NEWS
24 Apr 2025 - Hedge Clippings | 24 April 2025
|
|
|
|
Hedge Clippings | 24 April 2025 The Election (yawn!) Amid one of the least inspiring election campaigns from either side of politics, along with a more negative and combative approach from both the candidates and some of their supporters, the polls are pointing to what seemed an unlikely outcome: An Albanese victory just 12 to 18 months since his divisive Voice referendum. Albo's been helped by what appears to be an irresponsible showering of benefits not only to key demographics (e.g. Students with HECS debts, and first home buyers), but also to all and sundry in the form of electricity rebates. It seems that most voters couldn't care less about the government deficit we'll all have to pay for eventually, as long as individually they don't have to pay for it now. As Paul Keating once reminded us, "in the race of life, always back self-interest, at least you know it's trying". The televised debates have been indecisive at best, and worse still, boring and petty, with plenty of lies thrown in. Don't let the truth get in the way of a good story, and sling the mud, knowing some will stick. But the person who seems to be helping Albo back to the Lodge more than anyone seems to be none other than Peter Dutton, with on-again, off-again and delayed policy announcements, leaving him open to claims that he's either hiding something, or hasn't decided yet. He's had three years to prepare, but was perhaps waiting for Albo to trip up - or just fall off the stage. Figures released this week by the ABS indicated that maybe Albo and Chalmers do know where the handouts are coming from. Total tax revenue for the 2023-2024 financial year was $801.7 billion, an increase of 6.1% over 2022-23. Over the same period, CPI inflation rose 3.8%. To be fair, the Commonwealth's take was "only" up 5.1%, with the states the major culprits - Victoria (not surprisingly) leading the charge, +14.2%, followed by NSW, +11.8%, and South Australia +11.3%. At least you know one source of the cost of living crisis - governments of all persuasions were taking more of your hard-earned, with Victoria's increase almost 4 times the rate of inflation. Remember this on the eve of ANZAC Day: Federal income tax was first introduced in 1915 as a temporary measure to help fund the war effort in the First World War. If you think that's a worry, wait until the government broadens the net on taxing unrealised capital gains, surely one of the more ridiculous proposals, even for this government. Fund Returns: March has recorded one of the more extreme spreads of fund returns (60%) that we have seen since the GFC, with monthly returns ranging from +25.97 % through to -35.09%. This has led to the perennial debate between active vs. passive investing, with proponents of the latter (generally the index funds themselves) highlighting negative returns from their active peers over relatively short time frames. For the record, the March, Year to date (January - March, basically "Trump months") and 12-month averages are as follows: Assuming index or passive funds generally track their respective index, and the above numbers are averages across a total of 900 funds, the key takeaways are as follows:
For example, the top performing Australian Equity fund (Regal's Australian Small Companies Fund) has returned 20.18% since its inception in February 2015. Over 7 years, it has returned 14.99% per annum, and 25.79% over 5 years. In March 2025 it was down 14.53%. That level of volatility does not suit all investors, but there are plenty of funds providing 8-12% returns or more outside the volatile equity space. Research is the key! Finally, on ANZAC Day eve, we'd like to remember those no longer with us, those left behind, and those who continue to serve. Lest we forget. News & Insights Quarterly State of Trend report - Q1 2025 | East Coast Capital Management Are we there yet?! | 4D Infrastructure March 2025 Performance News Bennelong Australian Equities Fund Bennelong Concentrated Australian Equities Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
17 Apr 2025 - Hedge Clippings | 17 April 2025
|
|
|
|
Hedge Clippings | 17 April 2025 You'll probably be pleased to hear that this week's Hedge Clippings will be largely a "Trump Free Zone". Partly on account of the fact that he's been unusually quiet this week, and partly because there's not much more to add - yet - although there's plenty still to play out in his tariff war with the world in general, and China in particular. If that's the good news, the bad news is that in case you haven't noticed, there's an election on in Australia, and the major parties, plus the Greens, have been falling over themselves to shower various demographics and interest groups with financial enticements, which, irrespective of who wins, they (or rather we) won't have the money to pay for. The Department of the Treasury (Treasury) is forecasting a deficit of A$28.3 billion for 2024-25, compared to $A18.8 billion in the mid-year economic and fiscal outlook (MYEFO) released in December. This is expected to increase to $46.9 billion in 2025-2026, and $38.4 billion the year after, for a 3-year total of $112.2 