Hedge Clippings has endured a challenging (or should that be frustrating) week. As usual the first frustration came out of the ongoing two-step being danced in Canberra, where the government proudly announced it had delivered on at least one election promise, that of repealing the mining tax.
Of course it can only do anything at present with the approval of Clive Palmer and his PUP colleagues in the Senate, and in this case it seemed as if the trade off was the deferral for 7 years of any increase in the Superannuation Guarantee Levy or SGL. At the present time the SGL is 9.5% of every employees' wages or salary, and is levied as a tax on the employer, not the employee.
While there are plenty of arguments as to the rights and wrongs of the SGL and how it is levied, who should pay, and the cost of superannuation tax benefits to the federal budget, it is hard to argue about the logic of a system designed to cover the retirement benefits of all workers, given that one of the major expenditure items in the Federal budget is the cost of the aged pension.
It is also widely accepted by most (although possibly not the Federal Treasurer) that even after 40 years of the SGL at 9.5%, the retirement benefit for most employees will be insufficient to cover their income needs in retirement, particularly given ever extending life expectancies. Figures published in an article on news.com.au today indicate the average 50 year old male currently earning $79,700 can expect to receive an income of $27,600 when he turns 70 in 20 years' time.
Hardly enough one would have thought, and therefore any encouragement (whether it be using carrot or stick) should be applauded rather than the current government's policy of deferring or reducing even this meagre ration.
Maybe one of the reasons that Treasurer Hockey doesn't seem to think this is important is that the same article indicates that when he leaves Federal Parliament he will be in line for a pension of at least $270,000 a year.
Who says the age of entitlement is over? None other than the Treasurer of course!
The other challenge or frustration this week was altogether different, and altogether more enjoyable, having attended yet another Bob Dylan concert (my fifth or sixth from memory, but the ones I was at in the late 60's are for some strange reason rather vague). Bob is one of my favourite artists, sadly not one of the world's greatest communicators. Having said that, this was one of his best performances I had seen, with his rendition of his classic "Blowin' in the Wind" for his final number perfect for current times, just as it was way back in 1963.
Specific results received this week include the following PERFORMANCE UPDATES:
The Auscap Long Short Australian Equities Fund returned 2.95% during July and 43.54% for the prior twelve months with a volatility of 6.30%.
Returning 24.47% for the year ended July 2014, the Avenir Value Fund returned -1.12% during July.
Pengana Absolute Return Asia Pacific Australian Fund returned 1.18% during July and 8.03% for last 12 months with a volatility of 2.88%.
With a volatility of 8.95% the Nanuk Global Alpha Fund returned -1.26% in July and 17.01% for the prior 12 months.
The Supervised High Yield Fund returned 0.77% during July and 7.17% over the previous 12 months with a very low volatility of 0.72.
AFM are now accredited by the Financial Planning Association of Australia to issue CPD points for FUND REVIEWS.
This week's updated reviews include:
Aurora Fortitude Absolute Return 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 9 September in Brisbane , from 12pm to 4.30pm - ARRIA is hosting a further round table discussion, providing a valuable opportunity to meet with like-minded advisers. Free to Financial Advisors.
Tuesday 16 September in Sydney AIMA Australia's Hedge Fund Forum - and event by the Industry for the industry featuring quality Australian and international speakers.
15-17 October Grace Hotel, Sydney - Investment Performance Measurement, Attribution & Risk Management Forum will have leading experts sharing up-to-date, cutting edge ideas and insight on frontiers of recent developments in performance measurement.
21-22 October in Sydney Post-Retirement Australia 2014 conference. Comprehensive two day forum for high profile cross industry participants to provide updates, insights and ongoing discussion into the key issues central to achieving optimal financial outcomes.
Friday 24 October in Sydney Financial and Media Markets Charity Regatta Day out of Middle Harbour Yacht Club. Promises to be a fantastic day.
5-6 November, Grace Hotel, Sydney. Alternative Investments Conference - Investigating the rise of non-traditional high yield and low risk investment products, strategies and allocation in an era of prolonged volatility and low returns.
This week's Now For Something Completely Different and in keeping with our musical theme... I imagine it would be surprising to be shopping for groceries and find yourself in what might appear to be a scene from an opera, or Shopera as some might say. Well, I thought it was from an opera, but it's not. If anyone else is interested, the history of the song is here.
Best wishes for a happy and healthy weekend,
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.
