Could we be misjudging the US election outcome?
We are less than two weeks away from the US election which will provide both a media frenzy, and likely decide all our futures. Sitting in Australia the feeling is that no one in their right mind would vote for a President Trump, but sitting in Australia we are not voting.
However, what happens if Trump wins? And could Trump be Hilary Clinton's greatest electoral asset, who based on Wikileaks reports might not be a perfect candidate anyway?
Is there the possibility that like Brexit, a combination of non-compulsory voting, voter apathy with conventional politics, and not being close enough to the detail, means that we are not in a good place to judge the outcome? Today's media seems to indicate that the unthinkable might actually happen.
Either way, Hilary Clinton has promised to raise taxes and spend $500 billion on infrastructure. Trump has promised to reduce taxes and spend double that on infrastructure. That will surely change the supply/demand ratio in the bond market, and send interest rates upwards.
In that environment what will happen to equities? The optimists are hoping that increased economic activity will generate sufficient growth to offset the increase in interest rates, while the doomsday merchants believe it's all going to come down to a case of tears before bedtime.
Remembering what happened when interest rates rose unexpectedly in 1987 - before the stock market crashed - even without the buildup of debt we have seen over the past 7 years, suggests caution will be the investor's best friend.
Pengana PanAgora Absolute Return Global Equities Fund rose 1.77% in September. The Fund continues to have a low systematic risk (beta) to the ASX200 and the MSCI World Indices of 0.08 and 0.09 respectively.
APN AREIT Fund returned -3.21% in September. The long term performance since inception remains strong with annual returns of 17.90% p.a.
Totus Alpha Fund returned -5.31% in September. Since inception, the Fund has an annualised return of 24.74% p.a.
Insync Global Titans Fund returned -1.75% in September, compared to the MSCI All Country World ex-Australia Net Total Return Index in $A, which returned -1.20%.
King Tide NZ/Australian Long/Short Equity Fund rose 1.83% in September and +23.77% over the latest 24-months.
FUND REVIEWS released this week: Qato Capital Market Neutral Long/Short Fund; Bennelong Twenty20 Australian Equities Fund;
And on that note, have a great weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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