billion. Hedge Clippings isn't sure if the election bribes (sorry, promises) have been costed into the above numbers, but it is also not clear if the revenue side has allowed for the uncertainty, and potential recession, thanks to the current on-again/off-again trade policy from you know where. What's really disappointing about the offers from both parties, but particularly from Albo, is the unashamed handouts to all, or various sections of the electorate in the name of "cost of living relief" most of which - much like the energy rebates currently in place - are temporary. There's no big picture thinking, and apart from tax benefits, which will buy you two coffees a week if you're lucky, neither party is looking to fix the underlying problem of an outdated taxation structure. Remember the Henry Tax Review? Most voters don't or won't, as it was 15 years ago, and of course Kevin '07 made sure Henry's terms of reference excluded looking at the GST. And if, like us, you have been underwhelmed by what's on offer - let alone concerned about the prospect of a minority government with the Greens holding the balance - then last night's leaders' debate was totally uninspiring. Both Albo and Dutton dodged and weaved, failing to answer questions not once, but in some cases three times, more concerned it seems with not putting their foot in it - or in Albo's case falling off the stage. Most frustrating from both sides is their approach to the housing crisis, which only seems to focus on increasing demand with incentives to (mainly) first home buyers. Forget whether it's a 5% deposit, a government guarantee, or syphoning $50 grand out of your super, both will increase the cost of housing. That might be good news for existing homeowners, but demand is not the issue or cause of the housing crisis, supply is. Australia as a nation, particularly given a growing population driven higher by immigration, hasn't been building enough new housing for a decade. For instance, in the December quarter of 2024, total dwellings commenced totaled just under 42,000 - a fall of 4.4% over the quarter. This report from the Master Builders Association, dated October 2024, notes the worst year for new home building in 10 years. The problem for the government, whichever or whoever is successful on May 3rd, is that if they do increase supply, they face a series of problems: Firstly, it is not a tap that can be simply "turned on". Secondly, the labour and trades shortage in the building sector will drive up inflation, and finally, if the supply imbalance really is fixed (unlikely as that may seem), then economics 101 tells you that existing house prices will fall. While that might seem far-fetched, it certainly won't please three-quarters of the population who do own their own homes, with or without a mortgage. Nor will it please the banks, who have lent funds on a 5 or 10% deposit. Neither will it please Albo and Dutton themselves (and a whole raft of other politicians) who are heavily exposed to the residential property market themselves! And for something completely different, the news this week that five mega-rich and overly indulged American women, including Katy Perry (who I'm reliably advised is somewhat of a pop star) spent ten minutes in space this week aboard a rocket owned by Geoff Bezos. When interviewed on touchdown in a skin-tight space suit, specially designed to make sure her underwear didn't show, she came up with this: "You never know how much love is inside of you, like how much love you have to give, and how loved you are until you launch". Really deep and meaningful! Have a Happy Easter! News & Insights Manager Insights | Canopy Investors Trump's Tariffs: A game changer or investment opportunity? | Magellan Asset Management Investment Perspectives: Not another US recession | Quay Global Investors March 2025 Performance News Argonaut Natural Resources Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
11 Apr 2025 - Hedge Clippings | 11 April 2025
|
|
||||||||||||
|
Hedge Clippings | 11 April 2025
News & Insights Manager Insights | Digital Asset Funds Management Market Update | Australian Secure Capital Fund March 2025 Performance News Bennelong Emerging Companies Fund 4D Global Infrastructure Fund (Unhedged) Glenmore Australian Equities Fund Bennelong Long Short Equity Fund Skerryvore Global Emerging Markets All-Cap Equity Fund |
||||||||||||
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
4 Apr 2025 - Hedge Clippings | 04 April 2025
|
|
|
|
