A report in the latest Australian Banking & Finance this week quoting the Australian Bureau of Statistics report on household wealth and distribution in 2012 showed that just over 20% of Australian families can now claim to have household net worth of over $1 million. This was up from 14.6% eight years ago, while those worth less than $50,000 have fallen from 14.6% to 12.7% over the same period.
Based on my simple logic this should equate to there now being more people with more wealth, and less people with less. However I have no doubt there are plenty of details within the overall numbers to hold true to the adage of lies, damn lies and statistics. The headline numbers also seem to contradict the general anecdotal evidence in the community, given that eight years ago there was a raging bull market, the resources boom was building a head of steam, and the GFC in 2008 was yet to hit.
Household net worth averaged $728,139 in FY2012, down 4.1% over the previous 2 years on an inflation adjusted basis, while gross household assets averaged $858,200 with the average value of the home accounting for 43% of this, and investment property a further 15% for a total of 58%.
These numbers tally with the results of a report by consultants WealthInsight reported in Alan Kohler's Eureka Report showing that those Australians with $1 million or more of investable funds (as opposed to the total value of household assets in the ABS numbers) have a total of just 28.8% in property of one sort or another.
Superannuation was the second largest household asset in the ABS figures at 15.4%. Also released this week were figures showing the average contribution to superannuation had fallen significantly in 2013, presumably as a result in a reduction to $25,000 in the maximum permissible contribution.
Given the increasing proportion of the population at or approaching retirement age, when their taxation contribution reduces at the same time as the cost of their medical and aged care increases, I can't fathom why all politicians wouldn't want to increase retirees' financial self reliance through superannuation savings.
Sooner or later one treasurer or the other is going to have to bite the budget bullet: The government either needs to spend less (i.e. reduce handouts where not justified) or increase income (otherwise known as taxation) whether the electorate like it or not.
Most households have worked it out. Why can't the politicians?
Some specific results received this week include the following Performance and News Updates:
The Pengana Australian Equities Market Neutral Fund is notable for its low volatility relative to the ASX 300 and negative correlation with the same Index. Annualised standard deviation since inception in September 2008 is 8.1% p.a. compared to 15.58 for the Index while correlation is -0.04. The Fund returned -0.5% during July and has returned 8.94% since inception with the risk and return data indicating the Fund is meeting its strategy goals.
Insync Global Titans Fund returned 3.87% during July and 23.60% over the last 12 months. The Fund has an annualised standard deviation of 8.71% pa as compared to the ASX 200 Accumulation number of 11.74% pa over the last 36 months. Returns over the same period were 14.16% pa with the Index at 8.79% showing that the Fund is continuing to deliver a return and risk profile in line with its strategy.
Updated Fund Reviews were also completed on the following funds this week:
The Bennelong Long Short Equity Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with a ten year track record and annualised net returns of over 20% pa. This very high rate of return has seen $100 compound up to $764 since inception in January 2003.
Optimal Australia Absolute Trust has a long/short equity strategy, typically has a low but variable net market exposure comprising 40 to 65 stock broadly selected from within the ASX200. The Fund is very risk aware and this is borne out in the risk data - approximately 84% of monthly performances have been positive with the largest drawdown only -1.38%. Annualised volatility is 3.66% as compared to 15.58% for the ASX 200 Acc since the Fund's inception in September 2008.
The Aurora Fortitude Absolute Return Fund has an 8 year track record investing in ASX listed equities with a strong focus on risk. The Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles. Strong use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. The success of this strategy is shown by the fact that over 87% of monthly performances have been positive and most notably, the Fund did not record any negative months in 2008, with the largest drawdown since inception in March 2005 of -2.09%.
For something completely different - I've received many remarkable nature photographs over the years but this photo of a nesting Falcon is perhaps the most remarkable Nature shot that I've ever seen. I hope you enjoy it as much as I did. Nature is truly breathtaking!
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
