Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 243

Cuffelinks Newsletter Edition 243

  •   9 March 2018
  •      
  •   

Dividend imputation is a major attraction of investing in Australian shares, but there is widespread misunderstanding of the system. Many argue the proposed lower corporate tax rate will reduce franking credits and therefore lower after-tax returns, but the company tax rate is irrelevant. My first financial adviser from 30 years ago was an actuary, Graham Horrocks, and he explains the numbers. This is the first in a series Graham will write for Cuffelinks on common tax and superannuation misunderstandings.

Faced with uncertainty caused by rising US rates, Hamish Douglass is protecting capital and he reveals a cocktail of potentially explosive events has pushed him to hold more cash. The chart below shows how 10 year US Treasury bond yields have risen since September 2017.



Source: Bloomberg, US Treasury 10 year bond yields in 12 months to 7 March 2018.

How does anyone know if an active manager is doing a good job? Raewyn Williams says performance attribution can uncover whether a manager is worthwhile in a portfolio.

There is no one-rule-fits-all for retirement planning, and Melanie Dunn shares some SMSF data and describes a framework to decide whether Growing, Protecting or Spending (GPS) is appropriate. Still looking inside SMSFs, two new reports on investment patterns and contributions are analysed by Vinay Kolhatkar, and it's worth all trustees benchmarking their SMSFs against these summaries and recent ATO data.  

In last week's lively debate (50+ comments!) on Peter Thornhill's article, there were suggestions to put corporate bonds into a portfolio. They have a place but Cameron Dawson warns about default rates which seem to hit the sector every decade or so.

Finally, some context on Donald Trump's crazy proposal to give guns to teachers in schools. We look at what happened when guns were common in bank branches, and while many of the stories are humorous, there's a serious message and a warning.

(As an aside, while we were collecting these stories, someone recalled a classic, previously unreported Paul Keating line. Keating was Treasurer during the early phase of the privatisation of CBA, and he was invited to meet the Board. A member asked Keating if he was confident Cabinet would approve the deal, to which he responded, "They'll piss in whatever direction I tell them to."  He always had the perfect phrase to disarm and enforce). 

Continuing the theme of asset manager selection, this week's White Paper from MFS International argues there is a serious mismatch between investment time horizons, with investors failing to consider the benefits of manager skill over a full market cycle.   

Graham Hand, Managing Editor

 

Edition 243 | 9 Mar 2018 | Editorial | Newsletter

 


 

Leave a Comment:

banner

Most viewed in recent weeks

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Latest Updates

Weekly Editorial

Welcome to Firstlinks Edition 628

Australian investors have been pouring money into US stocks this year, just as they start to underperform the rest of the world. Is this a sign of things to come? This looks at 50 years of data to see what happens next.

  • 11 September 2025
Exchange traded products

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Retirement

We need a better scheme to help superannuation victims

The Compensation Scheme of Last Resort fails families hit by First Guardian and Shield losses, as well as advisers who are being wrongly blamed for the saga. It’s time for a fair, faster, universal super levy solution.

Investment strategies

5 charts every retiree must see…

Retirement can be daunting for Australians facing financial uncertainty. Understand your goals, longevity challenges, inflation impacts, market risks, and components of retirement income with these crucial charts.

Economy

How bread vs rice moulded history

Does a country's staple crop decide elements of its destiny? The second order effects of being a wheat or rice growing country could explain big differences in culture, societal norms and economic development.

Investment strategies

Small caps are catching fire - for good reason

Small caps just crashed the party like John McClane did in the movie, Die Hard - August delivered explosive gains. With valuations at historic lows, long-term investors could be set for a sequel worth watching.

Defensive growth for an age of deglobalisation, debt and disorder

Today’s new world order appears likely to lead to a lower return, higher risk investment environment. But this asset class looks especially well placed to survive, thrive, and deliver attractive returns to investors.

Economy

Will we choose a four-day working week?

The allure of a four-day week reflects a yearning for more balance in our lives. Yet the reliability of studies touting a lift in productivity is questionable and society may not be ready for such a shift anyway.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.