Investment Perspectives: Aussie interest rates are heading for zero (again)

16 Apr 2024 - Quay Global Investors

In the absence of a change in fiscal policy, the consumer and policy cycle will repeat until interest rates approach zero (again).

Performance Report: Collins St Value Fund

15 Apr 2024 - FundMonitors.com

The Collins St Value Fund rose by +4.85% in March, outperforming the ASX 200 Total Return benchmark by +1.58%. Since inception in February 2016, the fund has returned +13.74% per annum, an outperformance of +3.56% relative to the benchmark...

Performance Report: Bennelong Long Short Equity Fund

15 Apr 2024 - FundMonitors.com

The Bennelong Long Short Equity Fund rose by +1.86% in March. Since inception in February 2002, the fund has returned +12.58% per annum, an outperformance of +4.28% relative to the ASX 200 Total Return benchmark which has returned +8.3% on...

New Funds on Fundmonitors.com

15 Apr 2024 - FundMonitors.com

Here are some of the latest additions to our database. Follow the links to view each fund's profile, where you'll have access to their offer documents, monthly reports, historical returns, performance analytics, rankings, research,...

15 Apr 2024 - New Funds on Fundmonitors.com

By: FundMonitors.com

New Funds on FundMonitors.com

Below are some of the funds we've recently added to our database. Follow the links to view each fund's profile, where you'll have access to their offer documents, monthly reports, historical returns, performance analytics, rankings, research, platform availability, and news & insights.

Fidelity Global Short Duration Income Fund

Inception date:	July 2022	Minimum initial investment:	AU$25,000
Strategy:	Fixed Income	Distributions:	Quarterly
Geographic mandate:	Global	Management fee:	0.45%
Investor type:	Retail	Performance fee:	Nil

View Profile

Fidelity Global Long Short Fund

Inception date:	October 2023	Minimum initial investment:	AU$25,000
Strategy:	Equity Long/Short	Distributions:	Annually
Geographic mandate:	Global	Management fee:	0.90%
Investor type:	Wholesale	Performance fee:	20.00%

View Profile

Fidelity Global Future Leaders Fund

Inception date:	September 2020	Minimum initial investment:	AU$25,000
Strategy:	Equity Long	Distributions:	Annually
Geographic mandate:	Global	Management fee:	1.10%
Investor type:	Retail	Performance fee:	Nil

View Profile

Fidelity Global Equities Fund

Inception date:	September 2021	Minimum initial investment:	AU$25,000
Strategy:	Equity Long	Distributions:	Annually
Geographic mandate:	Global	Management fee:	0.99%
Investor type:	Retail	Performance fee:	Nil

View Profile

Fidelity Australian Opportunities Fund

Inception date:	July 2012	Minimum initial investment:	AU$25,000
Strategy:	Equity Long	Distributions:	Quarterly
Geographic mandate:	Australia	Management fee:	0.85%
Investor type:	Retail	Performance fee:	Nil

View Profile

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Hedge Clippings | 12 April 2024

12 Apr 2024 - FundMonitors.com

It was only a couple of months ago that the "market" (i.e. bond traders and economists) was firmly of the opinion that the US Federal Reserve would cut interest rates up to six times this year - starting about now. Fast forward to "now" -...

12 Apr 2024 - Hedge Clippings | 12 April 2024

By: FundMonitors.com

Hedge Clippings | 12 April 2024

It was only a couple of months ago that the "market" (i.e. bond traders and economists) was firmly of the opinion that the US Federal Reserve would cut interest rates up to six times this year - starting about now. Fast forward to "now" - actually last Wednesday - and the market views that the cuts, or possibly cut, (singular) won't arrive until much later in the year, possibly not until November. Some - including former US Treasury Secretary Lawrence Summers - warned that the next move might even be up, not down.

The cause of this market re-think were the US CPI numbers for the 12 months to March which rose by 3.5% over the past 12 months, up from 3.2% in February, having previously peaked at 9.1% post COVID back in 2022. Excluding volatile items such as food and energy it left core inflation unchanged at 3.8%, but for a market that was hoping for, (but not expecting) a reduction, this was not the news they were looking for.

Aside from higher food and fuel prices, the strength of the US economy, and the jobs market in particular, is not helping the Fed's task of cutting rates following their next meeting on the 1st of May. Over 300,000 jobs were added last month in the US, the largest gain in almost a year, against expectations of just 200,000 resulting in a jobless rate of 3.8%. In turn, this cast doubts on the argument that continued high US interest rates of 5.25% to 5.5% would damage the economy. Simply put, it seems that while the Fed is concerned about inflation above 2%, the average consumer is not - or is at least dealing with it, particularly if they have a job, which most do.

Much the same logic applies in Australia, albeit the numbers are a little different. December quarter CPI was 4.1%, and on a monthly basis in the 12 months to February it had dropped to 3.4%, although excluding volatile items such as fuel, fruit and vegetables etc., it was higher at 3.9%. Unemployment is low at 3.8%, or seasonally adjusted 3.7%. The RBA's cash rate is at 4.35%, and with some inflationary pressures coming through from recent wage decisions, higher oil prices, and July's Stage lll tax cuts, prospects for a rate cut aren't looking too good.

However, looking at the latest Housing Finance figures for February, this doesn't seem to be holding most borrowers back. Year on year, total housing finance rose 13.3%, with investors leading the charge up 21.5%, versus owner occupiers at 9.1%. However, all this is likely to do is confirm, or continue, the chronic housing shortage in Australia, as evidenced by the Building Activity statistics released this week. On an annual trend basis to December the number of total dwellings commenced fell by -15%, and the number completed fell by -2.4%.

