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Welcome to Firstlinks Edition 345

  • 20 February 2020
  • 1

Investment returns in major asset classes in 2019 were wonderful, except for cash and term deposits. With growth super funds delivering around 10% a year for a decade, it's tempting to expect similar good returns in future. The Morningstar Gameboard below shows only two negative results across all asset classes in any year over the last five years.

Should your equity manager hold lots of cash?

An investment with any fund manager should be part of an asset allocation decision, but what happens when your equity manager decides to do a major switch to cash? It messes up your plan.

Worshipping at the altar of alternative assets

Investors worried about an overvalued sharemarket and low interest rates on term deposits and bonds are focusing on alternatives. What are they and how are they used by leading asset allocators?

Where do sustainable returns come from?

The 20% share price gains over the past 12 months have not been supported by similar improvements in company earnings. The market is willing to pay far more for each $1 of profit or dividends.

The moral hazard of a national super fund

If billions of dollars of retirement savings were lost by a government agency in a national super scheme, the cost and risk would be passed back to the government and ‘caveat emptor’ would be history.

Dispelling the disruption myth

We tend to call any change a 'disruption', but the vast majority of so-called disruptive technologies are variations on a theme. Many innovations are really high-risk, low-probability investments.

Watch your SMSF’s annual return this year

The best way to preserve your SMSF’s favoured status is to make sure the fund’s annual return reaches the ATO on time. There are new rules this year that every SMSF trustee should know.

SMSFs have major role but not for everyone

Arguments between segments of the super industry do not foster public confidence. SMSFs are suitable for many who seek control of their own financial destiny, but it's not a competition. 

Most viewed in recent weeks

Buffett's meeting takeaway: extreme caution

Warren Buffett's annual meeting of Berkshire Hathaway showed he has not been 'investing while others are fearful' during the crisis. lt's a reminder to take caution and preserve cash.

Welcome to Firstlinks Edition 356

Few investors are as influential as Warren Buffett, although for the moment, the market is ignoring his caution. The annual meeting of Berkshire Hathaway revealed Buffett did not use the heavy market falls in February to buy shares. Rather than 'buy when others are fearful', he was a net seller of US$6 billion for the quarter, disposing of all airline shares. Berkshire is sitting on US$137 billion in cash, suggesting he expects better buying opportunities to come.

  • 7 May 2020

The vibe of future returns: tell ‘em they’re dreamin’

It's the vibe, but not much else. Super balance calculations default to earnings rates of 7.5%, but that's in the past. Global experts suggest financial plans are now dreaming at this level.

Baseline outlook for economic recovery is too optimistic

We cannot throw our hands up in the air and say 'this time around, it's simply too hard'. Having no macro view is unhelpful, but many of the baseline scenarios are overly optimistic, says the former CEO of Westpac and now Chairman of Chi-X Australia.

Retiree spending patterns differ from most expectations

A study of actual spending habits shows retirees have a faster-than-expected drop-off in spending in later years, casting doubts on financial plans that assume increasing expenditure over time.

Welcome to Firstlinks Edition 357

There is a remarkable concentration similarity between the Australian and US stock markets that has delivered poor results for Australians and great results for Americans (and global investors). As the share prices of five Australian banks have tanked, the prices of five US technology companies have surged. Each group now represents 20% of their respective indexes, but the journey has been a disaster for many Australians.

  • 13 May 2020

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