Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

24 April 2026

Home / 308

Cuffelinks Firstlinks Edition 308

Welcome to Firstlinks Newsletter Edition 308
Graham Hand

Graham Hand


In an edition chock-full of investment ideas, we start with a caution to the people calling for Labor's franking credits policy to be modified with either a grandfathering or a cap on the amount. For SMSFs, neither will work.

For example, two days after the election, on 20 May, the AFR wrote:

"Surely some sort of compromise position – a cap of say $15,000 on franking credit refunds – would have defused the issue in such a way that showed Labor wasn’t being harsh or unfair, but also allowed it to keep some of the budget savings."

They are overlooking that the SMSF, not the member, is the taxpayer. The cap would need to be on the SMSF, and anyone could manage the cap by opening multiple SMSFs. Grandfathering the impact is also flawed because a fund can change members. Trustees can enter (or leave) a fund when they wish, allowing new members to benefit from the grandfathering. Any revised proposal must address the inequity between SMSFs and APRA funds of the previous policy.

Which brings us to Treasurer Josh Frydenberg's support for the Productivity Commission's proposal to review the retirement incomes system. This is a big deal. The Commission made 31 recommendations, including the 'Best in Show' super fund shortlist. Although during the election campaign, Scott Morrison ruled out changing taxes on superannuation, the opening of a formal review puts everything back on the table - pension rules, the role of the family home in the assets test, taper rates, industry fund governance, fees. Forget keeping superannuation policy out of the headlines.

What super rules do you think are vulnerable in this review? Respond using Have Your Say.

Dozens of investing insights ...  

We continue our Interview Series with the CEO of Charter Hall, David Harrison. He identifies the major trends in property investing across retail, industrial and office, and while he likes diversity, he describes the sector he prefers and the one to watch carefully.

Two other investment products that should benefit from the clarification about franking credits are hybrids and Listed Investment Companies (LICs). On hybrids, Christopher Joye says the widening of spreads at a time when banks have improved their tier 1 capital strength is an opportunity. Then Norman Derham and Campbell Dawson describe the risk-adjusted returns of hybrids over equities, and their place in a diversified portfolio.

It's worth mentioning that both these papers are written by specialists who manage hybrid funds, and understand the complexities of these instruments. Hybrids may not suit the more conservative investor as they sit in a junior position in the capital structure, as shown below.



Many LICs saw their share prices fall by up to 10% since the start of the year amid the uncertainty created by franking, and some companies were considering converting to trusts. Dugald Higginsexplains which types of LICs are best suited to this structure.

Remember that we have extensive pricing and reports on hybrids, LICs and ETFs in our Education Centre, the place to go when you're researching for listed investments.

Investors came out of the election result with new-found optimism, especially for banks, but Jonathan Rochford sees warning signs for some tech shares and debt markets. Massive pools of liquidity have pushed up valuations in many asset types worldwide. It brings to mind advice Warren Buffett gave in 2006, just before the GFC hit all markets:

"Any asset class that has a big move, that’s based initially on fundamentals, is going to attract speculative participation at some point, and that speculative participation can become dominant as time goes by ... How far it goes, you never know. Some things go on to just unbelievable heights."

One way to invest is to watch major global trends and find companies that benefit from societal changes. David Sheasby and Will Baylis identify four food trends to whet your appetite.

Finally, two provocative articles take a critical look at 'value' investing. Jason Orthman and Mark Arnold debunk its reliance on share prices reverting to some normal or mean measure, while Graeme Shaw and Rob Perrone say the way value indexes are constructed is flawed. Both articles are bound to have opposing views, but that's what makes a market.

This week's White Paper from Fidelity International is an excellent one-pager on the different features of Active ETFs, passive ETFs, managed funds, LICs and LITs. They all perform a similar role but have unique characteristics which may suit certain investors.

Graham Hand, Managing Editor

 

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


 

  •   31 May 2019
  •      
  •   

 

Leave a Comment:
Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Indexation implications – key changes to 2026/27 super thresholds

Stay on top of the latest changes to superannuation rates and thresholds for 2026, including increases to transfer balance cap, concessional contributions cap, and non-concessional contributions cap.

The refinery problem: A different kind of energy crisis in 2026

The Strait of Hormuz closure due to US-Iran conflict severely disrupted global energy supply chains. While various emergency measures mitigated the crude impact, the refined product market faces unprecedented stress.

3 ways to defuse intergenerational anger

With the upcoming budget increasingly likely to include bold proposals to alter the tax code I’ve outlined three incremental steps with fewer unintended consequences.

The missing 30%: how LIC returns are understated, and why it matters

The perceived underperformance of LICs compared to ETFs is due to existing comparison data excluding crucial information, highlighting the need for proper assessment and transparent reporting.

Little‑known government scheme can help retirees tap into $3 trillion of housing wealth

The Home Equity Access Scheme in Australia allows older homeowners to tap into their home equity for retirement income, yet remains underused due to lack of awareness and its perceived complexity.

Welcome to Firstlinks Edition 655 with weekend update

Many investors are on edge as geopolitical turmoil continues to impact markets, often leading to short-sighted actions. These are the three quotes that I’ve relied on during periods of volatility.

  • 26 March 2026

Latest Updates

Retirement

2 billion reasons to fix retirement income

A proposal to address Australia's 'stranded balances' in retirement by requiring super funds to transition members to pension phase at 65, boosting retirement income and reframing super as a source of income.

Investment strategies

Not much alpha left in this bet

Google redefined advertising with its innovative business model, but its dominance is now under siege from AI competitors and shifting market dynamics.

Five simple reasons why Australian cash rates are highest

Australians are suffering the highest cash rates amongst their rich country peers for five simple reasons, including outdated inflation targeting and undisciplined monetary and fiscal policies.

Investment strategies

Spending big on AI: So where’s the proof it’s working?

Business leaders must reassess AI's return on investment using new frameworks that reflect productivity, capability shifts and long-term value creation.

Economy

Double down on renewables?

Global volatility has sharpened Australia's focus on energy security. Calls for domestic fuel production clash with renewable energy goals, sparking a debate on balancing traditional and sustainable energy sources effectively.

Investment strategies

Private Credit headwinds move onshore

It’s been a volatile couple of months in markets with the ongoing conflict in Iran. For Australian private credit investors, however, large exposures to real estate lending could mean the worst is yet to come.

Property

Five reasons unlisted commercial property is an attractive allocation in uncertain times

Cromwell takes a look at replacement cost as a practical lens on relative value in commercial property. When build-new costs rise faster than asset pricing, the gap can create opportunities in well-located existing assets.

Sponsors

Alliances

Site Map

About Firstlinks

© 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.