Damien Klassen

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The problem with traditional ethical funds

Ethical investment inflows have doubled in 2019. But, the Wall Street Journal highlights a problem near to my heart: ethical investing is not the same to everyone. Funds with a focus on socially responsible investing are enjoying a record year of inflows. But many such portfolios aren’t as clean as investors might expect. Eight of

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How to create a $47bn WeWork in one easy step

This is a message for those who want to avoid being ripped off by aspire to be investment bankers. One dirty secret (of many) in investment banking is valuations are an advertising tool. If you can’t manipulate valuations to get the number your boss wants you to get, you are in the wrong game. How else can

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MB Fund September 2019 Performance

September saw volatile, but ultimately strong equity markets push the investment returns for most superannuation funds higher. Our tactical investment funds performed well, and continue to post-investment returns above the returns of most Australian super funds over the last year. This comes despite their defensive stance. In our portfolios, we are positioned for adverse outcomes,

4

Why the banks are still a big, fat sell

Treasurer Josh Frydenberg announced Monday an ACCC investigation into the banks not passing on interest rate cuts. I think the investigation will make a nice addition to ACCC’s bookshelf. They can file it next Rudd’s FuelWatch and Grocery Code of Conduct. The biggest question is whether the investigation is designed to be a distraction from

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Is it just me or are China’s reactions increasingly unhinged?

Part of my investment thesis on China is that the underlying structural issues have been laid bare by the trade war. Regardless of any face-saving deal, the problems will not go away. China’s reactions to three events in the past week appear increasingly unhinged and are likely to accelerate the process. Background China entered the

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MB Fund August Performance

Most superannuation funds lost money in August on the back of the Australian stock market, falling around 2%. Our tactical funds all bucked the trend to increase in August on the back of our overweight bonds  and heavily underweight Australian stocks holdings: In our portfolios, we are positioned for adverse outcomes, which means that we

7

The great property yield trap

With decent investment yields increasingly hard to find, it is important to avoid yield traps when looking for alternatives to increasingly expensive bonds.  Looking beyond the headline yield is critical to avoid the pitfalls: sustainability of yield, adjusting for capital expenditure, incorporating buybacks and analysing cyclicality of earnings can all help. MSCI came out with a

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Manipulated valuations: WeWork vs your Superannuation

WeWork put its Initial Public Offering on ice this week as the company realised it would not be valued at the $47 billion that WeWork wanted. Indications are that WeWork would struggle to raise money with a $15 billion valuation. The process WeWork took to get a $47 billion valuation is instructive for anyone with

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First US, then Russia, to ravage Australian LNG

Some welcome news for LNG producers as the spike in the oil price flows through to the gas price for many Australian producers due to contracts struck over a decade ago. However, it is a short term gain only, the LNG market is highly competitive and only going to get more competitive going forward –

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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

5

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