NEWS
21 Nov 2025 - Hedge Clippings |21 November 2025
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Hedge Clippings | 21 November 2025 Reflecting on last week's edition of Hedge Clippings we're struck by the fact that we could simply reproduce the commentary of the chances of a rate cut both here and in the US, but with some small adjustments to the actual numbers. In the case of the RBA's next meeting, due on the 8th and 9th of December, we'd suggest the decision to hold has pretty much been set in stone, with the only chance of a cut being next Wednesday's release of October CPI numbers. While the RBA's minutes of the November meeting showed the decision to hold was unanimous, there were plenty of variables and possibilities about how inflation and the labour market might influence monetary policy. Hedging of bets (appropriate, given the meeting was held on Cup Day) was covered by consideration of multiple factors, uncertainties, resulting in "on the one hand" and then in the next sentence (or paragraph) "on the other hand". At least we know the Board explored all the options! Meanwhile, over in the US, last week we noted that the market's near overwhelming certainty (97%) of a rate cut just a month ago, had dropped to 50/50 based on a FactSet poll of market economists. This has now slipped further to being an outside chance at 22%, in spite of Trump's rhetoric and abuse directed at Jerome Powell, and the pressure he's trying to put him under. From what we've observed, Powell, to use the phrase coined by Maggie Thatcher way back in 1980, "is not for turning." As it is, Powell's term ends next May, so he probably feels he has a point to make regarding his independence, and the likelihood of his appointment for another (third) term is zilch, at least while Donald is in the White House. He might as well tough it out. The US Fed's next FOMC meeting is also in the second week of December, so on current projections, there'll be plenty of discussion and opinion, but not much action. Where there is action is in equity markets, with increasing calls from various well-known parties that the stretched valuations in the tech sector can't continue forever. Others of course maintain the usual mantra that "this boom is different" - and while it may be, the signs and psychology seem very similar. The following chart, courtesy of Callum Thomas of The Weekly Chartstorm, paints an eerie picture: News | Insights Manager Insights Video | Magellan Investment Partner The Housing Squeeze | Airlie Funds Management Staying the course | Canopy Investors October 2025 Performance News Glenmore Australian Equities Fund Bennelong Concentrated Australian Equities Fund 4D Global Infrastructure Fund (Unhedged) Bennelong Australian Equities Fund |
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14 Nov 2025 - Hedge Clippings |14 November 2025
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Hedge Clippings | 14 November 2025 Any lingering chances of a rate cut before Christmas - already unlikely given the uptick in the September quarter CPI to 3.2% - went out of the window yesterday when the October Labour Force figures were released, showing unemployment had dropped to 4.3% after rising 4.5% in September. The number of unemployed people dropped by 17,000, while the ranks of the employed increased by 42,000. If that's the case, there's no RBA meeting in January, so speculation will have to wait until February, but mid-2026 or even beyond is looking more likely. At the same time, the chances of a rate cut in the US - widely expected just a few weeks ago - also dropped to around 50/50 as a result of conflicting economic signals, thanks in part to the lack of data as a result of the US Government shutdown, a weakening labour market, and concerns about sticky inflation. There's time for the odds to move either way before the next FOMC meeting due on the 9th-10th of December. Meanwhile, among signs of stretched valuations and increasing equity market volatility - not only in the tech sector, but also amongst some local high-flying small-cap stocks we have taken a look at the performance of managed funds in the Australian Small to Mid-cap Peer Group. Not surprisingly, given the performance of the respective ASX200 and ASX Small Ordinaries indices, small caps outperformed large cap funds. The average return of all 97 funds in the small cap universe, broadly in line with the index over 1 - 5 years, will give encouragement to those who advocate passive investing via ETF's with their accompanying low fees. By filtering the list using AFM's Star Rankings, and only selecting funds with 4 or 5 Stars over 3 & 5 years, we created a portfolio of Top 10 funds which significantly outperformed the index. Using the same process to look at those funds with only 1 or 2 Stars, to come up with the bottom 10 funds, the result was equally predictable. Obviously, as in stock selection, manager selection is essential. Given that past performance cannot be guaranteed, how does one look at historical fund performance? We would suggest ignoring (or at least not jumping at) one-year performance. It can be misleading unless 3, 5 or 7 years is equally good. Taking 5 years covers a sufficient