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2019 – THE YEAR AHEAD

2019 – THE YEAR AHEAD

EXPECT ANOTHER YEAR LIKE 2018. SHARE-MARKETS TO PEAK EARLY IN THE YEAR.   Though we will certainly send out our thoughts for the year ahead in mid-January as normal, we thought there was enough going on to justify sending out a short note to you all to provide some context and insight on a few key areas.   Australian Investment Market Context As we stand today (Dec 18th), the Australian share-market looks set to record its first NEGATIVE year since 2011.   The ASX200 is down -4.5% year-to-date including dividends (over -8% in price alone), and this is broadly comparable to the S&P500 which is down a similar amount, however the fall in the Australian Dollar means that Australian equities have still underperformed their foreign peer group by between 5% and 8%.   The ASX200 is down -12.5% from its highs in late August.   The Australian Financial sector, which includes all banks, insurers and advisory groups has fallen over -12.5% year-to-date including payment of all dividends.   Whilst there might be little reason for widespread optimism, in Australia at least, we feel that the share-market is within sight of its lows given forward valuations are bouncing around near 6-year lows.   Australian bond indices, which incorporate all government, semi-government and corporate bond issuance, have risen +3.8% in the year-to-date.   This year is a reminder that all portfolios should ensure they are well-balanced, diversified, and in light of our current view, cautiously positioned.   Almost all of Prime’s recommended portfolios (from high-growth to conservative) have returned approximately +3% in the 12 months until the end of November, well...
Make this year a financially healthy one

Make this year a financially healthy one

With a focus on the New Year, this article consists of a short guide to planning ahead for the year to come. It highlights financial activities each quarter of the year and recommends professional guidance.   Another year is over – how was it for you? Did you achieve everything you’d hoped? Are you better or worse off financially than you were this time last year? With a new year in front of you, what can you do to make the most of every moment? We’ve put together a short guide to get you started and plan for the year ahead, a quarter at a time. January to March Make a start by turning wishes into goals. Some might be long-term like becoming debt-free, saving a home deposit, or retiring in a few years’ time. What can you do this year to support those goals? Write it all down and give it a name – something you can own. At the same time, don’t forget living for now. Prepare a month-by-month budget that makes room for the fun times – holidays and celebrations – as well as covering the necessities. Anticipate spikes in your spending. Do your car, home and life insurance premiums all seem to fall due at the same time putting pressure on your cash flow? Investigate monthly premium payments or spreading renewal dates across the year. Use this first quarter to bed down the budgeting habit and track your actual spending against your plan. At the end of March, do a quick review of your progress so far and make adjustments if necessary. April to June...
2018 Year End

2018 Year End

IT’s THE END OF THE YEAR TIME FOR SOME INVESTMENT PORTFOLIO HOUSEKEEPING   Though we will certainly send out our thoughts for the year ahead in mid-January as normal, we thought there was enough going on to justify sending out a short note to you all to provide some context and insight on a few key areas.   Australian Investment Market Context As we stand today (Dec 18th), the Australian share-market looks set to record its first NEGATIVE year since 2011.   The ASX200 is down -4.5% year-to-date including dividends (over -8% in price alone), and this is broadly comparable to the S&P500 which is down a similar amount, however the fall in the Australian Dollar means that Australian equities have still underperformed their foreign peer group by between 5% and 8%.   The ASX200 is down -12.5% from its highs in late August.   The Australian Financial sector, which includes all banks, insurers and advisory groups has fallen over -12.5% year-to-date including payment of all dividends.   Whilst there might be little reason for widespread optimism, in Australia at least, we feel that the share-market is within sight of its lows given forward valuations are bouncing around near 6-year lows.   Australian bond indices, which incorporate all government, semi-government and corporate bond issuance, have risen +3.8% in the year-to-date.   This year is a reminder that all portfolios should ensure they are well-balanced, diversified, and in light of our current view, cautiously positioned.   Almost all of Prime’s recommended portfolios (from high-growth to conservative) have returned approximately +3% in the 12 months until the end of November, well...