Hedge Clippings | 04 April 2025 It's difficult to add anything new to the commentary about Donald Trump's "Liberation Day" that hasn't already been said or written. Outside his immediate circle of acolytes, seemingly led by Commerce Secretary Howard Lutnick, we have struggled to find any positive commentary from any corner of the world, (including the economic powerhouse of Norfolk Island) or in any language that supports Trump's upending of the world's economy. Except two: Russia and North Korea. Go figure? Ronald Reagan and every other US president since WWII would be turning in their grave. To be fair, although Norfolk Island was singled out in Trump's Rose Garden ramble, by the time the official list was released, someone had realised there's stupid, and then there's plain dumb, and thus Fletcher Christian's descendants were spared - yet again. One assumes that in due course the results of Trump's "genius" (his words, not ours nor it seems anyone else's) will come back to bite him where it hurts most - his ego and the ballot box. Unfortunately his self esteem/adoration is such that he probably won't notice when it does, and in spite of his best efforts, a third term seems out of reach. Not that the US constitution will stop him from trying. So Australia, and the rest of the world, (except as above, Russia and North Korea) are left to try to decide how to respond to the US directly, and, at the same time, try to fathom how every other country's response will change the overall global economic landscape. One factor to consider is that Trump is obsessed with the trade of goods, where the US operates a deficit. In today's technological and service orientated world, the US has a services trade surplus - admittedly not sufficient to even the score, but he's quiet on that front. Trump will try to pick off individual targets. Maybe the world's best reaction is to coordinate their responses? It worked in 1939 (just, after a shaky start) when dealing with another predictably self-obsessed adversary, even if it did take the US a couple of years to join the fray, and only then when they had no other option, or possibly saw the tide turning. In the meantime, everyone else - along with the RBA - is left to ponder their reaction in uncertain times. For the record, if you can remember as far back as last Tuesday, the newly formulated board left rates on hold on April Fool's Day, just before Trump's Liberation Day. However, they did mention "uncertain" no less than five times, as well as devoting more than 50% of their media release to a section on the "Uncertain Outlook", before returning to the more familiar ground of "returning inflation to target" being the priority. Markets, and as a result, many fund performances, were negative in February and March, and April is certainly heading that way. We spoke with Euree Asset Management's Winston Sammut just before going to press, (see video below) and it is fair to say that with all his experience, he views the immediate outcome as "uncertain" (that word again) but not overly positive. News & Insights Manager Insights | Euree Asset Management Making sense of the banking sector | Airlie Funds Management |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
28 Mar 2025 - Hedge Clippings | 28 March 2025
|
|
|
|
Hedge Clippings | 28 March 2025 All of a sudden, the phoney war is over and the real campaign has begun. Tuesday night's 2025-26 Federal Budget has been handed down, and as expected it turned into a classic pre-election cash splash. Prime Minister Anthony Albanese then made the trip to Government House first thing this morning to call the federal election for 3 May - a five-week sprint to polling day, punctuated by the Easter and Anzac Day break. While Treasurer Jim Chalmers insists his budget is about "building a better future," it's widely seen as a blatant vote-buying exercise, stuffed to the gills with cost-of-living sweeteners. After running two rare budget surpluses, Chalmers has now opened the purse strings: the deficit is expected to hit $27.6 billion this year and $42.1 billion next year. Fiscal purists may wince, but most punters will shrug - those are just mind-boggling numbers on paper, far removed from the average voter's hip pocket. And hip pockets, of course, are exactly where this budget aimed. Sure enough, Tuesday's budget rolled out a Santa's sack of energy rebates, rent assistance, cheaper GP visits and PBS medicines. In other words, the usual household budget pleasers. A last-minute surprise - $17 billion in income tax cuts - gave Labor a rare chance to campaign on tax relief and left the Coalition looking awkwardly flat-footed. Cue Peter Dutton's budget reply, which promised to outbid Labor with a halving of the fuel excise and a vow to repeal those very tax cuts. A strange role reversal for the Liberal Party, but we are in pre-election auction season, where handouts come first and policy coherence later - if ever. Talk of real reform (say, fixing the tax system) didn't even get a look in. Meanwhile, speculation is growing that Albanese may not remain Labor leader for long. Dutton didn't miss the chance to stir the pot, suggesting Jim Chalmers is circling. The Treasurer, who's been on a media blitz since Budget night, certainly isn't shying away from the spotlight. Whether he's positioning himself for a leadership change or just basking in the glow of a very political budget, the message is clear: he's ready, just in case. Markets, for their part, aren't overly fussed. Pre-election budgets tend to play well with voters but don't rattle investors - especially when both sides are throwing money around and avoiding anything too radical. Inflation could get a nudge, but the RBA likely stays on the sidelines for now. In short: more of the same. If all of this seems a bit familiar, that's because it is. Still, there's comfort in a local political drama that, for once, isn't dominated by overseas chaos. Enjoy it while it lasts - not only because next Tuesday is April Fools Day, but because Donald Trump is due to announce his next round of tariffs. News & Insights Manager Insights | Altor Capital on the Business of Sport The future of healthcare: Trump, policy and innovation | Magellan Asset Management Market Commentary | Glenmore Asset Management February 2025 Performance News Equitable Investors Dragonfly Fund Insync Global Quality Equity Fund Insync Global Capital Aware Fund DAFM Digital Income Fund (Digital Income Class) |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
