13 Feb 2016 - Hedge Clippings

In the race of life, always back self-interest... at least you know it's trying

Paul Keating once used this quote, and reviewing the resistance from a range of self interested parties, (including a bunch of government back benchers) to an increase in the GST having any part in the GBT (Great Tax Debate), it seems self-interest, rather than the longer term interest of Australia's budgetary and fiscal future, is alive and well. At least we now know three things:

1. Trying to sell a tax increase - sorry package, whether necessary, logical, sensible or otherwise, shortly before an election is not possible, and,
2. If nothing else, Wee Willie Shorten can run a great scare campaign, even if he has to deal leniently with the truth to do so, and;
3. The Prime minister has shown himself to be ultra-pragmatic in understanding that there's no point in flogging a dead horse in the face of said scare campaign if it's going to lead to defeat in the media, or worse still, at the polls.

In amongst all the rhetoric and rubbish spoken was someone on the ABC claiming, and being allowed to get away with it, that a pensioner spending his or her $30,000 a year will pay as much extra GST on that as Jamie Packer will on his $30,000 spend. Quietly ignoring of course that young Jamie will go through his $30,000 somewhat more quickly or more often than once a year.

Next was the cash economy, be it from the local cafe, tradesman, cleaner or whatever. While cash payments avoid income tax, it is presumed they are spent in the real economy and at least taxed. We could go on, but what's the point, the subject is dead and buried. Well done self-interest!

Now to performance and the markets which are being subject to increasing volatility, making it difficult for the average investor to do anything other than hang on, or stay on the sidelines. Even the experts are finding the going tough, although based on the selection of results below they're still proving more than capable of protecting their investors' capital to a large degree. We have about 50% of January results in to date, with the average of all funds -1.85% against the ASX200's -5.48%. Over the 12 months to 31 January the outperformance is +12%.

As with all bear markets and negative volatility the selling pressure tends to accelerate as support levels and confidence crumbles, and the weight of money that has flowed into index and mutual funds, (here and overseas over the past 3 years) and is now flowing out equally quickly is not helping the market.

On the subject of the economy AFM is pleased to be offer subscribers and readers of Hedge Clippings an opportunity to join Jamieson Coote Bonds' Charlie Jamieson, in conjunction with Deloitte to hear the combined thoughts of noted economist Saul Eslake, and the ex-head of the Future Fund, Mark Burgess, at a breakfast presentation in Sydney on 25th February. Seats are strictly limited, so please respond directly to this link. 

Performance updates and reviews received this over the past couple of weeks included the following PERFORMANCE UPDATES:

For January, the Bennelong Long Short Equity Fund returned -0.29% compared to the ASX 200 Total Return Index which fell -5.5%.

The Jamieson Coote Bonds Active Fund rose 1.39% for the month of January 2016.

Meme Australian Share Fund returned -4.89% for the month of January, outperforming by +0.59% the ASX200 Accumulation Index's return of -5.48%.

The Paragon Fund returned -0.5% for the month of January, outperforming the ASX 200 Total Return Index which returned -5.48%, by 5.98%.

Morphic Global Opportunities Fund fell 1.98% in January, outperforming its benchmark (MSCI AC World Total Return in Australian Dollars), which fell 3.35%, by 1.36%.

The APN Asian REIT Fund rose 1.95% for January. Since inception, the Fund has an annualised return of 16.15% p.a.

Bennelong Kardinia Absolute Return Fund Fund fell 3.42% in January. Since inception, the Fund has an annualised return of 12.22% p.a.

Optimal Australia Absolute Trust recorded a flat return in January, against a 5.48% fall in the ASX 200 Total Return Index.

FUND REVIEWS released this week: Jamieson Coote Bonds Active Fund; Bennelong Long Short Equity Fund; 

And on that note we trust you have a happy and safe week-end - and be good to each other this Sunday on Valentine's Day!

Regards,

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.