The boring and the beautiful: How to find quality investments

Hans Lee

Livewire Markets

Think of all the acronyms that were born out of the 2020-22 retail trader influx - BTD (buy the dip), FOMO (fear of missing out), and HODL (hold on for dear life). Then, there's the one that expanded long beyond the 20-something investors - TINA.

For many years, equities provided returns that were simply best in class. The acronym has become a mantra for market bulls, arguing that yields have been so low for so long that bonds were hardly worth owning as an asset class. At one point, there were whole notes titled TINA (Morgan Stanley) or had references to the acronym (TINA Turning from Bank of America). 

But the game has well and truly changed.

The Australian 10-year yield is now at its highest level since September 2014. The safe-haven US Dollar index is at multi-year highs. Even that rise is coming at the expense of the normally even safer Japanese Yen (now tracking at 20-year lows as of writing.)

We recently sat down with Anthony Golowenko from MLC Asset Management to discuss whether the end of TINA is nigh. Plus, we take a look at the role of alternatives in your portfolio. Finally, he names one company that exhibits all the traits of a quality investment.

You can watch the video below or access our edited transcript.


LW: Does TINA (there is no alternative) still apply to equity markets?

Anthony Golowenko: Thinking about TINA and that environment of lower for longer forever... we think that time has passed. And what it means for equities - it's still constructive. We want to focus really on those cash flows and strong cash flows within our portfolios. And that delivers growth over time. Specifically, to the equity component and beyond that, well, there's a world of opportunities opening up. 

Whether that's credit markets or whether that's alternatives as part of a portfolio that can both have components to provide offence, such as equities and Australian equities. And those that are more defensive, as I mentioned, insurance-related and now fixed income and credit. 

There is a world of opportunities, so let's get out and explore them.

LW: What place do alternatives have in a diversified portfolio?

Anthony Golowenko: Certainly within our managed accounts program, we have real return inflation plus - and quite a reasonable sleeve within that is in the alternative space. So this is primarily around, as I mentioned, private debt, financing opportunities, and a credit market that's gone from a tailwind being ample liquidity in the system to more of a headwind. Those opportunities we see as continuing to become more fruitful and relevant in portfolios.

LW: Where are you seeing the biggest opportunities and pitfalls in this market?

Anthony Golowenko: I think that pitfalls are probably easier. This isn't rocket science. Running down a hill with a tailwind at your back, plentiful credit environment, and credit conditions... long-duration exposures, hypergrowth, winner takes all (stocks) ... that's really been challenged in that changing dynamic. 

Our portfolios naturally don't have a lot of that exposure. 

The opportunities and where we're thinking about, I think portfolio construction and high quality, and you might roll your eyes and think it's a little bit boring, but Amcor is a global business. Amcor is a business with clear price pressures. They have a supply chain staffing issue and still integrating. So that business is robust and resilient, and I think increasingly valuable in this environment.

LW: How do you identify quality in this environment?

Anthony Golowenko: In a nutshell, and very simply, cash flow. 

In this environment, cash flow - the ability to sustain a business, to deliver strong earnings, and maintain margins is really valuable. And thinking about those small and midcaps, founder lead businesses, real skin in the game and high ownership. And refreshingly in the large caps, such as NAB you've seen Ross McEwan come in and have a real focus to turn that business around. 

So in a nutshell, cash flows, the ability to maintain earnings and maintain margins, and that genuine as opposed to perhaps apparent quality in that analogy of all things are getting a bit tougher now. That's the way we think about our portfolio construction.

LW: How much cash are you holding in portfolios – and could it increase?

Anthony Golowenko: Within our managed account program, we've seen that cash level increase slightly. I think it's more relevant within our fixed income and our broader fixed income programme. Earlier in the year, we allocated away from all maturities in both domestic and global and we put that into a little bit more global credit and domestically short duration and cash enhanced. 

Now some of those in RMBS (residential mortgage backed securities) are less liquid, but the pure cash enhanced one has increased slightly. And we're doing that where we see stronger yield opportunities, a stronger risk-return opportunity, less duration, and I guess, less buffering in this recalibration period.

Learn more

MLC Asset Management's portfolios combine their best thinking on asset allocation with a disciplined investment process - developed over 35 years - that optimises returns and reduces risk. For further information, please visit their website

The information in this communication is provided by Anthony Golowenko, a representative of MLC Asset Management Pty Limited ACN 106 427 472, AFSL 308953 (‘MLCAM’), part of the Insignia Financial group of companies (comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate) (‘Insignia Financial Group’). No member of the Insignia Financial Group guarantees or otherwise accepts any liability in respect of any financial product referred to in this communication or MLCAM’s services. MLCAM is the distributor of MLC Managed Accounts Strategies. MLCAM does not provide and is not responsible for any financial product advice or service a financial adviser may provide or provides to its clients relying on this information, and any financial services or advice provided to clients by platform operators which include MLC Managed Accounts Strategies on its investment menu. MLC Managed Accounts Strategies are available for investment via investment platforms. Please refer to the MLC Asset Management website ( for a full list of platform availability. Investors should obtain a Product Disclosure Statement relating to the investment platform and consider it before making any decision about whether to acquire or continue to hold investments through the platform. This communication is not an offer, invitation or recommendation to buy, hold or dispose, any assets, undertakings, securities or any other financial products in any jurisdiction or to otherwise participate in any investment opportunity. The communication is of a general nature only and is not advice, it has been prepared without taking into account of the objectives, financial situation or needs of any person. Before making an investment decision, investors should consider their objectives, financial situation and needs. Opinions are subject to change and the accuracy of the information in this communication is not guaranteed. Past performance is not a reliable indicator of future performance. Whilst formulated on reasonable basis, any projection in this communication may be affected by inaccurate assumptions or may not take into account known or unknown risks and uncertainties. The actual results achieved may differ materially from the projection. Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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Hans Lee
Content Editor
Livewire Markets

Hans is a content editor at Livewire Markets and Market Index. He is the creator and moderator of Livewire's economics series "Signal or Noise". Each month, Hans sits down with Australia's best macro minds to explain how the big picture affects...

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