period, and then ensuring that the shorter-term performance is consistent. AFM's Star Ranking enables filtering on both performance and risk/volatility, and while not in-depth, it provides an initial, and significantly effective, and fast process to sort the wheat from the chaff and then allow concentrated analysis of the resulting funds. Of significant interest was the analysis of the funds at the bottom of the list based on recommended research ratings. In spite of these having a track record of being in the 3rd or 4th quartile performance over 1, 3, and 5 years, most of them came with "recommended" and in a couple of cases "highly recommended" research ratings from Zenith, Lonsec, Morningstar, or SQM. In fact, only one of them (yes, 1 out of 10) didn't have a rating. Which leads us to the question: What value can you put on (paid) research? News | Insights New Funds on FundMonitors.com Research house scrutiny needed | Fundmonitors.com Trip Insights: The US | 4D Infrastructure October 2025 Performance News Bennelong Emerging Companies Fund Quay Global Real Estate Fund (Unhedged) Bennelong Twenty20 Australian Equities Fund |
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7 Nov 2025 - Hedge Clippings |07 November 2025
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Hedge Clippings | 07 November 2025 The RBA's Balancing Act -- Up, Down, or Just Stuck? The RBA did exactly what everyone expected this week -- nothing. Rates stay put at 3.6 per cent, and for now that seems the safest course. But between the lines of Governor Michelle Bullock's press conference and the latest forecasts, the more interesting question isn't what the RBA did, but what it might do next. Depending on your perspective, that next move could just as easily be up as down. For one, inflation is refusing to behave. After more than a year of steady declines, the September quarter showed prices ticking higher again -- both in the annual headline number of +3.2%, and in the trimmed mean, which the RBA watches most closely, of 1% for the September quarter, and 3% for the past 12 months. At 3 per cent annualised, underlying inflation is moving in the wrong direction, and the RBA now doesn't expect it to fall back to its 2.5 per cent target midpoint until June 2027. That's a long time to be patient. Add to that a housing market that's rising again, consumers who appear to be rediscovering their wallets, and a labour market that's still "a little tight", and you've got the ingredients for inflation to stick around longer than anyone wants. Bullock herself made the point that monetary policy is "a little restrictive", but not much more than that. Credit is flowing freely, private demand is lifting, and the early effects of rate cuts earlier in the year are still working their way through. If inflation does prove stubborn, the argument for a nudge back up in rates will be hard to ignore -- especially if the RBA wants to protect its hard-won credibility. Then again, the RBA knows the economy is fragile. Unemployment has crept up to 4.5 per cent, job growth is slowing, and productivity -- the missing ingredient in every optimistic forecast -- remains weak. Wages growth has already eased from its peak, suggesting inflationary pressure from the labour market may be topping out. Add in a backdrop of global uncertainty, slowing trade, and the lingering drag of higher household debt servicing costs, puts the case for staying put -- or even easing -- but only once the data shows inflation back on a downward path. The release of reliable monthly CPI numbers (in other words, based on full data) for October, due out on November 25, will provide a clearer and a more up to date picture. Bullock's message was cautious rather than hawkish: the Board will watch the data and reassess each month. And the RBA's own central forecast still assumes the next technical move will be a rate cut -- albeit not until well into 2026. So, which way does the wind blow? For now, it's a stalemate. Inflation's too high to cut, but growth's too soft to hike. The RBA will no doubt sit tight in December, talking tough but acting cautiously, while hoping those "temporary factors" in the September CPI really do prove temporary. If inflation edges higher again in the months to come, the probability of a hike rises -- perhaps not by much, but enough to keep markets nervous. Conversely, if inflation steadies and the labour market continues to ease, rate cuts will creep back onto the horizon by mid-late next year. The RBA's next move could still go either way. But for households, businesses, and markets, the message is the same: don't expect relief soon, and don't rule out another bump if inflation refuses to play ball. In other words, rates might not be going up, but they're certainly not going anywhere fast. News | Insights New Funds on FundMonitors.com Fund manager ratings: Why due diligence is key, even on ratings houses | Fundmonitors.com Magellan Global Quarterly Update | Magellan Asset Management |
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It's that time of year again when the Melbourne Cup and the RBA's Cup Day meeting collide - and once again, inflation has thrown a spanner in the works.
