NEWS
15 Aug 2025 - Hedge Clippings |15 August 2025
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Hedge Clippings | 15 August 2025 RBA Cuts Rates - But Is It a Victory Lap or Wishful Thinking? This week, the Reserve Bank of Australia made headlines with a 25 basis point rate cut, bringing the cash rate down to 3.60% - the third move in the current easing cycle. The decision was unanimous and, according to the Board, driven by a "further moderation in inflation" and "easing labour market conditions." Unanimous means that six members of the board changed their views since the previous meeting held just five weeks earlier, so one has to wonder if the widespread outcry and criticism following that decision had any cognitive effect on the board? Maybe we're being a touch too cynical, but scratch beneath the surface, and the decision should have been far from clear-cut, as outlined in our interview below with Seed's Nick Chaplin, and Renny Ellis from Arculus. Yes, inflation is falling - the trimmed mean now sits at 2.7%, with headline inflation at 2.1%, helped along by temporary government cost-of-living relief measures which will now expire. The RBA's updated forecasts assume inflation will continue its graceful descent, conveniently alongside a "gradual" rate-cutting path. But the real economy isn't exactly booming in the background. While the RBA noted that "private demand appears to have been recovering," it also admitted that household spending is fragile and highly sensitive to both interest rates and confidence. Wage growth is down, productivity remains poor, and unit labour costs are still elevated - hardly a recipe for sustained disinflation. However, maybe hanging on for another six weeks before the next meeting at the end of September would have been - to use a military term - "a bridge too far." And then there's the global picture. The RBA acknowledged "elevated uncertainty," especially around trade policy and international demand, while reassuring us that "more extreme outcomes are likely to be avoided." That might be optimism, or just a polite RBA way of saying "we hope the Donald doesn't blow the world economy up." The labour market, however resilient, is showing cracks - July unemployment (post meeting) came in at 4.2%, down from 4.3%, but is up (and trending up) almost 1% over the past 3 years. The Bank continues to hedge, saying conditions are "a little tight" while also noting underutilisation is low. In the end, this rate cut appears as much about buying insurance against a downturn (not to mention keeping faith with the market's expectations) as it is about celebrating inflation control. The RBA is clearly worried - but doesn't want to say so too loudly. As always, the Board said it will remain "attentive to the data" - and ready to act. Whether that means more cuts or a hasty reversal remains to be seen. Cautious optimism? Or cautious back-pedalling? We'll know more when the next round of CPI, wages, and spending data lands, ready for the next RBA meeting at the end of September. Australia's real issue is productivity, and next week's talk-fest in Canberra is sounding more and more like a PR exercise, with Albo promising not to do anything that wasn't on the election agenda - which we presume is good news for his wedding plans. Labor is assured of being in government for at least two terms, so surely they should have the confidence to be bold? Or could it be caution again? They'll have to wear responsibility and the outcome (as will the rest of us) beyond the next election, and possibly the one after that, so better they don't rock the boat. Video Expert Analysis of the RBA's August 12 Rate Decision Manager Insights | Digital Asset Funds Management News | Insights 5 Things Investors Get Wrong About Trend-Following | East Coast Capital Management 10k Words | Equitable Investors Market Update | Australian Secure Capital Fund July 2025 Performance News Bennelong Twenty20 Australian Equities Fund Seed Funds Management Hybrid Income Fund Bennelong Emerging Companies Fund 4D Global Infrastructure Fund (Unhedged) |
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8 Aug 2025 - Hedge Clippings | 08 August 2025
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Hedge Clippings | 08 August 2025 The RBA meets next Tuesday, and following the June quarter's "trimmed mean"CPI number of 2.7%, Governor Michele Bullock and her board will be under pressure to reduce rates from the current 3.85%. Expectations from economists and the market for a cut are high, although that didn't stop the RBA from sitting on its hands in July, leading to widespread disbelief, disappointment and criticism from economists, mortgage holders, and the media. For followers of Hedge Clippings, there might not have been the same level of surprise following our interview with Nick Chaplin from Seed Funds Management, and Renny Ellis from Arculus Funds Management prior to the July meeting and decision. Both unanimously agreed that the RBA should hold rates then, so we reconvened earlier today to get their current take on next week's decision and the current economic outlook both here and the US. While not 100% in agreement on all points this time around, both Nick and Renny were of the view that not only was the July decision the correct one, but neither were convinced of the need to move next week from the RBA's "slow and steady"and look-through-the-numbers approach. In particular, Renny noted the six-to-nine-month lag between the initial easing in February, and the end of government support or rebates on energy bills. Both were also unconvinced that the slight uptick in unemployment to 4.3% (seasonally adjusted) was sufficient to cause alarm, and certainly don't hold the view of some bank economists, including the CBA, that a further two, or