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Thursday, 27 February 2020
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The Morningstar CEO on democratising investing, why saving in your youth is crucial, and why most investors care more about paying off their debts than comparing their results against benchmarks.
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Should sin stocks, those companies who engage in activities that are considered unethical or immoral, be excluded from a portfolio, or would this compromise potential performance?
Our close links to China mean the impact of the virus could tip the local economy into recession and certain sectors such as resources, education and travel will be harder hit than others.
The use of discounted pricing by insurers to attract new business is unsustainable and leaves existing policyholders on higher premiums for what is essentially the same product.
Do you risk paying a lot of tax in accumulation phase? Or, if you're in retirement phase, do you face the risk of outliving your asset pool? Two key things to consider in the low-rate world of today.
Links to dozens of global media articles that often do not receive mainstream coverage in Australia. It's sceptical, fun and revealing, often challenging consensus and accepted wisdom.
Last week's poll on whether equity managers should be holding large allocations of cash had more than 400 responses. Disclosure is the key to keeping investors happy.
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Welcome to Firstlinks Edition 345
Investment returns in major asset classes in 2019 were wonderful, except for cash and term deposits. With growth super funds delivering around 10% a year for a decade, it's tempting to expect similar good returns in future. The Morningstar Gameboard below shows only two negative results across all asset classes in any year over the last five years.Read More.
Investors worried about an overvalued sharemarket and low interest rates on term deposits and bonds are focusing on alternatives. What are they and how are they used by leading asset allocators?
If billions of dollars of retirement savings were lost by a government agency in a national super scheme, the cost and risk would be passed back to the government and ‘caveat emptor’ would be history.
We tend to call any change a 'disruption', but the vast majority of so-called disruptive technologies are variations on a theme. Many innovations are really high-risk, low-probability investments.
Arguments between segments of the super industry do not foster public confidence. SMSFs are suitable for many who seek control of their own financial destiny, but it's not a competition.
Our retirement savings system is supposed to encourage financial independence but there is a ‘Retirement Trap’ due to the reduction of age pension entitlements as assets and income rise.
The Total Return Investing approach is elegant, it makes intuitive sense and like many investment strategies, it backtests well. But low rates suggest the theory will not hold in future.
As we approach the 2020s, we are sailing into uncertain waters at best. These times also have some historical precedents, but we need to make important reforms before our luck runs out.
Prolonging a recovery with stimulus could lead to a worse slump later. Even today, policymakers are haunted by actions taken in 1937 which led to a loss of production and jobs and a falling GDP.
Global trends will create opportunities in Asia, including dealing with some of the world's youngest and oldest populations. Australia's Free Trade Agreement with ASEAN this week a valuable step.
Global central banks are delivering a sugar hit that markets are relying on, but it is unsustainable. Interest rates cannot continue to be cut into negative territory forever.
A close inspection of Reserve Bank Board minutes, the implications of US Fed moves, the way unemployment is measured and how monetary policy is set add up to a picture of further rate cuts.
Central bank independence was an appropriate solution when inflation was a threat. In today’s low-inflation, low-growth and high-debt world, even central banks doubt their level of influence.
The 20% share price gains over the past 12 months have not been supported by similar improvements in company earnings. The market is willing to pay far more for each $1 of profit or dividends.
Handling extreme winners is a complex task. Conventional wisdom such as “you never go broke taking a profit” often leaves a lot of money on the table as strong growth stocks continue to run.
Differences of opinion make a market, and hybrid specialists disagree on the likelihood that NAB will call one of its hybrids early. It makes a major difference to the expected return on NABHA.
In this 'lower for longer' rate environment, investors are recalibrating expectations of the required return from high-quality real estate, and foreigners are targetting Australia.
Australian investors have a domestic bias, but around the world, a swag of small to medium cap companies offer better value than the mega-cap names that have driven markets in recent years.
The best way to preserve your SMSF’s favoured status is to make sure the fund’s annual return reaches the ATO on time. There are new rules this year that every SMSF trustee should know.
We often focus on the implications for financial security of being unable to save enough for a comfortable retirement, but mental wellbeing is as important. Financial advice can help.
To mark his 80th, we publish a Noel classic plus his timeless commandments for retiree wealth, based on decades of advising clients, writing bestsellers and reaching millions of people every week.
Investors overlook that they are charged more as the market rises. Far more financial services should cost a flat fee, with portfolios dominated by index exposure backed by a few active managers.
Australia relies heavily on insurance for recovery from disasters, but underinsurance due to underestimating expenses is common. Read this and check your policy as costs blow out in a crisis.
