Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

5 September 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

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Welcome to Firstlinks Edition 674 with weekend update

What begins as appetite, grows into excess and ultimately ends in spectacle. Millions of investors just discovered this the hard way.

  • 6 August 2026

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

Retirement

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

SMSF strategies

Who really loses from the SMSF borrowing ban?

The ban on borrowing to buy residential property inside a self-managed super fund was framed as closing a loophole for the wealthy. Yet ATO data suggests its effects may be felt more heavily on members with moderate balances.

Investment strategies

The investing rule that explains the next market crash

What if investment success depends less on picking the right assets and more on understanding the decisions of other investors? A principle borrowed from game theory offers a different perspective on markets.

Investment strategies

Gold: should you own the metal or the miners?

Gold is back in the headlines but investors may be asking the wrong question. Before deciding where prices are headed next, it's worth considering whether the investment you choose will deliver the outcome you're actually seeking.

Fixed interest

Global bonds markets are hiccupping

For decades, investors looked the other way as government debt ballooned. But a reckoning may be beginning. Bond markets are stirring and the consequences could reach far beyond markets into everyday life.

Property

Why investors are looking beyond traditional property sectors

A little-known corner of the property market may be quietly benefiting from powerful demographic and healthcare trends. Could this specialised sector offer investors something increasingly difficult to find: enduring demand?

Retirement

Retirement in reality - 6 months in

Is retirement really an identity crisis, or is something else at play? New insights challenge conventional thinking and reveal why some retirees struggle to fully embrace life after work.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

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.