31 Oct 2025 - Hedge Clippings |31 October 2025
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Hedge Clippings | Inflation Surprise Upsets the Cup Day Celebrations - 31 October 2025
News | Insights Expert analysis on what the RBA will do next Tuesday, November 4 Manager Insights | East Coast Capital Management China's Energy Pivot: The Turning Point Investors Can't Ignore | Insync Fund Managers September 2025 Performance News Bennelong Twenty20 Australian Equities Fund Insync Global Quality Equity Fund |
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24 Oct 2025 - Hedge Clippings |24 October 2025
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Hedge Clippings | 24 October 2025 Albanese's Washington Waltz Prime Minister Anthony Albanese returned from his long-delayed audience with Donald Trump looking pleased -- and perhaps relieved. The headline takeaways were confirmation that Australia remains firmly within the AUKUS fold and a new rare-earth minerals partnership aimed at cementing our role in the global supply chain. Both announcements tick diplomatic boxes and offer a political win-win narrative at home: defence strength and economic opportunity. But they also come with heavy price tags, and even heavier geopolitical baggage. On AUKUS, Trump's assurance that the deal will continue may ease Canberra's nerves -- for now. But the reality remains that our nuclear-powered submarines are still many years, many billions, and several elections away. Even with bipartisan US support, the budgetary impact will be massive, and the timeline uncertain, even if the strategic and defence logic is inevitable. The promise of "interoperability" sounds impressive, but it translates into a dependency on US technology, training, and politics that's unlikely to get simpler under a second Trump presidency. The rare-earths agreement, meanwhile, sent a brief shiver of excitement through the mining sector. Australia already sits on a treasure trove of the minerals critical to EVs, batteries, and defence technology, and Washington's push to reduce reliance on China gives the deal global relevance. But as always, the devil lies in the processing. If Canberra insists that production move onshore -- as early reports suggest -- the cost and environmental hurdles could easily blunt the commercial enthusiasm. It's one thing to dig; quite another to refine and manufacture competitively. And then there's Beijing. Neither submarines nor strategic minerals are likely to make Australia's relationship with China any smoother - if anything, exactly the opposite. From Beijing's perspective, AUKUS still looks like containment, and any move to expand critical-mineral supply chains outside its orbit will be viewed through the same lens. Albanese may have brought back contracts and commitments, but not calm. Trump, for his part, was characteristically unfiltered -- including his barbed (but possibly tongue in cheek) comments about Kevin Rudd, which put him in good, or at least plentiful, company. For Albanese, the trip was a study in diplomacy under pressure: balancing alliances, economic realities, and domestic optics. For Australia, it's another reminder that while Washington handshakes make for good headlines, they often come with an open-ended invoice. News | Insights Australia's real estate shake-up: Where opportunity lies | Airlie Funds Management Skin in the game | Canopy Investors September 2025 Performance News Bennelong Emerging Companies Fund DAFM Digital Income Fund (Digital Income Class) Skerryvore Global Emerging Markets All-Cap Equity Fund |
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17 Oct 2025 - Hedge Clippings |17 October 2025
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Hedge Clippings | 17 October 2025 A Week Jim Chalmers Would Rather Forget It started with a backflip that was as inevitable as it was overdue. The Treasurer finally dropped the proposed plan to tax unrealised capital gains in superannuation balances over $3 million (although the amount is irrelevant, it was the concept that was the problem) -- an idea that had baffled economists, infuriated fund managers, and confused just about everyone else. Even among Labor's supporters, the policy looked tone-deaf. The notion that retirees and super funds could be taxed on paper profits, particularly in volatile markets, was always destined for the scrapheap. In the end, Chalmers bowed to a combination of political reality, a nudge from Paul Keating (never one to stay silent on superannuation), and what insiders describe as a not-so-gentle push from Prime Minister Anthony Albanese himself. The retreat was wrapped in the usual political spin -- "consultation," "refinement," "listening to stakeholders" -- but it was, quite simply, a climbdown from an idea that never should have seen daylight. Unfortunately for the Treasurer, the week didn't get any easier from there. During a "fireside chat" in New York, RBA Governor Michelle Bullock followed up with a blunt reminder that Australia's fiscal trajectory is unsustainable. Government spending, she warned, is growing faster than national income. The RBA, already worried about sticky inflation, coupled with falling productivity, now faces the added complication of a budget that's not pulling in the same direction. Bullock's comments were unusually pointed, suggesting rising concern inside Martin Place that fiscal policy and monetary policy are working at cross-purposes. And then came the kicker: fears that inflation