David Bassanese

Author, columnist and economist with over 25 years' experience in financial services. I develop economic insights and portfolio construction strategies for BetaShares' retail and adviser clients.

Expertise

Rise up! How high could US bond yields rise?

David Bassanese

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

fed interest rates fixed income

Three downside risks to the Australian economy

David Bassanese

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

Global Market Outlook November 2016: Rising bond yields take a toll

David Bassanese

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

An RBA rate cut is the dark horse on Melbourne Cup Day

David Bassanese

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

Latest Global Market Outlook: Listed property fades

David Bassanese

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

Is it time to buy resources stocks?

David Bassanese

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

resources commodities

Market Insights: Is the $A still overvalued?

David Bassanese

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

aud

Earnings Reporting Season: Wrap Up 2016

David Bassanese

I've filmed a quick 2-minute wrap up of the 2016 Earnings Reporting Season, watch it below. Show More

Global Market Outlook September 2016: Fed fears re-emerge

David Bassanese

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

Market Insights: Central banks have lost the plot

David Bassanese

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

Market Insights: Another rate cut more likely than not

David Bassanese

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

Global Market Outlook August 2016: The Post-Brexit TINA Trade

David Bassanese

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 Brexit: Implications for UK, Europe and Australia

David Bassanese

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

Deflation fears likely to abate

David Bassanese

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

inflation the buy side brief

The commodity supply overhang has not disappeared

David Bassanese

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

usd aud the buy side brief

Local equities still at the mercy of commodities

David Bassanese

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

australian equities

Brexit Fears Unduly Pound Sterling

David Bassanese

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

AUD/GBP

We're updating our model estimates of fair-value for the Aussie dollar against the US dollar

David Bassanese

Despite higher interest rates in the United States and ongoing weakness in commodity prices, the Australian dollar has broadly trended sideways since late 2015. This note updates our model estimates of fair-value for the $A against the US dollar in light of recent interest rate developments and the December quarter... Show More

aud fx aussie dollar audusd foreign exchange

Negative rates positive for Gold

David Bassanese

The recent rebound in the price of gold in light of heightened financial market volatility should serve as a reminder to investors of the “safe haven” properties that this precious metal can offer. What’s more, should more central banks resort to negative interest rate policy (NIRP) in the face of... Show More

gold precious metals volatility diversification hedging XAU

Australian Dividends are the Quiet Achiever

David Bassanese

With interest rates still very low around the world by historic standards, the chase for yield among investors remains intense. The need for decent income returns is all the more pressing considering Australia’s population is getting older and more are entering retirement. The good news for Australian investors is that... Show More

income dividends australian shares income investing

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.

On Why active management works in Australia -

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..

On Blending active and passive: Analysing the key benefits of core/satellite investing -

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

On Thoughts on the Active vs Passive Debate -