It was a mixed week for global markets with lingering optimism over the US economy tempered by concerns surrounding emerging markets in the wake of financial volatility in Russia and Turkey. US sanctions have unnerved investors in these markets, culminating in Turkish President Tayyip Erdogan even cajoling his citizens to... Show More
The key highlight across global markets last week was the fact that Wall Street simply shrugged in the face of an escalation of the trade wars. As noted last week, Wall Street rallied on the day America’s first instalment of tariffs on $US50 billion of Chinese imports came into effect,... Show More
Last week was a down week for global equities in general, thanks in large part to US President Trump’s threats to impose even more tariffs on Chinese and European imports. So far at least, however, what’s apparent is that countries are not bowing to Trump’s threats. That said, markets are... Show More
Global bond yields have started to lift over the past year after several years of trending down. This post examines how structural and cyclical factors have affected US bond yields over recent years and what a “normal” level of US bond yields might look like going forward. Show More
An element of optimism appears to have crept back into the Australian economic outlook over the past month or so, culminating in the Reserve Bank’s latest above-consensus forecast of above-trend economic growth in 2017. But, as this note points out, the economy still appears to face at least three critical... Show More
Rising bond yields, a mixed US earnings reporting season and US Presidential election uncertainty contributed to a soft month for risk markets in October. Our decision last month to move underweight bonds and listed property proved fortuitous given the weakness both asset classes exhibited last month. Download the full report:... Show More
The Reserve Bank of Australia has recently indicated that this Wednesday’s September quarter consumer price index report will be a critical factor when its Board sits to decide on interest rates next Tuesday (Melbourne Cup day). What’s more, there is a reasonable chance that inflation will (again) surprise on the... Show More
Global equity markets inches cautiously ahead in September, somewhat heartened by the fact that the United States Federal Reserve baulked at raising interest rates at its key meeting. That said, growing fear of Fed tightening saw equity market “bond proxies” such as listed property underperform. Download the full report: http://www.betasharesblog.com.au/wp-content/uploads/2016/10/GlobalMarketOutlookOct16-1.pdf Show More
The Australian materials sector (largely comprising our major miners) has performed relatively well so far this year due to firmer commodity prices and a relatively benign United States interest rate outlook. Although valuations in the sector appear high, they might be justified if commodity prices hold up near current levels... Show More
The Australian dollar has proven stubbornly resilient in recent months, thanks to firm iron ore prices and reluctance on the part of the United States Federal Reserve to raise US interest rates. This note updates our valuation model of the Australian dollar, particularly in light of recent comments by the... Show More
I've filmed a quick 2-minute wrap up of the 2016 Earnings Reporting Season, watch it below. Show More
Solid US economic data and hawkish rhetoric from several Federal Reserve members saw markets last month start to fear re-commencement of US official interest rates hikes. Whether the Fed hikes rates or not in coming months, a key emerging investment theme nonetheless is a maturing in America’s expansion due to... Show More
This week’s annual meeting of global central bankers at Jackson Hole comes at a time when investors are beginning to question the wisdom of ongoing extreme monetary stimulus. Contrary to many critics, however, my concern is not that these measures have not worked. Instead, I maintain they’re simply not... Show More
Although the Reserve Bank of Australia’s August Statement on Monetary Policy (SMP) did not contain an explicit easing bias, nor changes to the Bank’s growth or inflation forecasts, it’s nonetheless still consistent with a strong bias to cutting interest rates further – even after the RBA’s decision to slash official... Show More
Optimism related to post-Brexit central bank stimulus continued to buoy global equities in July, even though oil prices slumped and initial central bank actions proved disappointing. Other supportive factors were a reassuring bounce-back in US employment growth, a relatively benign US earnings reporting season to date, and continued cautiousness from... Show More
The United Kingdom’s decision to leave the European Union has thrown global markets into turmoil in recent days. Given the result was the opposite of market expectations, the knee-jerk response was understandable, though likely overstated Brexit’s global (and hence Australian) impact. That said, Brexit is potentially devastating for the UK... Show More
There are upside risks as the US labour market is tightening and we’ve seen the first tentative signs of bargaining power being restored to workers. That said, I would not overplay the inflation outlook, as it is still expected to remain comfortably low and in line with the average of... Show More
I still feel the $A should be lower than it is at present. Holding up the $A of late has been a more dovish than expected Federal Reserve, but with the US labour market still firm and early signs of a list in US inflation, it seems only a matter... Show More
The Australian equity market has faced significant hurdles over the past year or so, with none more challenging than the sharp slump in export commodity prices. The challenge for the market in the coming year is that analysts still expect a sharp turnaround in resource sector earnings, which may be... Show More
The decision by United Kingdom Prime Minister David Cameron to hold a national referendum on European Union Membership has created a scare through British financial markets, with sterling taking a “pounding” in particular. But with polls suggesting a “Brexit” remains unlikely, this might be an opportune time to consider buying... Show More
I'll keep it simple.. on historic mortgage affordability measures Sydney had become and still is just way too expensive ...and that's before the RBA lifts rates.. .I foresee sluggish price weakness for several years to come...
As you note, the MorningStar Institutional Survey excludes active performance fees, which may well eat up most of that marginal out performance by the 'average' manager. The survey also does not appear to allow for survivorship bias - i.e. under performing managers exiting before the 10-year period ends. The result seems great but defies most other financial research evidence, including S&P's SPIVA survey.
Hi Jerome. Thanks for reading my post but I think you miss the whole point of index investing. The core produces asset class "beta" returns and so is cheap as it does not try to generate alpha returns. It is hardly "risky" or "sub-optimal". If you know a great alpha fund that more than makes up for its (assumed) higher fees through higher returns then good luck to you.. but the evidence suggests most can't do that consistently..
Thanks for your comments and passing on your research finding. As you say I am sure there are a few fundies that can outperform over time.and a few strategies they seem to work . but finding them and sticking with them is hard as even they may go through periods of under performance. In general, everyone can't beat the market! Cheers David