Macro Outlook: Erratic and ineffective fiscal policy settings in the past few years show that the economy has outperformed on autopilot. Slowing global growth and rising global macro volatility will drive local economic growth to lower levels without coordinated long term transition plans. Service industries are unlikely to absorb the slack from the slowing mining, automotive and housing sectors. We continue to favour an investment strategy with a dominant sustainable yield aspect due to the weak growth outlook. Cheap Pick: VLW is the only low growth cheap yield pick from the SHIELD screen that has average earnings and cash flow per share growth of below 10%, an average of price-earnings and price-cash flow below 10, a dividend yield above 5% and a BUY rating. SHIELD Top 20 picks are: large cap – CBA, WBC, ANZ, TLS and IPL; mid cap – MFG; small cap – IMF, VLW, BRS, MOC, OFX, HFA, RRL, EPW, TGA and CCP; and micro cap – DDR, NCK, LOV and AVN. (VIEW LINK)



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James Marlay

Banks weighing on the weighted index...

Mathan Somasundaram

Yep...but that effect was also seen in the overall market. The interesting trend is the the average index now outperforming the weighted index. Sustainable Yield is not just with banks!!!