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Monday, 21 September 2020
Recently trending Everything my friends need to know about investingWho's next? Discounts on LICs force managers to pivotWelcome to Firstlinks Edition 373Four simple things to do right nowWelcome to Firstlinks Edition 374
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Government bond yields are so close to their lower bounds that they are unlikely to provide the returns of the past, nor act as a counter to falling equity markets. What are the investment choices?
The signs are that bond yields could stay low for a long time. This has important implications for future returns, but are we heading for the Big Bang, the Big Crunch or the Steady State?
Going back to June 2019, investors would have questioned the logic of diversifying away from outperforming growth assets. But when markets feel at their best, it is paramount to keep a perspective on long-term goals.
Falling dividends and the uncertain outlook deliver challenges for income generation, but a dual approach of short-term income and long-term sustainability should ensure a portfolio continues to perform.
Do you think investors can only lose heavily on bonds if the credit defaults? When bondholders accept 0.88% for 100 years, there is great potential for serious pain somewhere along the journey.
Investors who stick with the same asset allocations as in the past will likely fall short of their goals. The 'right' allocation is personal and holding more equities depends on risk capacity.
There are heavy clouds on the horizon in the near and medium term, yet risk markets have separated themselves from the economics. Liquidity will not solve the problems of bankrupt companies.
Investors hold non-government bonds for both their income and defensive characteristics, but there must be sufficient diversification and liquidity in quality names to manage the risk.
Market uncertainty, low interest rates and the threat from COVID-19 to global economies have boosted the performance of high quality fixed income assets. Lesser corporates face another story.
For investors able to react quickly when stressed selling hits hybrids, excellent margins are available on quality names. The GFC taught experienced investors lessons that are now repeating.
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.
Some investors are questioning the role of bonds with such low rates, but they remain an important part of a diversified portfolio for several reasons. Don't give up on them yet.
Based on a long investing career, the author sets out his beliefs without attempting to justify them here. Readers can agree or disagree. It's his guide for friends and family with an actionable variation for risk appetite.
The boards and managers of six high-profile LICs, frustrated by their shares trading at large discounts to asset value, have embarked on radical strategies to fix the problems. Will they work?
It was a milestone for strange times last week when the company with the longest record in the Dow Jones Industrial Average (DJIA) index, ExxonMobil, once the largest company in the world, was replaced by a software company, Salesforce. Only one company in the original DJIA exists today. As businesses are disrupted, how many of the current DJIA companies will disappear in the next decade or two?
Markets have recovered in the last six months but most investors remain nervous about the economic outlook. Morningstar analysts provide four quick tips on how to navigate this uncertainty.
Suddenly, it's the middle of September and we don't hear much about 'snap back' anymore. Now we have 'wind backs' and 'road maps'. Six months ago, I was flying back from Antarctica after two weeks aboard the ill-fated Greg Mortimer cruise ship, and then the world changed. So it's time to take your temperature again. Our survey checks your reaction to recent policies and your COVID-19 responses.
Many property trust results are better than expected, with the A-REIT sector on a dividend yield of 4.8%. But there's a wide variation by sector and the ability of tenants to pay the rent.