May 2014 Review & Comments
Written by Tony Gray   
Thursday, 12 June 2014 09:25

The focus of recent months has been on implementation of financial planning steps and less so on investment markets – partly as the end of financial year sets a time limit for some planning action and partly as investment markets have been flat.

No asset classes at this time represent particularly good value in our opinion – although we are also not seeing overly excessive prices either – with the exception of bond markets and smaller US companies.  Volatility across all markets is very low and the range of price movements is also quite narrow.

This has not presented the opportunities we would normally hope for to get surplus funds to work – especially for newer portfolios that are still developing.

In fact, despite all sorts of risk, it seems so far that economies and markets are muddling through.  The Australian economy has managed to cope with a slower Chinese economy and reduced capital spending from the mining sector.  Next challenge will be coping with reduced energy sector capital spending (which has been larger than the mining boom).

The same story exists overseas, with the US reducing their budget deficit considerably in the last two years and the slow unwinding of quantitative easing has so far not triggered a jump in interest rates – if only because the economic profile of Europe and Japan remains fragile.

We appear to be in a period of lower returns, where income yield is responsible for the majority of returns.  We are seeing some individual assets representing value, although limited in number.  Overall only occasional portfolio adjustments appear necessary or beneficial at this time.

One example that may or may not be relevant to your position is the decision to quit the Five Oceans World Fund.  Whilst returns from this international share fund were strongly positive during 2013, performance has lagged in 2014.  The move to close the fund and transfer (on 16 July) to an index aligned fund is not of interest.  If we want to accept an index approach there are lower cost alternatives and Five Oceans was introduced as an active manager.

As always, please contact me with any questions about your investment portfolio or any planning queries.

Best wishes

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

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

Last Updated on Thursday, 12 June 2014 09:41

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