even three, rate cuts to the 3% region are scheduled by early next year. That said, while the CPI and unemployment numbers might say hold, the politics and the media pressure will be intense! You can watch the video here. In the US, the pressure on Fed Chair Jerome Powell to cut rates continues following the weaker-than-expected July employment numbers, and downward revisions to those previously announced. A slowdown in the US economy, at the same time as a tariff-induced increase in inflation, will create further uncertainty both in the US and Australia. Meanwhile Albo has scotched any expectations of changes to economic or taxation policy at or as a result of the upcoming 3-day Economic Summit scheduled for 19th of August, giving as his reason that he will only legislate tax changes during this term based on commitments made leading up to the last election. If there's to be no change, what's the benefit of the summit - unless it is to set in place changes post the 2028 election? Changes to the GST are a long-overdue necessity (along with a revamping of the tax system as a whole that it would enable) but are a political minefield for whichever government is left to introduce them. Maybe it is time for some rare bipartisan support? Instead we have a proposal to tax unrealised capital gains in superannuation. While it may initially only affect those with super balances over $3 million, watch out, it's the thin end of the wedge. When governments (of all persuasions) get the taste of a new source of income, they rarely lose it. Remember that Federal income tax was first introduced in Australia in 1915 as a temporary measure to help fund the war effort in the First World War. Video Expert analysis on what the RBA will do next Tuesday, August 12 | FundMonitors News | Insights The enemy within | Canopy Investors Pivot, don't panic: America's next act | Magellan Asset Management News & Views: One final round of rail consolidation? | 4D Infrastructure
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1 Aug 2025 - Hedge Clippings | 01 August 2025
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Hedge Clippings | 01 August 20256 According to economists, market junkies and the media, all or most of whom incorrectly thought there would be a rate cut in July, this week's June quarter inflation number makes a rate cut of 0.25% in August a certainty. Most of them reiterated that they thought the RBA should have acted in July rather than waiting five weeks for more data. That data, in the form of the bank's preferred "trimmed mean"inflationary measure, which came in at an annualised 2.7%, continued a downward trend, and was the lowest number since December 2021. So you'd have to suggest a rate cut the week after next would be a fait accompli. Except that the RBA are, by nature, cautious folk, embodied by their stated strategy of "easing monetary policy in a cautious and gradual manner", and there remain a couple of unknowns out there. At home, there's a risk that inflation picks up in the September and December quarters as the various energy subsidies disappear. Globally, there's the uncertainty around the economic and inflationary effects of Trump's tariffs, and his "big beautiful bill". US Fed chief Jerome Powell was sufficiently uncertain overnight and so kept US rates on hold, where they've been since last December, even though he kept his options open about the possibility of a cut in September, subject to the data. Meanwhile, back to those tariffs. It appears that for the time being, Australia has "escaped"with a tax rate of just 10% on imports into the US, a far cry from Canada's rate of 35%. Of course, knowing Trump this could change, but for now it seems that Albo's strategy of keeping a low profile could be working. Then again, it might not be Albo's strategy that's keeping Australia out of Trump's firing line. Maybe the Donald has other more pressing matters to deal with. We'd hope that's the case. Webinar How to get the most from Fundmonitors.com | Register Now News | Insights Trip Insights: Europe | 4D Infrastructure The Rise of Gamified Fandom: Why Gen Z Is Reshaping the Sports Industry | Insync Fund Managers June 2025 Performance News Insync Global Quality Equity Fund Equitable Investors Dragonfly Fund Argonaut Natural Resources Fund |
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25 Jul 2025 - Hedge Clippings | 25 July 2025
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Hedge Clippings | 25 July 2025
Webinar How to get the most from Fundmonitors.com | Register Now News | Insights Investment Perspectives: Six themes impacting GREITs right now | Quay Global Investors Airlie Australian Share Fund Quarterly Update | Airlie Funds Management June 2025 Performance News TAMIM Fund: Global High Conviction Unit Class DAFM Digital Income Fund (Digital Income Class) |
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18 Jul 2025 - Hedge Clippings | 18 July 2025
