It has been an incredibly ugly period for funds management in recent months, albeit a very informative one for their investors. Unfortunately, the market environment is transitioning, and in response many fund managers have – simply put – been found wanting. It is exactly this type of period when manager... Show More
The market environment has changed. Yet most advisers’ portfolios have not. They may want to adapt fast if they want their clients better suited to the new market environment - assuming they’re not going to unduly suffer more weak returns going forward as they did in 2018. Show More
Almost universally weak performance of fund managers over the last two months has left many advisers and their investors in shocked disbelief, or hiding under their sheets unwisely hoping for a change in market conditions. It has been almost impossible for those with active manager portfolios to avoid at least... Show More
The recent equity market rally in response to dovish FED language again highlights how dependent equity markets are on government stimulus and sugar hits. Show More
There is (arguably of course) a bubble in nearly every mainstream asset class. A bubble in debt markets, a bubble in property, a bubble in equity, a bubble in private assets, and a bubble in the way portfolios are managed. This is an artificially created result of easy monetary and... Show More
Yes, your investment portfolio is quite realistically stuffed. At least in terms of being best aligned with what you need or want. At the very least, the investment portfolio you’re in is almost certainly less ideal than it could be, if not imprudent for the world we live in. Show More
1-2% net yields in Sydney which are falling....This means a serious reality check when speculation is removed from the equation.
Excellent article Jonathan. Thank you.
Very interesting article. Thank you
On The Goldilocks Crop -
Outside a few large vehicles, the LIC space in Australia is very illiquid and hence can largely only be considered seriously by investors with very small funds under management. And as you highlight Dominic, the risks are generally under-appreciated currently by a market unwilling to spend sufficient money on due diligence and research (and which may not be justified in many cases given the illiquidity), and where manager and broker interests have too often been put first. Of course, the ease and accessibility is what makes this market attractive to investors, and made it so easy to forget about the potential hidden costs of investing this way.
Concise analysis Tony. Thanks for sharing.
Having predicted the market falls this year also, I can't wait to see the next article and how far Sydney needs to fall before it becomes fair value! The falls to fair value (or below) might be a lot bigger than most readers realise. There is good news in this though - hopefully Sydney will eventually become affordable to 'normal' hard-working productive people and their families so that they can live here 'adequately well' (poor building quality aside). Although the transition may be painful, these falls may finally kill the illogical love affair with Australian property and stop it being a huge source of wasted savings and capital - with the latter better directed elsewhere to support Australian productivity, innovation, investment, competitiveness and industry.
Hi John and Mark Thank you for your comments. Performance needs to consider the risks taken to get that performance and whether it is sustainable. PoorIy performing managers frequently don't improve unfortunately - a deep researched understanding of the individual manager is required to make this assessment. My livewire article "Making money through the cycle" provides investors (through their advisers) with some pointers and ideas to help them carefully select the better alternative managers. I am also happy to be contacted by your advisers, and may be able to help advisers improve their offering to their clients. I will also aim to write more on selecting fund managers for Livewire in due course given the strong importance and expressed interest in this area, both from yourselves and from others directly contacting me.
Hi Carlos Indeed, but hopefully this article provides investors (through their advisers) with some pointers and ideas to help them carefully select the better alternative managers, given what a valuable part of a portfolio they can be over time!
This is fantastic to see a fund manager's efforts to publicly hold both AMP and the ASX accountable, and to consider the potential broader adverse impacts. Thank you Hamish.
Spot on Jon. There is no point betting very heavily on whether an expensive equity market goes up or not from here if you don't have to....There are other ways to make more resilient consistent returns with less downside risk which are much better aligned with most people's preferences (less likely to lose large amounts of money!)
Matthew, while you alone may have "no idea where prices will go in the short term" and "it’s impossible to forecast where things go next" it remains blatantly obvious that Sydney and Melbourne property have a very high chance of falling again in the short term, just as it was in the last few months.... Sorry, but that really is (once again) a very possible forecast to make!
Often promulgated is the notion that one can only buy equities or bonds or cash or some mixture of these, as if there are no other choices. Good alternative managers are an underappreciated option for investors, albeit to be effective one needs aligned managers who have genuine resilience to the downside, with an ability to still actually make good returns. Indeed, alternatives are routinely being massively under-utilised - due in part to a lack of skills and expertise on the part of allocators to choose the good ones - along with an unwillingness to be different (we might define this as putting yourself on the line for the sake of your clients rather than backing mainstream dogma). Too much rearview mirror investing (e.g. confusing a bull market with a notion that equities or properties or bonds or whatever always go up) also doesn't help...
Rents - already great relative value for renters - are indeed falling in many places! Whether it falls 40% or 10%, housing appears a waste of capital.. From an economic perspective, what a shame Australian house prices have become so inflated at the expense of good productive use of our capital.
Nice article Hugh
The 'core' part is risky and suboptimal. It is cheaper for a reason.