Two different articles cover a recent report on the attitudes of Australians towards retirement. What should be a enjoyable life stage is feared by many, and they fail to plan and work towards it.
An active manager of cash and fixed interest funds can achieve higher returns than the cash rate through a selection of other securities while managing both liquidity and income for clients.
A global portfolio of infrastructure assets allows trends in one part of the world to be recognised early in another, while companies with pricing power and high barriers to entry enjoy extra resilience.
1997 Nobel Laureate Robert Merton wants greater focus on the income that will sustain a retirement, and even Jane Austen understood this. And he has a surprising proposal to help with longevity risk.
After 35 years in fiduciary and leadership roles, the President of MFS Investment Management is clear about the major problem in wealth management: we have not convinced investors to think long term.
Two of Australia's most experienced and successful chairs explain what makes a good board, what to watch for in bad ones, with advice for aspiring board members: understand first what motivates you.
In the month when index US equity funds exceeded active funds for the first time in history, a look at the company which started it in 1975, with insider views on mass market financial advice.
Investment returns in major asset classes in 2019 were wonderful, except for cash and term deposits. With growth super funds delivering around 10% a year for a decade, it's tempting to expect similar good returns in future. The Morningstar Gameboard below shows only two negative results across all asset classes in any year over the last five years.
There's always more happening in money markets than most people realise, with significant implications for investors and borrowers. The Reserve Bank of Australia (RBA) injects or withdraws billions of dollars into the financial system each week to manage liquidity. In cash markets, the RBA is currently providing plenty of stimulus and banks are funding loans easily.
There are three words that most experts are unwilling to say. In complex circumstances with many unknowns, 'I don't know' is often better than hearsay and guesses. We suddenly have a plethora of experts on pandemics and how diseases spread, and much of the economic analysis is guesswork.
Most people satisfied with the home they own or rent care little for the parallel universe of weekend house hunters who barely have time for breakfast before they join the queues. With mortgage rates as low as 2.84% and risk written all over other asset classes, housing FOMO is strong in major cities, even though consumer confidence is falling in the wake of the bushfires and coronavirus.
The majority of investors hold a diversified portfolio no more than half invested in equities. The share exposure often declines with age as retirees seek capital preservation, and even young people place their super in balanced funds. Delight in the noisy 'all-time highs' is far from universal, with millions of Australians missing the big gains.
Companies hit by technology disruptions from competitors often face tough decisions to hang on to customers. It's why many investment analysts require strong 'economic moats' in the best companies as evidence of resistance to competition.
The story of Mr Market originated with Ben Graham and was further popularised by Warren Buffett, but does it still hold true? Based on experience, the two-investor scheme looks hopelessly oversimplified.
As the newly-inked initial trade deal between the US and China appears set to roll back some tariffs, we look at how these China-exposed Australian companies have fared recently.
Make sure you're not focussing on minor investment problems while giving short shrift to the game-changers. This pyramid describes the important decisions and it might surprise what comes last.
When Barack Obama puts out a reading list with 19 of his favourites from 2019, it makes us realise we should spend more time reading books. Plus Morningstar's experts recall 2019 and preview 2020.
State Street Global Advisors is a pioneer in the Australian ETF market, but aggressive pricing from new rivals has eroded its competitive edge.
Chris has many years of experience in building successful wealth management practices.
Noel Whittaker is one of the world's foremost authorities on personal finance.
Phil Ruthven is the founder and director of IBISWorld, Australia's best-known business information, forecasting and strategic services corporation
Paul John Keating is a former Australian politician who served as the 24th Prime Minister of Australia, in office from 1991 to 1996 as leader of the Labor Party.
to launch first ETF focused on providing access to Australia’s technology sector.
Global ETF Review: Global ETF industry scales new heights as it approaches 30th anniversary.
webinar: Company reporting season - 27 Feb.
When more than half of retired Australians restrict their spending to less than the age pension and fear running out of money more than death itself, they may be denying a better lifestyle for themselves.
What does a portfolio look like when someone with access to almost every asset class and manager in Australia takes a genuinely long-term view, building the portfolio from the ground up?
Despite advances in technology in many parts of asset management, that most fundamental step - the application process - often bewilders investors. Time for the industry to step up and coordinate a solution.
Business has always faced changes, but the rapid extent of technical progress means many companies will cease to exist over the next 20 years, including some famous global brands.
We should be grateful for our mandatory and 'auto enrolment' super system as the most powerful tool for increasing savings. Without one, the US has a severe retirement crisis approaching.