is still running hotter than the RBA expected, her tone suggesting that the RBA might be preparing the public for the possibility that rates will stay higher for longer -- something neither homeowners nor the Treasurer will want to hear even if we are still two and a half years away from the next election. Whether Bullock's concerns are confirmed or not will be known on October 29th, when the ABS releases both monthly and quarterly inflation numbers for September. The June quarter annualised number was an encouraging 2.1%, but August's monthly figure (admittedly only partial) was a worrying 3.0%. If that trend continues, the central bank won't be loosening the reins on Melbourne Cup Day, so for anyone backing a rate cut, that might look like a long shot indeed. They might be encouraged by yesterday's September unemployment rate, which rose to 4.5%, the highest since November 2021. Although still historically tight, it's a signal that the labour market, one of the last bastions of strength in the post-pandemic recovery, may be beginning to soften. Ordinarily, a rise in unemployment might nudge the RBA toward cutting rates to prevent a sharper slowdown -- but if inflation is still above target (or even worse, rising) and with government spending still climbing, the central bank's hands will be tied. It's a classic economic tug-of-war: growth is faltering, inflation is lingering or rising, and the government's fiscal stance isn't helping either side win. For Chalmers, the optics are rough. After months of claiming Australia's economy is resilient and well-managed, the data is beginning to tell a different story -- one of slowing growth, weakening labour demand, and persistent cost-of-living pressures. The Treasurer can take small comfort in the fact that Australia is hardly alone in facing these challenges, but politically, that won't count. He's lucky the opposition is such a mess. However, in a single week, Albo has forced him to back down on a politically toxic policy, he's fended off criticism from Keating, the architect of superannuation, and listened to the central bank warn that his budget settings could be fuelling inflation. Add a rising unemployment rate to the mix, and it's no surprise Chalmers might be wishing for a quiet weekend -- perhaps one spent far from the Canberra bubble. Unfortunately, in the current environment, there's no such thing as a quiet week in economic policy. News | Insights New Funds on FundMonitors.com Quarterly State of Trend report - Q3 2025 | East Coast Capital Management 10k Words | October 2025 | Equitable Investors Investment Perspectives: Data Centres - An update is required | Quay Global Investors September 2025 Performance News Bennelong Concentrated Australian Equities Fund Argonaut Natural Resources Fund Glenmore Australian Equities Fund |
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10 Oct 2025 - Hedge Clippings |10 October 2025
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Hedge Clippings | Friday, 10 October 2025
News | Insights When Regimes Shift, So Should Portfolios | East Coast Capital Management Plans are worthless but planning is essential | Canopy Investors September 2025 Performance News Bennelong Australian Equities Fund Quay Global Real Estate Fund (Unhedged) |
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3 Oct 2025 - Hedge Clippings |03 October 2025
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Hedge Clippings | Friday, 03 October 2025 At its board meeting this week, the RBA kept the cash rate steady at 3.60 per cent - exactly as expected. In fact, so widely anticipated was the decision that it barely rated more than a passing mention in the media. What caught the RBA's attention was last week's partial monthly inflation number for August, which ticked up to 3.0 per cent - right at the top of their 2-3% target range. That result raises the prospect that the outcome for the full September quarter CPI, due out on October 29 (just in time for the Cup Day meeting), could spoil the party for homeowners still hoping for relief. News | Insights New Funds on FundMonitors.com Trip Insights: Latin America | 4D Infrastructure Renewable energy investment: gloom or boom? | Magellan Asset Management August 2025 Performance News |
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26 Sep 2025 - Hedge Clippings |26 September 2025
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Hedge Clippings | 26 September 2025 - Helicopter view of the Economy
Across the Pacific, the US economy surprised to the upside in the second quarter. Revised figures show GDP running at an annualised 3.8%, well ahead of the initial 3.3% estimate and the fastest clip in almost two years. The driver was the consumer, with spending up 2.5%, supported by an upswing in investment in intellectual property - particularly software and AI. Not all sectors pulled their weight, but financial services, information technology, and manufacturing made solid contributions. Economists, however, were quick to point out the obvious caveat: while the data looks strong, its durability is less clear. A still-uncertain trade policy environment, persistent tariff disputes, and the shadow of slowing global demand could yet put a lid on momentum, while the previous week's soft employment numbers, and the upward inflation pressures remain. Back home, the inflation story also continues to play out. The monthly Consumer Price Index (CPI) indicator rose 3.0% in the 12 months to August 2025, according