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Hedge Clippings | 18 July 2025 Yesterday's release by the ABS of the June, Labour Force estimates for June which showed an increase in unemployment in trend terms to 4.2%, and to 4.3% in seasonally adjusted terms, had plenty of economists and commentators weighing into the Reserve Bank for not cutting rates 10 days ago, basically saying "I told you so!" - or more accurately trying to excuse themselves for getting their prediction wrong. For instance, the ABC news quoted one economist (presumably one of the 32 out of 36 who got the RBA's call wrong) as saying "the RBA's decision to leave rates unchanged felt misguided in the moment and has aged like milk." There were plenty of others who presumably also had their professional ego's dented, making comments along the same lines. We beg to differ on a number of counts: Firstly, in their post-meeting statement, the RBA "judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis". That information - the June quarter CPI number - is due on the 30th of this month. Again, quoting from the RBA's statement, the board will "pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market". Secondly, although the monthly unemployment number ticked up, overall, the employment market is strong. Employment growth over the past year to June is at 2%, close to the RBA's forecast of 2.1%. One month's employment data by itself is not sufficient to claim the RBA got it wrong - unless you're one of those who called it wrong, and want to justify why. Thirdly, although you wouldn't notice it from the performance of the S&P 500, the level of global uncertainty remains high from both an economic and geopolitical perspective. That's unlikely to change any time soon. So, waiting five weeks until the next meeting on the 12th of August seems pretty logical - and cautious. Even if the quarterly CPI does come in lower than - or as expected - the RBA isn't - and shouldn't be - in the guessing game. That's for the punters - and economists. While on the subject of forecasting and getting things wrong, analysis of the performance of the 17 peer groups in AFM's database clearly shows that those who thought cryptocurrencies and digital assets were a worthless fad a few years ago have certainly been proven wrong: (Source Fundmonitors.com. Average net returns of all funds in each peer group, assuming reinvestment to June 2025.) Aside from the obvious outperformance of Digital Assets, led by DAFM's Digital Income Fund Bitcoin Class, which has provided investors 91.10%, 95.09% and 83.01% over the past 1, 2 and 3 years, the other interesting point to note is the reasonably consistent performance of each peer group, particularly over 1-3 years. Less so over 5 and 7 years, which include Covid-affected markets. Headline figures such as these also obscure the extreme range of many other underlying funds' performances, and in many cases the volatility of individual funds' returns. For instance, the Equity Long, large-cap global group produced an average return of 16.77% over 12 months to June, with performances ranging from 96.67% down to -6.11%. 3-year returns among the same peer group ranged from +38.76% down to +3.14%. Meanwhile, while 1-year returns can sound attractive, all offer documents will advise investors to take a 5-7 years view when investing. High returns are obviously attractive, but by themselves can mask drawdowns and volatility, which often don't match an investor's risk profile or tolerance. Diversification is one potential solution, either across asset classes or peer groups. We spoke at length (25 minutes) this week with two managers in the alternative space, Simone Haslinger from East Coast Capital Management, a trend following futures strategy, and Clint Maddock from Digital Asset Funds Management. You can watch the video here. Webinar How to get the most from Fundmonitors.com | Register Now News | Insights Insights into the Alternatives Sector | Fundmonitors.com Trade deals and stimulus: the key drivers for stock returns | Magellan Asset Management 10k Words | July 2025 | Equitable Investors Market Commentary | Glenmore Asset Management June 2025 Performance News Bennelong Emerging Companies Fund Seed Funds Management Hybrid Income Fund Bennelong Long Short Equity Fund |
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11 Jul 2025 - Hedge Clippings | 11 July 2025
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Hedge Clippings | 11 July 2025 According to the AFR, 32 out of the 36 economists that they surveyed prior to this week's RBA board meeting got it wrong. That's not very encouraging if you're making decisions based on their advice, and certainly not good for your bonus if you were in a bank's dealing room trading or relying on the outcome. We suspect that privately there were red faces among the 32 wrong-footed economists, and some angry ones on their banks' respective dealing desks. At the risk of saying "we told you so", they should have listened to our video in last week's Hedge Clippings, when we asked Seed Funds Management's Nick Chaplin, and Renny Ellis from Arculus Funds Management, their opinion, and most importantly, what they would be doing were they in Michele Bullock's chair? Their unanimous answer was "sit tight", and backing it up with sound logic and reasoning. We asked them again after the RBA's board had voted 6-3 in favour of holding the line, and they're still not fully convinced there's a rate cut required in September, even though they believe there's a better chance next time around if there's more clarity on the numbers - particularly the June quarter's CPI due on 30th of July. You can see both interviews below. So how come so many experts - and it seems journalists - got it wrong? The journalists can be forgiven on two counts: firstly, they were led astray by the experts, and secondly, judging by some of the questions directed at Michele Bullock after the meeting, they were disappointed that their own mortgage repayments weren't about to be reduced. Bullock and her board received some unjustified criticism (implied or otherwise) at the RBA's press conference, as she patiently explained the board's thinking, when she could have been much more direct in her responses. If her critics had taken the time to analyse the "RBA speak"in the board's post-meeting statements over the past six to 12 months, it would have been pretty clear. Let's take one of the RBA's big concerns - "Uncertainty"- a word used over 50 times in their statements over the past 12 months, and a headline in bold, with an explanation to itself in every monetary policy statement for at least the past