21 Mar 2025 - Hedge Clippings | 21 March 2025
|
|
|
|
Hedge Clippings | 21 March 2025 All of a sudden, next Tuesday's Federal Budget is upon us. No doubt Jim Chalmers was hoping the Federal election would be sufficiently early so he would not have to go through the motions, but the weather patterns in Queensland put paid to that. So unless Albo, who has previously confirmed next Tuesday evening as budget night, changes his mind over the next 3 or 4 days and pays a visit to the Governor General, that's when it will be. While it might be a bit of a phoney budget, the logic of holding it pre-election is quite simple, even if Chalmers has to 'fess up to a deficit closing in on $30 bn. December's Mid-Year Economic and Fiscal Outlook (MYEFO) predicted deficits of $26.9 bn for this financial year, and $143.9 billion from now until 2027-28. Most punters will ignore that, firstly as the figure's too large for them to comprehend, and secondly, it doesn't immediately and directly hit them where it hurts, in the hip pocket. What Jim's budget speech allows is the announcement of a whole range of cost-of-living relief measures, and we've seen and heard a few of them already: Energy bill relief, support for renters, an expansion of bulk-billed GP visits, and cheaper medicines under the PBS, etc., etc. In other words, directly aimed at the family or household budget. This will be the start (as if it hasn't been going on for a while already) of the election campaign build-up, even before the traditional pork barrelling in specific electorates takes place. You can only expect handouts, however - tax reform, which is desperately required is unlikely to get a mention. Should Albo spring a surprise and pre-empt the Budget, the government will be limited to releasing a Pre-Election Economic and Fiscal Outlook (PEFO), independently prepared by the Treasury and Department of Finance. Apart from being independent, it will have none of the theatre and spin potential of Chalmers bringing a whole host of hand-out goodies out of his bag on the night. It's a tight election schedule however, with the deadline of 17th May, and with school holidays, Easter and Anzac Day all falling in between. If all of this seems pretty tedious for a Friday afternoon, it does have one benefit, namely (hopefully) taking Trump off the front page for a second. Sadly, that's unlikely to last for long - if at all. News & Insights Manager Insights | Insync Fund Managers Manager Insights | Seed Funds Management Sports Investing: A Rising Global Opportunity | Altor Capital Investment Perspectives: Share based payments are an expense! | Quay Global Investors February 2025 Performance News Bennelong Emerging Companies Fund Quay Global Real Estate Fund (Unhedged) Skerryvore Global Emerging Markets All-Cap Equity Fund Bennelong Twenty20 Australian Equities Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
For those of us who might have previously been unaware of noted US economist, Hyman Minsky (1919 -1996)...
14 Mar 2025 - Hedge Clippings | 14 March 2025
|
|
|
|
Hedge Clippings | 14 March 2025
News & Insights New Funds on FundMonitors.com Minksy, the X-Factor and what to watch | PinPoint Macro Analytics DeepSeek R-1: A Game-Changer? | Insync Fund Managers Investing in Technology | Magellan Asset Management February 2025 Performance News Bennelong Australian Equities Fund 4D Global Infrastructure Fund (Unhedged) Bennelong Concentrated Australian Equities Fund Bennelong Long Short Equity Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
7 Mar 2025 - Hedge Clippings | 07 March 2025
|
|
|
|
Hedge Clippings | 07 March 2025 Firstly, a correction: Last week's Hedge Clippings, where we likened Donald Trump and Elon Musk to Lewis Carroll's twins, Tweedle Dum and Tweedle Dee, was half on the mark, and half off it. Seemingly no sooner had we made the connection, than what had been a planned photo/PR opportunity in the Oval Office with Ukraine's Volodymyr Zelenskyy degenerated into a now infamous example of global diplomacy, Donald style. Very Tweedle Dum, although not that dumb, as it now appears that Zelenskyy is now going back for more - or at least more munitions - even without security guarantees - which given they would be up to Putin to honor, might not be worth much anyway. As Tweedle Donald said, "You don't have the cards". Where we were off the mark was putting Musk in the Tweedle Dee role. JD Vance stole that part - and spectacularly. For those not looking forward to the remainder of Trump's Term 2 as POTUS, watch out when, or if, Vance takes over, either in four