Watching the market react to economic data is really about watching the human beings that constitute the market react with fear and optimism to normally mixed messages. 2006 is shaping up to be the year of volatility...
A week ago, we updated you on what the world is doing with gold, and reported predictions of gold reaching $US500/oz by Christmas. In fact, it's happened much sooner...
In a move that can only be taken as a massive victory for hedge funds and their major promoters, the global investment banks, the Australian Stock Exchange has announced changes to the rules requiring disclosure of the identity of brokers behind buy and sell transactions...
A recent study out of the US takes a shot at what you may believe about dollar cost averaging, one of the sacred cows of investment…
Advisers that turned up to last week's FPA Conference on the Gold Coast were treated to a debate that is at the leading edge of a massive turning point in the investment management industry...
Emerging markets have been out of favour with mainstream investors since the series of financial shocks in the late 1990s that culminated with the default by Russia on its sovereign bonds in 1997. So what has changed since then, to bring emerging market debt back into favour (with a number of new products being released that provide exposure to emerging market debt)?
How would a global bird flu pandemic affect financial markets? If past history, including the effect of SARS in 2003 is anything to go by, the effect would be significant...
In each You Asked For It, we ask the public research houses to respond to topical portfolio construction questions of the day. This time it’s strategic asset allocations to property. Have they reviewed their allocations now advisers have access to global property investments? What are those allocations? Only two research houses picked up this particular guantlet: IWL and Lonsec...
With the Aussie stock market at or near record highs over the last few months, investors are increasingly confused about what type of equity portfolios they should be designing for their clients. Defensive stocks have made way for a profound switch to cyclicals (with resource stocks predominant). But as global inflation worries raise questions about the longevity and depth of the resource boom, style is again becoming a key direct investing issue...
As we took the Global Energy and Commodities Investing Forum around the country, one of the hot discussion points was total return investing and portfolio construction...
Last week, Delphi Corp, one of the key players in the US auto parts industry, defaulted on its bond payment obligations. The loss from Delphi has adversely impacted at least two CDOs known to Australian investors: Deutsche Bank's Nexus 3 and Macquarie's Generator Income Notes...
Infrastructure funds develop and hold infrastructure assets - which are increasingly becoming available for private sector ownership as Governments privatise public sector assets as part of budget deficit reduction programs...
One of the most frequent questions we're asked by advisers considering an IPO for a new listed product is "Will this product list at a discount?" The question applies to ordinary shares as well as listed alternative assets, and listed structured products. No doubt, the concern stems from the rash of listed investment companies (LICs) listed at the end of 2003, some of which continue to trade at a discount to their net asset value today...
Dealer groups wishing to differentiate themselves and strive to achieve greater alpha in client’s portfolios face a dilemma. To move "beyond the vanilla," there are a number of practical issues to sort out before properly embarking on an expanded approved list...
As the great Australian icon Norman May used to say, the economic news this week is all about "Gold, Gold, Gold". Sure, Nugget May was talking about our Aussie Olympic athletes, but in the context of the market there's definitely some important guidance here for Aussie investors...
Private equity offers the promise of occasional outstanding returns – but with the significant risk that some private equity investments will end with no return. To encourage investment, there are a range of significant tax concessions available for investors accessing private equity through Pooled Development Funds (PDFs)…
In each You Asked For It, we ask the public research houses to respond to topical portfolio construction questions of the day. This fortnight, it’s hedge funds. Are they an asset class? Should they be classified as growth investments, defensive, both or neither? Seven research houses responded…
The outlook for Asia-Pacific sovereign credit ratings for the remainder of 2005 remains mixed...
In each You Asked For It, we ask the public research houses to respond to topical portfolio construction questions of the day. This time it’s emerging markets. What regions are included? What are the advantages and disadvantages to an emerging markets exposure? What asset allocation is appropriate? Only two research houses picked up this particular guantlet…
The global growth story may well be a vital contributor to client’s wealth – and your practice – for the rest of 2005 and into 2006…
A common question from the many advisers who implement direct equities through model equity portfolios is how to justify putting a client into the underlying shares which may have risen steeply since the inception of the portfolio, or since its last rebalance…
Since their introduction to – and initial acceptance by – the Australian financial planning industry, hedge funds have probably not delivered the returns promised. This article explores other reasons why hedge fund returns may have been lower than expected., the market conditions needed to generate returns, the current environment for hedge funds, and the outlook for sector...
Thank you for your kind comments, at the International Monetary Conference in Beijing recently, regarding the state of the investment industry and the benefits of investing in skilled managers who actively seek absolute returns through a combination of diversified strategies. I particularly appreciated your comments as follows…
Using standard deviation as the sole measure of investment risk overlooks the fact that real investors tend to care much more about downside volatility and far less about volatility when returns are above average...
After months of presenting a pessimistic outlook for the US and recommending defensive investment exposures, global investment heavyweight Standard & Poor’s (S&P) has this week made “substantial changes” to its US investment outlook for the second half of this year…
Hybrids have been successfully issued since the early 1990’s, however, due to recent accounting changes, these types of products are no longer being issued. Their replacement, the Step Up Preference Share, has a problematic investment profile with high levels of equity risk, and is potentially unsuitable for inclusion in the fixed interest portfolio…
Specialist asset allocation research house, farrelly’s, has released a paper “Between the Ivory Tower and the Philistines: Practical Asset Allocation” which outlines the academic approach to asset allocation, and the approach taken by most practicing planners, and suggests a middle ground combining the best of both...
