Are we turning Japanese?
The experts are telling us that we are facing the first US rate rise in nearly seven years. However it is worth remembering we've been here before, with expectations for a Fed tightening having been on the cards for at least the past 18 months. Each time they've pulled back from the brink, either because the market reaction was so savage, or a more recent statistic or world event cut them off at the pass.
So we would have to ask the question, will it be any different this time around? And if it is, what's in store beyond the first upward move, considering that interest rate movements rarely, if ever, occur in isolation?
The reality is that the world's economy is in a very different place, and what might have occurred in the past is not occurring now. Maybe we're fixated by the recent past, rather than the distant, or the reality of the present, but the feeling is that as and when US rates do start to climb, they will struggle to get far beyond 1% in the foreseeable future.
Now one percent might not seem much, but given there's been so much debate and consternation about the first 0.25% (or maybe it will only be 0.125%) rise, one percent represents at least four rate rises. Could it be that the Japanese experience of the past 20 years is going to be reflected across the Pacific?
Japan has effectively had a debt overhang, having never cleared their debts of the '80's. Allied with a demographic problem, Japan has struggled to record any meaningful growth since the early 1990's. The US may be different, but is the world's economy facing the same future as Japan, and are we all turning Japanese as a result.
Performance updates and reviews received this week included the following PERFORMANCE UPDATES:
APN AREIT Fund rose 4.43% in October to bring annualised return since inception to 17.90% p.a.
Insync Global Titans Fund rose 3.5% in October, to take their 12 month return to 22.02%
In October, KIS Asia Long Short Fund rose 2.50%, to bring the Fund's annualised return since inception 15.16%.
Freehold Absolute Return Fund delivered a positive 1.29% for the month of October, to take their 24 month return to 26.97%.
The Supervised High Yield Fund produced a return of +0.54% for the month of October, to bring annualised performance since inception to 9.87% p.a.
FUND REVIEWS released this week:Pengana Absolute Return Asia Pacific Fund; Totus Alpha Fund; APN Asian REIT Fund;
And on that note, I trust you have a safe and enjoyable week-end.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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