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20170505 – Portfolio Activity

20170505 – Portfolio Activity Update from Michael Cooper on Vimeo.

On Monday the ASX 200 index hit a two year high of 5956, falling short of the March 2015 peak. This was quickly followed by four days straight of losses as declines in commodity prices saw the Resources Sector sell off. The market today looks likely to close around the 5,830 level, down 1.6% for the week. Globally, stock markets have been mixed, the Japanese stock market has been closed for three consecutive days for holidays and in Hong Kong the market was closed on Wednesday for The Birthday of the Buddha.

As widely expected, the Reserve Bank of Australia decided at their Board meeting on Tuesday to keep the cash rate unchanged at a record low of 1.5% for the eighth consecutive month. The statement is similar to last month with little hint of any change to the policy rate in the near future. The Governor repeated his broad guidance that the current stance of policy was consistent with sustainable economic growth and achieving the inflation target over time.

In the US the Federal Reserve announced on Wednesday that the benchmark interest rate would remain unchanged after a two-day policy meeting, as had widely been expected. The only new information from the meeting came from changes to the Federal Open Market Committee’s statement where the committee adjusted language to acknowledge the weaker inflation and consumption data of late is ”likely transitory” and the risk in the near-term remains ”roughly balanced”. The Committee did not signal a change to its interest rate projections or balance sheet policy.

PACE OF IMPLEMENTATION

In light of the small decline in the Australian market this week we believe it is worth reinforcing the way in which we execute trades in order to bring new accounts to target. We use a number of metrics to assess buying opportunities, however it normally comes down to price and time. Ideally we would hold off investing if we could clearly see markets were going to fall, on the flip side, if we knew markets were going to rise we would purchase investments at the start of the implementation period. However as you are probably aware it is very hard to do this in a consistent manner. We implement over a period of at least three months taking advantage of price falls, however if markets don’t present these opportunities we have the time limits in place which essentially forces us to purchase assets ensuring accounts move towards the target.
Over the short term market falls are normally greater than gains so it stands to reason that missing out on a small gain is preferred to experiencing a large loss. This is one reason why no two portfolios will look the same and highlights the flexibility that we have to manage your portfolio via the Individually Managed Account structure. Of course, we always implement in the context of the instructions provided by your Adviser, who best understands your personal circumstances and requirements. At all times you can monitor the progress of your portfolio via the online reporting.

PORTFOLIO ACTIVITY

  • We have taken advantage of the pull back in the Australian market and completed buying of two of the investments that form this asset class; the S&P/ASX Midcap ETF (MVE) and Small Cap Dividend Payers ETF (MVS). In addition we have also purchased the Australian Property ETF (MVA).
  • We have completed buying in the High Interest Cash ETF (AAA) as we do regularly at the start of each month.

 

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