This week's Clippings is going to attempt to multi-task, (not your scribe's strongest point) or at least cover a number of different topics. Feedback (positive or negative) is welcome.
Firstly AFM's Research Manager, Sean Webster has taken a look below the surface of yesterday's poor employment numbers (6.4% against the market expectation of 6.1%) which helped trigger a fall of almost 1c in the Aussie dollar, and led to further expectations of the RBA easing official rates by Christmas. RBA Governor Glen Stevens came out today and tried to pour cold water on that view, but it would certainly seem that any rate rise might be further off than previously expected.
Sean's piece, 'Lies, damn lies and statistics' is not suggesting there was any fiddling of the books, just that the ABS has made some significant changes to its data collection and survey methodology, and yesterday's numbers are the first example of the resultant numbers. For those wondering why the numbers were such a surprise it makes excellent reading.
What might also have impacted the unemployment rate was the never ending budget saga, which three months after budget night is still being debated in the media at least, as debate in parliament has been interrupted by Federal MP's winter overseas holidays (apologies, "fact finding tours"). Business hates uncertainty, almost as much as a bad budget. With the final budget outcome yet to be determined by negotiation with the minor parties in the Senate, including the uncertain Clive Palmer, business confidence and patience might be running as low as Treasurer Joe Hockey's.
Elsewhere Sean also unearthed this excellent article entitled The Great Fee Debate - Resetting Manager and Investor Expectations. If there's one subject guaranteed to generate ill feelings, let alone a debate, it is the quantum and structure of fund manager's fees. We have raised this issue before, and it was front and centre in David Murray's interim FSI report a few weeks ago, but Jonathan Rochford of Narrow Road Capital has some excellent points to make - most of all his number one factor when choosing a manager: Integrity. At AFM we often ask ourselves a rhetorical question when speaking with managers: Do they see managing other people's money as an opportunity, or a responsibility? Only after that can one analyse the value for money the Manager is providing.
Finally ASIC has today released its clarification on how it will apply the wholesale investor test to self-managed superannuation funds (SMSF's). As ASIC says: "This has long been an area of ongoing legal uncertainty" (and therefore probably quite a lucrative area of advice for the legal fraternity) where SMSF's were not necessarily judged to be wholesale investors even though their trustees were.
ASIC's revised approach can be viewed here, and as the previous approach (QFS 150) was issued ten years ago, and the SMSF sector has since grown dramatically to number over 500,000 funds, representing over one third of Australia's retirement pool by value, the clarity will be welcomed. As we read it, ASIC's new approach means that it is the Trustee's status as a wholesale investor which determines the wholesale status of their super fund. Maybe we should get a legal opinion on that. Or two just to be sure.
Specific results received this week include the following PERFORMANCE UPDATES:
Microequities Deep Value Microcap Fund recorded a return of 5.94% during July and 34.46% for the previous twelve months.
Returning a performance result of 3.20% in July, the Monash Absolute Investment Fund is now at 20.24% over the prior year with a volatility of 8.62% in line with the Index.
AFM are now accredited by the Financial Planning Association of Australia to issue CPD points for FUND REVIEWS.
This week's new reviews include:
Optimal Australia Absolute Trust, Aurora Fortitude Absolute Return Fund and also Insync Global Titans Fund
Read the most recent Fund Review for any of our research clients, and then answer 5 straightforward questions, these are presented in multiple choice format. An 80% or more success score will provide 0.5 CPD points, with a certificate provided as proof of completion. There is no charge for this service.
Tuesday 12th August 2014, from 12pm to 4.30pm - ARRIA is hosting a round table discussion in Sydney, providing a valuable opportunity to meet with like-minded advisers. No cost to participants. Also in Melbourne on Tuesday 26 August and Brisbane on Tuesday 9 September.
Wednesday 13 August 2014 - Perth and Thursday 14 August - Melbourne: Financial System Inquiry - Public Forums to raise issues and discuss the inquiry. Brisbane and Sydney next week. Click here to see dates in your capital city and register.
Thursday 14th August in Sydney: AIMA Australia Education Forum. The forum will discuss regulatory, tax and other issues, as well as current observations and insights associated with a range of hedge fund investment products, including Australian unit trusts, Cayman funds, UCITS and listed investment companies. It is a "must attend" event for hedge fund managers reviewing their current products or considering development of new products.
14-15 August in Sydney: Alternative Investments Conference - Investigating the rise and rise of non-traditional high yield and low risk investment products, strategies and allocation in an era of prolonged volatility and low returns.
Wednesday 27 - Friday 29 August Money Management's Platforms and Wraps conference in the beautiful Hunter Valley, NSW. Covers the latest industry trends and innovation, while also exploring technology iniatives, client segmentation, data ownership, analytics, marketing and distribution, regulatory reform and consolidation. Pre-conference golf and wine tour of Hope Estate included. Special rate for fundmonitors.com members.
If you would like your Event listed in our calendar, please contact us.
This week's Now For Something Completely Different should either put to rest the argument that children are not influenced by what they see on TV, or that cats are more intelligent than dogs. Enjoy, and wishing you a safe and happy week-end.
Best wishes,
Chris
CEO, AUSTRALIAN FUND MONITORS
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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.
