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Cuffelinks Firstlinks Edition 299

  •   29 March 2019
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The word 'disruption' is overused, often to describe a type of ongoing change we have seen for hundreds of years. But as the Federal Government sat down this week with large internet platforms to discuss new content laws, it highlighted the genuine 'disruption' caused by social media giants. They control and define more of what we see and how often we see it than any other companies or governments in history. And most of the advertising revenue.

Following the Christchurch terrorism, fund managers across Australasia are debating whether Facebook meets their ethical investing criteria. It's a crucial decision, as the company is one of the biggest global investments in the super industry. Vivid Social estimates there are 15 million Facebook users in Australia, or 60% of the population. Almost three million are over the age of 55.

It's amazing what we agree to when we sign up, such as allowing commercial use of everything we tell them, the pages we view, who we talk to, what we share, what we buy, who we are, what other sites we visit and even who is in our address book. Most of us are part of their success.

 


The Budget is on next Tuesday, and the Government is releasing snippets in advance. In complete contrast to the funding cuts of the past, ASIC and APRA will receive a record of over $550 million next year to 'help restore trust in the financial system'. Bank provisions for customer remediation will exceed $2 billion in 2019. APRA Chairman Wayne Byres said the regulator would strengthen oversight of governance weaknesses that are hurting retirement incomes.

It's a new world of compliance. While the industry funds came through the Royal Commissionwell, they are not beyond more scrutiny. Damien Klassen looks at the valuation of unlisted assets and the consequences for asset allocation. This week, AMP Chair David Murray said in a keynote address at The AFR Banking & Wealth Summit that the extent to which super funds have shifted into illiquid, unlisted assets is uncertain, making it difficult to know what would happen if the superannuation system faced fund outflows.

An edition packed with useful ideas

Last week, I sat down with global portfolio manager Barnaby Wiener to discuss asset allocation in an overvalued and risky world, and the insights went deep into investment philosophy.

A reader pointed to some confusion in the media about the treatment of franking credits in the 'direct investment' offers of industry funds, so we clarify the likely impact. 

Phil Ruthven is Australia's leading futurist and long-term thinker, and he shows the importance of housing in Australia, and gives his thoughts into when a turnaround in prices is likely.

5G technology promises to be one of those step-changes that connects and accelerates many developments, but Michael Collins warns there are more risks than usual.

Borrowing by SMSFs via LRBAs is back in the news, and John Chauvel and Adam Smithexamine the contrasting policies of the two major political parties.

Finally, Nathan Krieger expects financial advice changes to focus more on client goals.

In contrast to the article on not holding cash or bonds, the White Paper from Perpetual makes the case for a diversified portfolio, in the wake of the launch of its new listed Credit Income Trust.

Please comment on any of the articles, or use the Have Your Say section for other input. 

Graham Hand, Managing Editor

 

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

 


 

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