Last week our Team was fortunate enough to hold our P3 Financial Planning Annual Conference for the first time since 2019. On day one of the conference, our Team had the pleasure of hearing invaluable insight from industry professionals at Fidelity, Perpetual, Elston, Janus Henderson & Bell Potter. We at P3FP understand the importance of remaining up-to-date on ever-changing economic and market overview’s during this economic adjustment process. Furthermore, we recognise that it is just as important to ensure our clients have an understanding of the products they are invested in and how they align with their risk profile, goals and objectives.
Please note that the below is of a general nature, it is not intended to be an investment signal for you but rather some helpful topical information.
This should serve as an overview of the knowledge that was shared with us during the first day of presentations at the P3FP 2021 Annual Conference.
Lauren Jackson – Fidelity
- Emerging markets are in a much better position to generate strong returns through driving global growth, becoming technology innovators, having less debt, experiencing rising wealth and offering attractive valuations.
- Monetary policy – Cash rate (0.10%) is highly unlikely to go negative, budget to be in deficit for the next decade.
- Bitcoin is now considered a legitimate and distinct asset class. As its network increases, bitcoin’s value and durability could increase at an even faster rate.
- Long-term investment strategies – exploit a long-run time horizon, diversify your portfolio, minimise cash as it is return-free, minimising investment costs may come at a cost, be selective.
Matt Sherwood & Michael O’Dea – Perpetual
- May need to be prepared for lower returns, especially in US Equities and this may occur with greater volatility.
- Bonds have long been an alternative to volatile equities, however as we see potential rising yields be prepared for likely capital losses.
- Focus of Perpetual Diversified Real Return Fund is on managing downside risk.
- UK market is now in a much better position to generate inflation plus 5%.
- Predicted returns for next 10 years expected to be much lower for most managed funds except for Emerging Markets which are well positioned to provide better returns.
- Perpetual feels that inflation is overdone – demographics, debt, disparity of wealth, disruption and productivity.
- Balanced fund is predicted to perform 3% worse over the next ten years than than it did the preceding ten years.
- There will likely be period of higher volatility experienced over the next 10 years.
- Bonds are very vulnerable to inflation and can realize a negative return as yields rise, traditional conservative fund may not generate sufficient returns.
Bruce Williams – Elston
- See some opportunities in CSL, COH – good structural growth companies with strong balance sheets that have performed poorly due to COVID, opportunity arising for growth now.
- Similar to some of the heavily impacted stocks – SYD, which previously help up very well during SARS outbreak and the GFC. The demand for SYD is predicted to return in full by 2024.
- FLT – Elston has high expectations for FLT bouncing back post-covid, they have won over the business of some competitors and have cut costs via the closing of many of the excessive stores that existed pre-covid (completing their 3 year plan in 1 year).
- Think that long term sustainable price for Iron Ore is about $80, currently trading at $200. This should have an effect on FMG, RIO & BHP long-term.
- Have a positive outlook on global infrastructure.
- Bond yields rising, so fixed interest is now under-weighted in their eyes.
- Immigration will continue to drive domestic growth, Australia being an optimal destination, in comparison to places like Singapore. The country has dealt extremely well with COVID-19 in terms of minimising active cases and being able to keep companies operating as close to normal as possible.
- Wages growth is a key focus for the RBA moving forward.
Daniel Simpson – Janus Henderson
- RBA predicts the inflation rate to reach 2.36% by the end of 2020.
- RBA has implemented yield curve control – 10 year yields spiked to 2.5% and then rallied back down to 0.64% in just two weeks
- Australian corporate credit spreads – there is relative value seen in A and BBB rated credit entering 2021.
- Janus Henderson does not currently include and does not plan to include any structurally challenged companies (QAN, AMP, etc.) in terms of ESG in their Tactical Income Fund and ETF. The fund’s allocation is 85% to ESG compliant equities and 15% to challenged but safe (in regard to ESG) equities.
Geoff Beeston – Bell Potter
- Quantam of movement in the 10-year bond yield (proxy of the risk-free rate) cause drastic movements for equities with stretched p/e ratios (e.g. tech and healthcare) as the risk-free rate and equities with stretched p/e ratios have an inverse relationship.
- Recently there has been a rapid increase of global commodity prices, particularly with iron ore due to the intense demand from china powering their existing infrastructure boom.
- Iron ore demand from China should continue to remain high into the foreseeable future (even during the ongoing trade war) seeing as Australia offers the cheapest, best quality iron ore and is currently the closest mine.
- Cryptocurrency – recent exponential growth in crypto trading volumes.
If you have any queries regarding the aforementioned conference information; Jim, Jon, Maria & Blaine are only a phone call away – 07 3378 9681.