing earnings results in the US (more on outlook than numbers) and weaker global economic data. Sentiment worsened in October due to a cocktail of worries

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Limits to LNG prices

The Oxford Institute for Energy Studies has an in-depth piece out on the cost of LNG plants, looking in detail at the drop in LNG construction costs and how maintainable the falls are in construction costs: As you can see, the Australian plants dominate the top of the cost table, with many of the more recent plants

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MB Fund September Performance

After a strong August performance, September saw a pull-back in most of our portfolios amid concerns surrounding trade tensions, China’s economic growth and the outlook for interest rates, as the US Federal Reserve hiked US interest rates by 25 basis points. All of those factors extended into October (and then some), with stock markets down close

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MB Super webinar: Drivers of Volatility

This week’s webinar at 12:30 pm AEST, Thursday 18 Oct is a focus on the drivers of the recent volatility in stock markets around the world: – How to hedge against volatility – What does it mean for your portfolio – Investment opportunities Add to your Calendar. Click here to watch Join us on our live

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MB Fund webinar: Cold War 2.0

Join Damien Klassen, David Llewellyn Smith and Tim Fuller as we discuss the new cold war between the US and China and how it affects the world of investment. Listen in to a replay of our webinar Find out below: Take us on your daily commute ! Podcasts now available on iTunes and all major Android

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Do financial advisers add any value?

Trying to work out how much value an investment adviser adds to the investment process is difficult, but Vanguard has had a go at quantifying it anyway.  Vanguard’s conclusion is that there are seven key areas adding to around 3% per annum (intermittently rather than every year) that could be added by an adviser (see here for

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A statistical rival for Anscombe’s quartet

Quantitative and statistical models are extremely useful in investing. But they are guides, not gospel. Forgetting there are real consumers behind the sales numbers and real companies beneath the profit numbers is the first step to an investment model that is going to fail when you need it most. There is a reason you never

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Have US earnings peaked?

The Wall Street Journal suggests that they may have: I’m not seeing it yet in my data: I use Factset rather than the Bloomberg data used by the Wall Street Journal, and so maybe there is a timing issue. But Thomson Reuters data concur with Factset: Also, it is worth noting the fall in earnings in the

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MB Fund August Performance

International stock markets ripped higher in August and both the Australian dollar and bond yields fell, completing a trifecta of investment themes that we have been positioned for. With this backdrop all of our portfolios performed strongly: Given our portfolio tilt toward Quality stocks, our portfolios once again performed strongly over the month of August. Our

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Investment tips for the Nervous Investor

This post is dedicated to all of the Nervous Investors out there: you know who you are.  You want to start investing, or invest more, but are frozen by a myriad of concerns: are you buying at the wrong time? you wanted to buy last year but didn’t get around to it, and now you

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Risk schmisk! Why US stocks are bullet proof

Investment markets are late in the economic cycle,  the issue being that you never know when the end will come. However, there are some signs that it is not here yet for US equities at least – and there is the potential that US equities will hold the rest of the world out of the abyss

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What Trump policies should you worry about?

In The Hitchhikers Guide to the Galaxy there is a galactic president: The President is very much a figurehead… the qualities he is required to display are not those of leadership but those of finely judged outrage. For this reason the President is always a controversial choice, always an infuriating but fascinating character. His job is not

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MB Fund July Performance

July marked our first full year of live investment for the MB Fund. We started the year with a view that with Australia at the tail end of historic mining and housing booms, and the US in the middle of a tax-cut driven boom was that the best strategy was to invest heavily in offshore