March 2012 Review Comments
Written by Tony Gray   
Friday, 16 March 2012 00:00

Portfolio Valuation & Comment

Please find attached a copy of your portfolio as at the 29th of February 2012.  As expected, investment markets remain highly ‘uncertain’, with some retreat in early March from the positive January and February start to the year.

Our general approach at this time can be summarised as follows:

* Hold a higher than normal cash reserve, but reducing over time;

* Maintain or lighten to a neutral fixed interest allocation and ensure there are some longer dated deposits to reduce the impact of lower future interest rates;

* Maintain a neutral exposure to Australian listed property trusts;

* Regularly add to Australian shares to bring up to a neutral weight over time; and

* Regularly add to international shares (which are typically well underweight).

The Australian sharemarket is highly concentrated, with the top 20 stocks representing two thirds of the market.  Further, the mining and banking sectors represent some 70% of the total market capitalisation.  Mining stocks are under pressure due to the slowing Chinese economy, subdued growth globally and lower expected iron ore prices.  Bank stocks are unlikely to rally significantly due to the weakening economy, no loan growth and a lack of international interest.

The high dollar and cheap international share valuations means it makes sense to increase international share weightings.  Managed funds are ideal for making regular monthly contributions, accepting the fund manager fee.  We favour managers who do not invest in line with indices and have the ability to lift cash reserves when the outlook is negative.  We have some new recommendations in this area to discuss at an individual portfolio level.

As always, if there is a material change in your position or goals, or if you have any investment or planning queries or concerns, please contact me. 

Best wishes,

A.W. (Tony) Gray BCom, LLB, Dip FP, GDipAppFin, CFP, FFin
Principal, TG Financial

Please treat the above comments as General Advice, with no action to occur until we have considered with reference to your financial position, needs and goals.


Last Updated on Thursday, 22 March 2012 13:01

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