Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 272

Cuffelinks Newsletter Edition 272

  •   21 September 2018
  •      
  •   

Among the investors who suffered most from the GFC are those scarred by the experience who moved into cash and term deposits for the last decade. Their income has fallen dramatically. Meanwhile, investors who stayed in a balanced portfolio, with an asset allocation like the one below, have seen investment returns in 10 years of over 80%, despite the initial ravages in 2008.

Research by Vanguard on 580 Australian balanced funds shows asset allocation is responsible for 90% of a diversified portfolio's return, leaving only 10% for factors such as stock selection. Yet many investors spend most of their time selecting shares or fund managers.

 

Asset allocation of superannuation funds excluding SMSFs


Source: Association of Superannuation Funds of Australia (ASFA).


This institutional portfolio mix differs from most SMSFs due to its larger allocation to global equities, unlisted assets and hedge funds. However, Marcus Evans shows SMSFs are increasingly diversified, and global equities are popular for new flows. 

This week, five insightful stories on investing: Roger Montgomery believes many so-called innovative and disruptive companies, including Afterpay and Tesla, are simply a tweak on an existing business modelSteve Johnson offers an honest mea cupla on his poor call buying Freedom Insurance, which fell foul of the Royal Commission last week; Erik Weisman explains what we can really interpret from the shape of the yield curve, which is worrying many investors; and Rudi Filapek-Vandyck gives his final summary of the latest ASX reportingseason. Back on the GFC, Brett Lewthwaite shares his personal view of watching the CDO market go crazy 10 years ago.

Continuing our debate on Labor's franking policy, Warren Bird responds to the readers who argue that SMSFs in pension mode should not have a zero tax rate. In fact, they've already paid tax. Yesterday, Treasurer Josh Frydenberg asked the Standing Committee on Economics to inquire about the implications of removing franking credits, and submissions can be made here.

Another Royal Commission, now into the aged care sector, hit the market this week, with Aveo, Japara, Regis and Estia all suffering heavy falls. The mortgage broking hearings were bad, superannuation was worse and insurance was shocking, but aged care will be the worst.

This week's White Paper from Accurium/Challenger is a subject often overlooked by SMSF trustees in managing the capital gains which form part of their assessable income each year.


Graham Hand, Managing Editor

 

For a PDF version of this week’s newsletter articles, click here.

 


 

Leave a Comment:

banner

Most viewed in recent weeks

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 income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

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.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

Super crosses the retirement Rubicon

Australia's superannuation system faces a 'Rubicon' moment, a turning point where the focus is shifting from accumulation phase to retirement readiness, but unfortunately, many funds are not rising to the challenge.

Latest Updates

Investment strategies

Why I dislike dividend stocks

If you need income then buying dividend stocks makes perfect sense. But if you don’t then it makes little sense because it’s likely to limit building real wealth. Here’s what you should do instead.

Superannuation

Meg on SMSFs: Indexation of Division 296 tax isn't enough

Labor is reviewing the $3 million super tax's most contentious aspects: lack of indexation and the tax on unrealised gains. Those fighting for change shouldn’t just settle for indexation of the threshold.

Shares

Will ASX dividends rise over the next 12 months?

Market forecasts for ASX dividend yields are at a 30-year low amid fears about the economy and the capacity for banks and resource companies to pay higher dividends. This pessimism seems overdone.

Shares

Expensive market valuations may make sense

World share markets seem toppy at first glance, though digging deeper reveals important nuances. While the top 2% of stocks are pricey, they're also growing faster, and the remaining 98% are inexpensive versus history.

Fixed interest

The end of the strong US dollar cycle

The US dollar’s overvaluation, weaker fundamentals, and crowded positioning point to further downside. Diversifying into non-US equities and emerging market debt may offer opportunities for global investors.

Investment strategies

Today’s case for floating rate notes

Market volatility and uncertainty in 2025 prompt the need for a diversified portfolio. Floating Rate Notes offer stability, income, and protection against interest rate risks, making them a valuable investment option.

Strategy

Breaking down recent footy finals by the numbers

In a first, 2025 saw AFL and NRL minor premiers both go out in straight sets. AFL data suggests the pre-finals bye is weakening the stranglehold of top-4 sides more than ever before.

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.