20170721 – Portfolio Activity

20170721 – Portfolio Update from Michael Cooper on Vimeo. Despite two positive potential catalysts this week, the Australian share market has maintained the sideways trading pattern that has prevailed since the middle of May. Early this week a much anticipated announcement came when the Australian Prudential Regulation Authority defined what it means for our banks to be ”unquestionably strong”, a phrase taken from the final report of the Financial System Inquiry. The banks have been building their capital for several years and are already quite close to the increased capital ratio set out by APRA, well ahead of the January 2020 deadline. This benign outcome saw the banking sector rally by more than 5% across Wednesday and Thursday’s trading. We also had labour market data released this week and saw a continuation of the strong recent trend in jobs growth, particularly in full time jobs. An uptick in the participation rate meant that the unemployment rate remained steady at 5.6%, though importantly the underemployment rate drifted lower to 8.4%. This is an encouraging sign for the health of the Australian economy, though as we have mentioned before it will be especially welcome to see strength in employment data translate into improvements in wages data. ASSET ALLOCATION & INVESTMENT COMMITTEE With the sideways move described above the forecast returns for Australian Equities have remained relatively steady over the last several months. As a result the committee has affirmed the active overweight to this asset class at our meeting this week. We are however making a subtle adjustment within the constituent investments which will see a reduction in the Financials ETF...

20170707 – Portfolio Activity

The leaders of 20 nations have gathered this week in Hamburg, Germany in what Bloomberg is calling the G19 plus Donald Trump, pointedly referring to ”America’s new unwillingness to cooperate with the world on vital international issues.” There can be no clearer rejection of the Trump administration’s isolationist stance than the preliminary free trade agreement reached between the European Union and Japan. The deal announced this week will eliminate tariffs, expand markets for services and boost regulatory cooperation. It must also be said that it shows the priorities of the EU as Brexit negotiations begin in earnest, and the weak position from which the United Kingdom is required to negotiate their exit from the common market. Reserve Bank Governor Philip Lowe delivered a decidedly neutral statement when announcing the bank’s decision to leave interest rates at 1.5% this week. Whilst the decision was entirely expected, some had anticipated that the bank may signal a subtle shift towards a tightening bias in due course. The absence of that language led to a sharp fall in the Australian dollar as expectations were adjusted. The consensus is still that the next rate move will be upwards, as data continues to confirm that the economy is on a sound footing. This week trade data showed a strong rebound in activity, supporting the view that the Q2 GDP result will do likewise. CORRELATED INVESTMENTS The flexibility to correlate non-model investments within asset classes is a feature of the Individually Managed Account portfolio structure. As an example, often this means we accommodate an investor’s existing shareholding and manage asset allocation and sector exposures around that...

20170630 – Portfolio Activity EOFY

European Central Bank President Mario Draghi gave an important speech this week in which he referenced the continuing economic recovery in Europe. Market participants took a clear signal that the era of extraordinary monetary policy support would not continue indefinitely. This led to some significant moves in bonds and a sharp increase in the Euro exchange rate. Whilst these short-term moves have been quite pronounced, Draghi made clear that ”global uncertainties remain elevated,” and as a result the bank will exercise prudence in adjusting the policy stance whilst ”accompanying the recovery.” Activity in equity markets has also been a little more turbulent than the recent past, however after rallying by nearly 2% mid-week, indications are that the ASX200 will give back some of that gain on Friday and close about flat for the week. With a longer term perspective, and as we close the financial year, the ASX200 index has provided a very solid total return of 15% over the last year. Importantly, the recently beleaguered Financials sector has in fact led the overall market higher over the same period, notching up a total return of nearly 22% since July 2016. ASSET ALLOCATION & INVESTMENT COMMITTEE At our meeting this week the committee affirmed the current active asset allocation stance. Within the defensive Income Securities asset class we are implementing the recent decision to use a new investment grade corporate bond exchange traded fund (PLUS), with portfolios having recently received the proceeds from the redeemed ANZ investment (ANZHA). Westpac have also announced the redemption of their similar investment (WBCHA), and we will redeploy these funds in the same manner...