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Friday, 6 August 2021
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Retirees want better returns but they have limited appetite to dial up their risk exposure in order to achieve it. Financial advice and protection strategies in portfolios can enhance investment outcomes.
The 60/40 portfolio has been the mainstay of 'default' Australian investing, but large allocations to bonds compromise returns when rates are low. Strategies with exposures negatively-correlated to equities are needed.
In investing, income and capital gains are akin to scoring goals, but successful teams must also stop the other side from scoring. Most portfolios need a manager preserving capital and reducing drawdowns.
A review of the performance of gold in the aftermath of prior US Presidential elections gives a feel for where the price may head, but with a wide disparity within the one-year figures.
During COVID-19 and the economic recession, we are seeing a surprising new entrant to the defensive sector grouping. Technology shares have been behaving a lot like defensive shares such as food and utilities.
The 60/40 diversified portfolio has been the mainstay of the superannuation industry for decades. But it is built on a fundamental principle of defensive bond returns, and its time is nigh.
For all its widespread use in investing, growth/defensive remains undefined with a large degree of subjectivity. A Working Group is seeking an industry standard with measures for each asset class.
As uncertainty intensifies around geopolitics and markets, gold has rallied strongly in 2020. While most investors think of gold for price growth, does it deliver defensive features to a diversified portfolio?
Although gold is not an income-producing investment, the price tends to do well when equity markets fall and interest rates are low. The recent strength is in response to perceived greater risks in financial markets.
The rise in bond rates in the US in 2018 has tilted investment opportunities away from the easy choice of collecting higher dividends on shares, and now, greater prudence is required.
Infrastructure assets usually benefit from long-term, stable and predictable cash flows, giving them defensive characteristics, with airports traditionally offering reliability even in difficult economic conditions.
Sticking to a long-term ‘set and forget’ asset allocation plan forgets those close to or in the retirement phase. Further, we are at a point where prospective returns in all markets are lower.
What happens when a superannuation expert sets up his own retirement portfolio using decades of knowledge? He finds he can afford much more investment risk in his portfolio than conventional thinking suggests.
The Government has taken the next step towards encouraging retirees to live off their capital, and from 1 July 2022 will require super funds - even SMSFs - to address retirement income and protect longevity risk.
There is a small universe of companies on the ASX which are reliable dividend payers over five years, are fairly valued and are classified as ‘negligible’ or ‘low’ on both ESG risk and carbon risk.
The Big Four banks look similar but they are at fundamentally different stages as they move to simpler business models. Amid challenges from operating systems, loan growth and neobank threats, one factor stands tall.
They are six of the greatest businesses ever and should form part of the global portfolios of all investors. The market sees risk in inflation and valuations but the companies are positioned for outstanding growth.
The first of five articles on modern retirement income products that aim for an increasing pension that lasts for life and on average should not decline in real terms. They are not silver bullets but worth a look.