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Edition: 219

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Edition 219

  • 15 September 2017

Ten years on from the start of the GFC in 2007, most asset classes have recovered reasonably well. Equity markets did not decline until late 2008, but investors who exited stocks then have missed a solid rise, as shown below in the chart of total returns, including reinvested income.

US will fall more than Australia in next bust

Amazingly, Australian and US stock markets have delivered the same returns for their home country investors over the very long term. With the recent US strength, it's more likely to fall further in the next bust.

Understanding the extra return from hybrids

Hybrids are complex instruments but they can be viewed as a bond with an embedded option, and they convert to equity in certain circumstances. Investors should consider the risk of this happening.

Watch out for the buy/sell spread on funds

Investors should know the buy/sell spreads in their funds. The purpose of the spread is to pay for the transaction costs when investors buy or sell to ensure equitable outcomes for those that remain.

The unreliability of inflation forecasting

Inflation and deflation forces exist and the dominant outcome is uncertain at the moment, but equity investors should consider inflation risk within their asset allocation framework.

Investors face new choices in listed vehicles

Listed Investment Trusts are a rival structure to the long-established Listed Investment Companies, but what should investors know about the differences?

Managed accounts enter the mainstream

Managed accounts are becoming more mainstream. They allow investment transparency, better performance analysis and improved tax optimisation versus some other structures.

Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

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