What is an ETF, what are the key performance and cost differentiators compared to actively managed equity funds, and how can they be integrated into a portfolio?
In a core and satellite approach to portfolio construction, some of the benefits of including low cost, index-tracking products such as exchange traded funds (ETFs) in the “core” of a portfolio...
Dow Jones Indexes has launched the Dow Jones Australia LPT Index, which tracks the performance of the Listed Property Trust (LPT) securities traded on the Australian Stock Exchange. The index will provide investors with a transparent and objective tool to measure an investment class that has outperformed the major equity market indexes in recent years…
Private equity firms understandably advocate the hands-on style that distinguishes them from other traditional portfolio investors. But does this active ownership really produce superior performance, ask McKinsey principal Joachim Heel and director Conor Kehoe ask in an article published in the McKinsey Quarterly…
In this update: Asian share markets rose on the back of the US market rally which saw US stocks rise to a three-month high, China's trade surplus peaked in May while industrial output and investments grew strongly, foreign investors can now own up to 26% of local Indian media companies, Singapore's non-oil exports fell unexpectedly in May, and Philippine sovereign bonds retraced the prior week's losses while Korean bonds fell - plus country-specific news for Japan, Australia, China/HK, India, Indonesia, Korea, Malaysia, Singapore, Taiwan, and Thailand...
Continuing low allocations to direct property are “tantamount to the biggest blind spot ever witnessed in the history of asset allocation strategy, says Australian Direct Property Investment Association President Richard Cutler, citing a new study showing direct property significantly reduces portfolio risk and investment loss, while delivering attractive total and income returns…
Portfolio rebalancing helps mitigate the impact of the common mistakes investors make, according to a new study published in the US Journal of Financial Planning…
Global investors are continuing to pour money into emerging market bond funds, with year-to-date inflows passing the US$3 billion mark during the second half of May…
It may be time for investors to consider rebuilding investor exposure to Asian stock markets but they will need to make use of Asia-specific equity products to obtain the desired exposure, says Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors…
After enjoying strong above-average returns from the Australian sharemarket over the past two calendar years, the Australian equity market provided negative returns in both March and April 2005 – the first time in over two years we’ve seen consecutive months of negative returns. So which fund managers can be expected to outperform in falling markets?
Australian shares and listed property trusts have outperformed residential investment property over 10 years ending 31 December 2004, according to the latest ASX Investments Report…
Australian superannuation funds allocate more to private equity than their European counterparts, and are poised to increase their offshore private equity investment…
Distressed debt is one asset type beloved of hedge funds. There are four distinct types of distressed debt, and each carries unique risks and rewards, says Mercer Investment Consulting, warning that this event-driven style is not as homogenous as the definition indicates…
As the numbers of hedge funds on offer increases, the lines between hedge funds and traditional asset managers are fading. More traditional managers are establishing a presence in the market, writes Mercer Investment Consulting in its latest Hedge Funds newsletter…
Using agribusiness managed investment schemes in portfolio construction isn’t a new idea, and at this time of year, it is a downright popular strategy. Research house AAG has just released a number of “thinking points” for those considering including agribusiness offerings in an investment portfolio…
Rising interest rates and a resurgence in oil prices proved difficult headwinds for Australian superannuation funds in the March quarter, according to research released by Intech today…
In giving evidence to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into Commonwealth Regulation of Property Investment Advice, the FPA expressed its concerns about the lack of effective regulation for property investment advice…
A few years back, Roger Gibson offered a very simple four-part matrix to help advisers determine what they believe about investing. Some commentators are now rethinking one quadrant which they used to reject out of hand...
Many advisers put their clients into absolute returns funds because they know intuitively that it is the right thing to do, says Professor Les Balzer. But until now, advisers had no real scientific reason to back up that intuition?
Strong financial performance can be directly linked to good corporate responsibility, according to new research by AMP Capital Investors. The research breaks new ground - although extensive research in this area has been carried out in North America and Europe very little has been undertaken in Australia…
Global property offers investors low volatility, attractive returns with a strong income component, and a low correlation with the returns from other asset classes, according to a recent research paper issued by Russell Investment Group…
Central bankers in several emerging countries are having to explain to politicians why they are hiking interest rates at a time financial continues remain favourable, says Pimco’s managing director, Mohamed El-Erian in Pimco’s latest Emerging Markets Watch…
The real world of economics is very different to that of the text book economics. Pimco managing director, Paul McCulley gives his analysis of the prospective global prices for oil, currencies and retirement incomes, to make his point that considering economics without considering politics gives a view of a world that does not exist...
While it might be tempting, after two years of strong gains in equity markets, to conclude that we have returned to a world of double digit investment returns, the medium-term outlook remains for high single digit returns from equities, and low returns for bonds, warns Dr Shane Oliver, AMP Capital Investor’s chief economist and head of investment strategy…
With unlisted private equity companies comprising such a major part of the economy, it makes sense that they should form part of an investment portfolio as well...
Not all rules of thumb make sense, and one of the sillier ones in this industry is the way it labels assets as either growth or income…
The New Zealand Superannuation Fund has unveiled a significant shift in its strategic asset allocation and plans to significantly increase its allocation to alternative assets…