year. That leads one to conclude - if you hadn't already guessed - that central bankers don't like uncertainty. Next, take Inflation. The RBA wraps up every statement with words to the effect "inflation is (or remains) the priority", sometimes also adding "full employment"into the mix. Again, how come everyone (or at least the 32 out of 36 economists in the AFR survey) focused on the new monthly inflation number for June of 2.1%? Ignoring the fact that the monthly data uses an incomplete data set, and the more reliable quarterly number for March was 2.4%, and also ignoring the fact that the RBA prefers the quarterly trimmed mean number, which came in at 2.9%. It seems that the RBA is comfortable with the current employment outlook, at least as far as their dual mandate of balancing inflation and full employment is concerned. But full employment in itself is potentially inflationary, and central bankers, by their nature, are not risk takers. With only three weeks to wait for more reliable June quarter inflation numbers, and five weeks before their next board meeting, they judged they could afford to wait. Will things be less uncertain by then? Possibly - in fact, with the exception of the CPI number, probably not. There is a complete lack of certainty over the eventual tariff numbers that will come out of the White House, and even in the unlikely event they are set in stone, a lag as the world - including the FED and Jerome Powell - waits to see how much damage they will or won't wreak on both the USA's and their trading partners' economies. Although we don't think the Donald thinks of other countries, even allies, as partners. More like adversaries who've been "ripping off"America for decades. News | Insights Expert Analysis of the RBA's rate decision | FundMonitors.com Expert analysis on what the RBA will do next Tuesday, July 8 | FundMonitors.com News & Views: Oil spikes and geopolitics - How does Global Listed Infrastructure fare? | 4D Infrastructure Market Update | Australian Secure Capital Fund June 2025 Performance News Bennelong Australian Equities Fund Glenmore Australian Equities Fund 4D Global Infrastructure Fund (Unhedged) Bennelong Concentrated Australian Equities Fund |
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4 Jul 2025 - Hedge Clippings | 04 July 2025
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Hedge Clippings | 04 July 2025
News | Insights Expert analysis on what the RBA will do next Tuesday | FundMonitors.com 10k Words | June 2025 | Equitable Investors May 2025 Performance News |
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27 Jun 2025 - Hedge Clippings | 27 June 2025
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Hedge Clippings | 27 June 2025
Webinar How to get the most from Fundmonitors.com News | Insights Why invest in infrastructure | Magellan Asset Management The return you see, the risk you don't | Canopy Investors May 2025 Performance News Insync Global Capital Aware Fund TAMIM Fund: Global High Conviction Unit Class |
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20 Jun 2025 - Hedge Clippings | 20 June 2025
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Hedge Clippings | 20 June 2025
Webinar How to get the most from Fundmonitors.com News | Insights Market Commentary | Glenmore Asset Management Investment Perspectives: Thinking about bonds.....and the local school play | Quay Global Investors May 2025 Performance News Bennelong Concentrated Australian Equities Fund 4D Global Infrastructure Fund (Unhedged) Bennelong Twenty20 Australian Equities Fund |
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13 Jun 2025 - Hedge Clippings | 13 June 2025
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Hedge Clippings | 13 June 2025
In the meantime, it certainly feels more dangerous, and even the US is shying away from becoming actively involved in the air or on the ground at this stage. Hopefully, that lessens the chances of escalation. Meanwhile, the immediate effect on financial markets was an inevitable after-market fall in US stock futures, and an almost 10% spike in crude oil prices, and a smaller increase in gold, now not far off US$3,500 per ounce. Possibly of greater risk to US markets is the potential for the demonstrations against Trump's deportation orders and subsequent deployment of the National Guard and the Marines to escalate over the weekend, and spread to other states and cities. By all accounts, Trump is itching for a showdown at home, while avoiding one overseas. Whether either or both of the above crises is sufficient to scupper Albo's chances of a meeting with Trump to discuss either tariffs, or the US review of AUKUS on the sidelines of the G7 leaders' meeting in Canada remains to be seen. The Australian government's sanctioning of two right-wing members of Israel's cabinet against the wishes of the US won't have helped his chances of success. Meanwhile, looking at May's fund performance (which we accept is looking in the rear-view mirror) shows a positive month, particularly by the various equity peer groups. While the ASX200 Total Return was up 4.2% for the month, and the S&P500 up 6.29% (taking their 12 month returns to 13.36% and 13.52% respectively), this is not surprising, but there were 20 or more funds with double-digit returns for the month, and close to 60% of equity based funds out performed the ASX200, while 94% of all funds produced positive returns for the month, and 91% over the past 12 months. A selection can be found below. Webinar How to get the most from Fundmonitors.com News | Insights Market Update | Australian Secure Capital Fund Canopy Highlights - insights from our global research | Canopy Investors May 2025 Performance News Bennelong Australian Equities Fund |
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