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Saturday, 5 December 2020
Recently trending Five ways the Retirement Review points to new policiesGraeme Shaw on why investing is at a pivotal momentRetirement Review gives strong views on hoarding of super11 key findings on retirement dreams during the pandemicBank scorecard 2020: when will the mojo return?
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Bonds have been strong performers over many decades and always play a role in defensively-positioned portfolios. There are some basic principles investors should understand such as the types of yield.
The impact of the pandemic on Australia's debt and deficit has forced the government into borrowing on a scale unimaginable at the start of 2020. What are the implications, and what is even more important?
The signs are that bond yields could stay low for a long time. This has important implications for future returns, but are we heading for the Big Bang, the Big Crunch or the Steady State?
Many investors are struggling with the idea of negative yields on bonds, but with $17 trillion on issue, it's worth taking a moment to think about what it actually means for your portfolio.
Australian bond rates are now lower than during recessions and depressions of the past, but it's not driven by local fundamentals. The world of interest rates is in a place it's never been before in history.
We like a good debate, and when two opposing views argued about the role of government bonds in a diversified portfolio, a veteran of 30 years in fixed interest stepped in as referee.
Most investors think the relationship between interest rates and prices only applies to fixed rate bonds, but the rate impact on discounting future cash flows applies to all income-producing assets.
Contrary to historical norms, Australian sovereign bond yields are trading below those in the US. What are the implications for hedging and returns from bonds and will the differential be sustained?
Bonds have performed well for most of the last 30 years with a tailwind of easing liquidity, but the current high prices makes them vulnerable to losing their protective qualities.
Many experts expected the Aussie dollar to fall rapidly when US rates rose above Australian rates, but the fall has been modest. What factors are holding it up and what's the outlook?
Market fundamentals are pointing toward an era of high volatility and lower returns, which have not been factored into current prices. Better to wait till there is blood in the streets rather than be fully invested.
With the strongest defensive assets earning close to zero and negative real returns, investors are looking at other ways to shock-proof their portfolios, but it invariably means taking on more risk.
The Retirement Income Review goes much further than an innocent-sounding 'fact base', and is sure to guide policies in the run up to the next election. It will change how we think about retirement incomes.
Company profits have not improved for many years but higher valuations have been driven by falling rates and excess liquidity. Conditions do not suit a value and contrarian manager but here are some opportunities.
The Review includes some profound findings, most notable that retirement income should include drawing down far more capital. Expect post-retirement products to proliferate under a Retirement Income Covenant.
A mid-pandemic survey of over 1,000 people near or in retirement found three in four are not confident how long their money will last. Only 18% felt their money was safe during a strong economic downturn.
Banks severely cut dividends in 2020 but are expected to improve payments in 2021. History provides clues to when the banks will return to their 2019 levels of profitability, but who is positioned the best?
It's not only that 60 is the new 40, but 80 is the new 60. Many Baby Boomers spend up in retirement and are less inclined to leave a nest egg to their children. The ways wealth transfers will affect all investors.