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Monday, 24 January 2022
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The outlook for emerging market debt in 2021 revolves around liquidity, uneven recoveries and debt sustainability. Damage has been done to many countries’ finances and watch for central banks withdrawing support.
At some point, policymakers will turn to the task of deleveraging, to work off massive debt burdens built up during the pandemic. Australia is already ticking the boxes on many policies used in the past.
Markets always come back to fundamentals, valuations and liquidity, even when faced with a global pandemic. The key question is whether liquidity can hold up the market as the economic storm hits.
Large super funds hold unlisted assets such as infrastructure, property and private equity. It's likely many of these assets have not been revalued recently, inflating the price paid to members who exit.
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.
Equity market vigilanties, particularly resisting poor Initial Public Offerings (IPOs), are showing the benefits of active managers not simply buying everything put in front of them.
APRA’s letter to super funds highlights concerns about 'cash' investments. A lack of understanding might haunt investors when the next downturn comes as too many people forsake protection for yield.
One benefit of ETFs for investors is their tradability - being able to buy or sell at any time through the ASX just like an ordinary share. But this leads many investors to mistakenly evaluate their liquidity in the same way.
There's no straightforward answer to the question of whether a bond is liquid. Unfortunately, at the time when you most want to sell, everyone is likely to be running for the exit.
When deciding between listed and unlisted infrastructure securities, the focus should be on the cashflows, the risks associated with those cashflows and the entry price to buy the assets.
Despite similar objectives, the proportion of Australian superannuation assets in alternative and less liquid assets is much lower than for other long-term investors such as family offices and global pension funds.
Australia's defined contribution superannuation market seems to be obsessed with ‘liquid’ investments. For the long-term investment that super inherently is, it doesn't make sense to limit our options.
Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.
Eligibility for the Commonwealth Seniors Health Card has no asset test and a relatively high income test. It's worth checking eligibility and the benefits of qualifying to save on the cost of medications.
The focus is on Magellan for its investment performance and departure of the CEO, but Douglass says the pandemic, inflation, rising rates and Middle East tensions have not played out. Vindication is always long term.
This is our annual checklist of what retirees need to be aware of in 2022. It is a long list of 25 items and not everything will apply to your situation. Run your eye over the benefits and entitlements.
The Warren Buffett/Charlie Munger partnership is the stuff of legends, but even Charlie admits it is coming to an end ("I'm nearly dead"). He is one of the few people in investing prepared to say what he thinks.
Depending on personal circumstances, it may be time to rethink the bias to paying down housing debt over wealth accumulation in super. Do the sums and ask these four questions to plan for your future.