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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Damien Klassen
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
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
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
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
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
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
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
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
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
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
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%
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
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.
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
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,
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
Oil prices not low enough to slow US production
EIA put out a timely reminder of the big picture for US oil. There has never been more proved reserves or production: A big part of this is the economics of shale oil. A typical oil well has economics that looks something like this: Source: Changing Paradigm for the Oil Industry: From Peak Oil Production
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
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
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
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
Chris Joye talks a little more sense on bonds
Better work from Chris Joye this week on bonds as he abandons the worst of his arguments about the benefits of floating rates. However, his main purpose seems to be to distract from his prior poor arguments and so he builds an irrelevant straw man and then demolishes said straw man. In his original piece,
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
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
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