That's not a bubble, This is a bubble! Or is it?
Hedge Clippings spent an interesting and informative morning this week at Money Management's Asset Allocation event. Apart from moderating a series of discussions covering retirement income amongst financial and wealth advisors, we were treated to a keynote presentation from Stephen van Eyk.
Stephen opened his address by stating that in preparing his presentation he had determined that he would try to put a positive view on his outlook for our collective financial outlook, but that having sifted through all the data and looked at the evidence, this would unfortunately not be possible. No matter which way one looked at it, Australia's low economic growth wasn't responding to interest rates of 2%, and weren't likely to, providing a headache for both the government and the RBA.
The event was wrapped up with a panel discussion entitled "What is the New Bubble", consisting of five leading fund managers, namely Alva Devoy from Fidelity, Tim Samway from Hyperion, Dr Phil Hofflin from Lazard, Anton Tagliaferro from IML, and Matthew Drennan from IOOF. Some interesting ideas, comments and statistics emerged with the usual varying degrees of optimism and pessimism, some of which I managed to recall after the event. Of course given the RBA's comments earlier in the week regarding Sydney house prices, and some typically insensitive, albeit obvious comments from the Treasurer, the discusion leaned towards a real estate bubble.
Anton noted that he did not expect a crash, as they only occurred when not expected, although he also noted the concentration risk within equity markets, and that in his opinion QE had resulted in one of the greatest examples of wealth transfer (from tax payers to financial markets) in history. His expectation was that low growth is set to continue.
Alva Devoy noted that we should get used to current conditions as the "new normal" and it was likely to be 10 years before interest rates returned to the old normal, and that as a result monetary policy would continue to support stretched equity valuations.
Phil Hofflin wondered if we were heading down the Japanese path of long term low growth in spite of central bank stimulation, and turning to the housing market warned of the 65/65 ratio: 65% of bank assets in Australia are in housing, which in turn is on a PE multiple of 65 times, and that the total value of Australia's housing market, if it does correct, is many times larger that the equity market.
Finally Matthew Drennan cautioned that traditional safe havens may not turn out to be so safe. All in all while some of the panel were more cautious than others, along with Stephen van Eyk, none were overly optimistic either.
Specific results received this week include the following PERFORMANCE UPDATES:
Monash Absolute Investment Fund returned -0.40% in May, taking annualised performance since inception in May 2012 to 15.35%.
The Bennelong Long Short Equity Fund performance in May was down 1.91% taking annualised performance since inception in January 2003 to 17.05%.
Allard Investment Fund returned 1.0% during May, with annualised performance since July 2003 of 9.99%.
FUND REVIEWS released this week: Insync Global Titans Fund; Monash Absolute Investment Fund
20 - 21 August 2015 - The 2nd Superannuation Fund Investment Operations Forum 2015 is a two day forum providing invaluable technological, regulatory compliant and best practice insights into improving back and middle office efficiency to drive member loyalty, bottom line profitability and a competitive edge
26 - 28 August 2015 - The 15th Annual Wraps, Platforms & Masterfunds Conference will provide solutions for succeeding in a distribution world of endless possibilities, showcasing strategies to help business achieve the biggest bite of market share, use innovation to overcome problems and support opportunities. Australian Fund Monitors is pleased to offer a discount of $300 to all investors and advisors using coupon code promoFM on registration.
15 September 2015 - The AIMA Australia Hedge Fund Forum 2015 is the annual non-profit hedge fund conference organised by the industry for the industry.
And finally best wishes for a happy and healthy week-end ahead,
Chris
CEO, AUSTRALIAN FUND MONITORS
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