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

 

  •   9 March 2018
  •      
  •   

 

Leave a Comment:

banner

Most viewed in recent weeks

The strange effect of the 30% minimum capital gains tax

The 30% minimum tax on capital gains sits at the heart of the budget's proposed reforms. Yet the mechanics reveal anomalies that introduce unexpected distortions that raise questions about its design.

Does your will qualify for the discretionary testamentary trust exemption?

Treasury has confirmed the exemption many families were hoping for. But buried in the fine print are two conditions that could leave some wills on the wrong side of the exemption, despite years of careful planning.

Ranking three common retirement strategies

The defining challenge of retirement isn't just about building wealth, it's about converting your lifetime savings into sustainable income. A holistic understanding of different strategies can improve long-term outcomes.

Are you making these SMSF mistakes?

After four decades advising investors, there are a few common mistakes I've seen SMSF investors make. From holding too much cash and chasing yield to overtrading and trusting tips. Are these errors costing you?

Why Australian shares are falling behind the world

Australia’s market boasts a long record of outperformance, but recent results tell a different story. Is the ASX’s lagging performance a temporary setback or evidence that structural forces will keep global markets ahead?

Australia has saved $4.5 trillion for retirement. Here's what matters more

Most Australians approaching retirement can tell you the exact dollar value of their super account. But success depends on more than a sizeable balance. Here's four key questions to ask yourself at the start of the financial year. 

Latest Updates

Economy

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Latest from Morningstar

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Taxation

Completing the reform of CGT: tax real losses like real gains

Recent CGT reforms tax real gains by indexing capital gains to inflation. However, the reform fails to index losses, leading to higher tax on assets that do not keep pace with inflation, creating inefficiencies in the tax system.

Investment strategies

Blockbuster AI debt issuance coming to a bond market near you

With Australia likely to attract a growing share of AI-related issuance, investors should prepare for increasing influence from AI funding demands, evolving credit fundamentals and changing valuation dynamics.

Investment strategies

Active managers: Bringing a gun to the gunfight

When data arrived, basketball abandoned the mid-range shot, Formula 1 reinvented the pit stop and chess embraced humans working with machines. Active managers confronting today's markets may learn from the same path.

Retirement

What Australian super funds can learn from the UK

Most people want answers to three retirement questions: What have I got? Is it enough? What can I do with it? A leading UK pension innovator shares his lessons on helping members better understand and prepare for retirement.

Investment strategies

What the market may be missing in FY27

We asked ten fund managers the same question following FY26. While their investment styles differ dramatically, their answers revealed several surprising areas of agreement about where markets may be heading next.

Sponsors

Alliances

© 2026 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.