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Thursday, 28 October 2021
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We tend to think of the 'stockmarket' as one beast, but it pays to know the drivers of the different parts, especially global versus Australian stocks. The outlook favours global due to better sector exposure.
As more Australians tilt their investments to global equities, they often overlook the exchange rate risk and fees. The move from US57 cents to US73 cents in six months shows the unhedged impact.
Government bond yields are so close to their lower bounds that they are unlikely to provide the returns of the past, nor act as a counter to falling equity markets. What are the investment choices?
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?
New ways to hedge the risks in an equity portfolio are now readily available, including bear funds designed to make money when the market falls. They're not for everyone so check with a financial adviser.
An investment in gold without hedging the currency risk of the USD price can deliver portfolio diversification and protection, with the AUD price often rising when equity markets are falling.
The S&P500 experiences a one-month return of -10% or worse only 1.5% of the time. Most drawdowns were much shallower and occur at higher frequencies, but are they worth spending money to protect against?
There are many ways to hedge against volatility, but often at a cost to the overall return of the portfolio. At what point is a smooth journey worth the impact on the destination?
Investors who want to limit equity market losses while retaining the upside may use put options. The cost for banks seems relatively low at the moment, but understand what you're doing.
Investing in foreign assets brings with it foreign currency exposure. Your return not only depends on the performance of the asset but on changes in the exchange rate, which can work against you or for you.
With recent volatility in the value of the Australian dollar, investor attention is drawn to the topic of currency hedging. What impact does currency have on an international equity portfolio for an Australian investor?
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.
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?
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.
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.
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.
There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.