to the ABS - up from 2.8% in July, and the highest annual rate since July 2024. Housing (+4.5%), food and non-alcoholic beverages (+3.0%), and alcohol and tobacco (+6.0%) were the largest contributors. The annual trimmed mean inflation rate edged down slightly to 2.6% in August from 2.7% in July, but the CPI excluding volatile items and holiday travel accelerated to 3.4%, compared with 3.2% previously. Housing inflation, in particular, reflected higher electricity costs, with the annual rise skewed by the expiry of one-off rebates. In August last year, households in Queensland, WA and Tasmania were cushioned by State Government rebates of $1000, $400, and $250 respectively. With those programs now finished, out-of-pocket costs have risen, leaving electricity prices up 5.9% year-on-year once rebates are stripped out. On a monthly basis, however, electricity costs fell 6.3% in August, mainly due to NSW and ACT households receiving the first payments of the extended Commonwealth Energy Bill Relief Fund rebates. The shifting landscape of rebates makes the data noisy, and while the ABS' monthly indicator grabs headlines, the RBA remains more focused on the quarterly numbers - with the September quarter CPI not due until the end of October. Which begs the question: what will the RBA Board do when it meets next week? Having just cut rates by 0.25% at their last meeting, was the Board a little too quick to bow to pressure from the media and the market? Our experts - Nick Chaplin (Seed Funds Management) and Renny Ellis (Arculus) - might be tempted to say, "I told you so." For now, it seems inevitable that the Board will sit on its hands until at least their November meeting. With some banks and economists starting to backtrack on their expectations of multiple cuts before Christmas, the latest inflation uptick adds an uncomfortable wrinkle. Maybe only one at the most? News | Insights New Funds on FundMonitors.com Manager Insights | East Coast Capital Management Market Update | Australian Secure Capital Fund Investment Perspectives: Riding the silver tsunami | Quay Global Investors August 2025 Performance News Insync Global Quality Equity Fund DAFM Digital Income Fund (Digital Income Class) Equitable Investors Dragonfly Fund |
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19 Sep 2025 - Hedge Clippings |19 September 2025
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Hedge Clippings | 19 September 2025
Hedge Clippings - All about the Donald! The US Federal Reserve did what markets had been anticipating - and Donald Trump has been crying out for - cutting rates by 25 bps and flagging that two more are on the way. Trump will claim the credit no doubt, and his new FED appointee Stephen Miren - direct from his day job at the White House - voted against the move, instead arguing for a .50% cut. However, Jerome Powell stuck to his guns, and it went by the numbers, 11-1 in favour of 0.25%. The move came off the back of weaker employment numbers as job growth has slowed, partly due to Trump's immigration policy, and despite stronger inflation, which Powell described as "somewhat elevated". But the complication is tariffs. While Trump won't admit it, his trade barriers are acting as a tax on consumers, pushing up the cost of goods and feeding through to inflation. So, while the Fed is easing with one hand, they're fighting a tariff policy that is tightening the screws with the other. For investors, it's a case of celebrating cheaper money while simultaneously wondering what it says about the health of the US economy - and whether tariff-induced inflation could yet bite harder. Still on Trump, across the Atlantic, the UK was busy polishing the silverware for his visit to Windsor Castle. King Charles, who has seen his fair share of world leaders, rolled out a stunningly lavish welcome. The photo-ops were dutifully staged, but one can't help speculating what was said behind closed doors once the motorcade departed. Did Charles turn to Camilla and mutter, "Thank goodness that's over", or perhaps, "Best to count the cutlery." Sadly, we'll never know. Jokes aside, markets remain in the uncomfortable space between policy and politics. Rate cuts are meant to provide reassurance, but they also underline fragility. Trade barriers are meant to project strength, but they tend to hurt the very economies that impose them, and the people who voted for them. And while royal pageantry makes for colourful headlines, investors would do well to tune out the theatre. As we often say, "let the numbers do the talking". Right now, in the US those numbers point to an uneasy mix: slowing growth, stubborn inflation risks, and the hope that monetary stimulus buys enough time for the economy to adjust. Whether it does so depends less on the pomp at Windsor, and more on how long consumers and businesses can shoulder the contradictions of easy money, and expensive trade. What's next on the local front? Albo's off to New York, where he's hoping to have a more successful time persuading Donald to see his point of view than he did this week while trying to keep PNG and Vanuatu out of the clutches of Beijing. Hopefully (not that hope is a reliable strategy), Trump, fresh from Windsor, will still have his warm and fuzzy side on show. News | Insights New Funds on FundMonitors.com 10k Words | Equitable Investors Australian Equities Reporting Season Update | Airlie Funds Management August 2025 Performance News |
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