years' time, or possibly before that if Trump doesn't make it. Turning to the local news, this week saw a glimmer of hope for Albo's re-election chances in the form of an uptick in Australia's GDP figures, rising 0.6% in the December quarter, its highest level since December 2022, and 1.3% over the year. Slightly less encouraging were the GDP per capita figures, which only rose 0.1%, an improvement at least, but still in negative territory at -0.7% for the year. Finally, an interesting speech by the RBA's Andrew Hauser who as we've mentioned before manages to upend the traditional view of a central banker by being both smart (generally a pre-requisite for the job) and entertaining at the same time. Hauser explained and expounded the VACU view of the world - Volatile, Uncertain, Complex, and Ambiguous. Hauser was talking about a general approach, but he might also have been describing the first six weeks of Tweedle Donald's second term. In fact, he was explaining the difficulty the RBA has in getting its monetary policy settings right, which in the past had focused on treading the "narrow path" as Philip Lowe used to put it. He rightly explained that the RBA, having put rates up more slowly, and less than the rest of the world, it was only correct that they had started the easing cycle behind the others as well. In his and his colleagues' eyes they have achieved what has been asked of them - trimmed mean inflation averaged over the past six months back in their preferred 2-3% range, and with employee participation in the workforce at 64.5% - a record level. Congratulations? Maybe, but then of course his words of caution: "Central bankers are paid to worry, not celebrate" particularly given the VACU world in which we live. Number one worry is global trade policy - Volatile, Uncertain, Complex and Ambiguous - courtesy of Tweedle Donald, although Hauser was too polite to put it that way, as he cautioned that maybe markets weren't fully factoring the uncertain risks ahead. Number two risk on Hauser's agenda was the level of spare capacity in Australia's strong labour market, and the potential for inflation to head upwards again if the current low (record) unemployment level falls further as economic activity picks up. This is where the RBA's crystal ball falls into the Uncertain, Complex and Ambiguous categories - and possibly all three at the same time. So welcome to the new normal of VACU - into which we'll add another U - the uncertainty of the soon to be announced election. News & Insights Manager Insights | East Coast Capital Management 2024 Responsible Investment and Stewardship Report | 4D Infrastructure 10k Words | February 2025 | Equitable Investors January 2025 Performance News Equitable Investors Dragonfly Fund
February 2025 Performance News |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
28 Feb 2025 - Hedge Clippings | 28 February 2025
|
|
|
|
Hedge Clippings | 28 February 2025 This week we're going a bit off-piste. Trump or Musk fans might not want to read further. Back when Hedge Clippings was still in short pants (a long, loong time ago!) he had a favourite Aunt who used to recite Lewis Carroll's Alice in Wonderland, and the two characters that come to mind in particular are Tweedledum and Tweedledee. For those less familiar with Carroll's work, T'dum and T'dee were two near identical characters, reminiscent of the current day Tweedle'Donald, and Tweedle'Elon. For the musically inclined, Bob Dylan even recorded a song entitled Tweedle Dee and Tweedle Dum, (possibly not my favourite Dylan track) on his appropriately entitled 2021 album, Love and Theft:
Webinar Making the most of FundMonitors.com - "Simply Better Research" | FundMonitors.com News & Insights Starting Points Matter | Airlie Funds Management Market Commentary - January | Glenmore Asset Management January 2025 Performance News Insync Global Quality Equity Fund TAMIM Fund: Global High Conviction Unit Class |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
21 Feb 2025 - Hedge Clippings | 21 February 2025
|
|
|
|
Hedge Clippings | 21 February 2025 This week's rate cut will forever show the market consensus was correct, however all the comments coming from the RBA, both in their official post meeting media release, and in interviews and comments since, suggest it was a close run thing. As Deputy Governor Andrew Hauser said on Bloomberg TV, while there was a clear-cut consensus among the board members, the decision was by no means clear-cut, and neither was the decision.
PinPoint's analysis goes on to show that during the first year of an easing cycle, and as cuts work their way through the economy, the following typically occur:
Full details and Pinpoint's Chart pack can be accessed here. News & Insights 2024 Year in Review | FundMonitors.com What happens after the first RBA rate cut? | PinPoint Macro Analytics Investment Perspectives: The investment case for Safehold | Quay Global Investors Magellan Global Quarterly Update | Magellan Asset Management January 2025 Performance News Argonaut Natural Resources Fund Bennelong Twenty20 Australian Equities Fund Seed Funds Management Hybrid Income Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
