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Edition 25

  •   2 August 2013
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Welcome from Chris Cuffe

The major investment story in the news this week came from Peter Morgan and my old colleague, Greg Perry. They told the AFR that fund managers gleaned inside information through their access to corporate executives, giving professional investors an unfair advantage. At the end of our time at Colonial First State in 2002, Greg gave an interview where he discussed this issue in more detail, and we have extracted some relevant parts. For your interest, the entire interview is attached here as an exclusive for our Newsletter readers. We have not heard the last on this subject.

The expression ‘smart beta’ is appearing more often in the financial media, although it’s been around for at least a decade. Whereas traditional index funds weight stocks in a portfolio by their market cap, smart beta funds use another weighting criteria (such as economic footprint, volatility or even equal weighting) to create a portfolio with index-like characteristics. The jury is out on whether these funds are ‘index’ or ‘active’ by another name, but either way, they’re worth knowing about.

The most successful non-cap-weighted index funds in Australia are offered by Realindex, established in 2008 by the Editor of Cuffelinks, Graham Hand, now with over $6 billion under management. But eschewing any favouritism, Ibbotson provides its perspective, proposing that smart beta funds should have a capital preservation strategy when market valuations become stretched.

Ashley Owen continues his revealing series on ‘Investing against the herd’, showing from consumer sentiment data that we feel most bullish at or near the top of share market booms, just before the falls. And Chris Stott takes a close look at LICs, and argues the recent changes in FOFA and improved ability to pay regular dividends increases their appeal. Finally, Rick Cosier laments the lack of financial education in our school system, especially in the context of increasing amounts of personal borrowings and long life expectancy.

Chris

Latest posts from Cuffelinks, 2 Aug 2013, Edition 25

  • Greg Perry on insider trading and brokers as principals Graham Hand
  • The fifth dimension of smart beta Peter Bull and Michael Ng
  • Investing against the herd, Part 2, Consumer sentiment Ashley Owen
  • The evolution of Listed Investment Companies Chris Stott
  • Education not just legislation Rick Cosier

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  •   2 August 2013
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