Meanwhile net overseas migration rose by 518,000 in 2023. As such, that level of increase will keep the economy growing (as it has done for decades), make the RBA's inflation target of 2.5% harder to achieve, and underpin, if not continue, to increase property prices.

As in the US, while sections of the media and social services point to high inflation, maybe the average consumer is learning to live with it, and just get on with life.

In turn that can lead to entrenched inflation, above the RBA's target, hard to achieve - a situation they're keen to avoid.

News & Insights

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March 2024 Performance News

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Glenmore Australian Equities Fund

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Performance Report: Quay Global Real Estate Fund (Unhedged)

12 Apr 2024 - FundMonitors.com

The Quay Global Real Estate Fund (Unhedged) rose by +3.57% in March. Since inception in January 2016, the fund has returned +7.06% per annum, an outperformance of +3.17% relative to the FTSE EPRA/ NAREIT Developed NET TR benchmark which...

Performance Report: Glenmore Australian Equities Fund

12 Apr 2024 - FundMonitors.com

The Glenmore Australian Equities Fund rose by +4.98% in March, outperforming the ASX 200 Total Return benchmark by +1.71% compared with the ASX 200 Total Return benchmark which rose by +3.27%. Since inception in June 2017, the fund has...

Why reframing fixed income is key to portfolio stability

12 Apr 2024 - Yarra Capital Management

Conventional portfolio construction theory positions equities as the primary driver of returns, while fixed income typically takes a back seat as a low-return and low-risk asset class. However, this perspective often overlooks a crucial...

12 Apr 2024 - Why reframing fixed income is key to portfolio stability

By: Yarra Capital Management

Why reframing fixed income is key to portfolio stability

Yarra Capital Management

March 2024

Conventional portfolio construction theory positions equities as the primary driver of returns, while fixed income typically takes a back seat as a low-return and low-risk asset class. However, this perspective often overlooks a crucial aspect of fixed income: its role in dampening portfolio volatility.

Protecting portfolios through the storm

Contrary to the notion that fixed income should exhibit a negative correlation to equities, suggesting that when one goes up, the other goes down, in our view, it's more accurate to view fixed income as a stabilising force within a portfolio. Instead of focusing solely on returns, investors should also consider the invaluable function of fixed income can have in reducing overall portfolio volatility and improving risk-adjusted returns.

Historically, equities have exhibited higher volatility, compared to bonds, reflecting the relatively stable income streams of bonds and their fixed coupon payments. While bonds can still experience price fluctuations, especially in response to changes in interest rates or credit risk, these movements are generally less pronounced compared to equities.

Even small bond allocations in a portfolio can help dampen portfolio volatility for a small reduction in overall return and improving risk adjusted returns (Sharpe ratio).

Chart 1: Historical risk adjusted return comparison of bonds and equities

Source: Bloomberg, Yarra Capital Management

If equities and bonds were negatively correlated, fixed income would never deliver positive returns over the long-term. As shown below (refer Chart 2), the correlation is slightly positive.

Chart 2: Australian equity and bond correlation (post 1989)

Source: Bloomberg, Yarra Capital Management

While it's true that fixed income returns may lag during bull markets, the trade-off can be crucial: in times of market turbulence, fixed income can serve as a critical buffer against sharp declines in equity values, helping to preserve capital and reduce overall portfolio risk (refer Chart 3).

Chart 3: cumulative bond and equity returns

Source: Bloomberg, Yarra Capital Management

For much of the past 30 years, equity and bond returns have tracked each other. However, over the past decade, equity returns have significantly outstripped bonds by a considerable margin. This period coincides with governments and central banks pumping considerable liquidity into economies.

While the relationship between equities and bonds may still hold, (refer Chart 1), a combination of both asset classes can yield high returns while offering some important protection against equity corrections.

In essence, the role of fixed income extends beyond generating returns; it can provide a vital layer of defence against market volatility. By diversifying portfolios with fixed income, investors may achieve a more balanced risk-return profile, thereby enhancing long-term wealth preservation and stability.

Investing is not just about chasing high returns--it's about safeguarding against the inevitable storms that come our way. Rather than viewing fixed income solely through the lens of negative correlation, in our view, investors would be wise to remember its true value as a potential dampener of volatility and a of prudent portfolio construction. And in that regard, in our view, fixed income remains an indispensable ally.

Funds operated by this manager:

Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund

Performance Report: 4D Global Infrastructure Fund (Unhedged)

11 Apr 2024 - FundMonitors.com

The 4D Global Infrastructure Fund (Unhedged) rose by +1.76% in March. Since inception in March 2016, the fund has returned +9.22% per annum, an outperformance of +0.73% relative to the S&P Global Infrastructure TR (AUD) benchmark which has...

Performance Report: DS Capital Growth Fund

11 Apr 2024 - FundMonitors.com

The DS Capital Growth Fund rose by +1.62% in March. Since inception in January 2013, the fund has returned +12.97% per annum, an outperformance of +3.69% relative to the ASX 200 Total Return benchmark which has returned +9.28% on an...

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16 Apr 2024 - Investment Perspectives: Aussie interest rates are heading for zero (again)

15 Apr 2024 - Performance Report: Collins St Value Fund

15 Apr 2024 - Performance Report: Bennelong Long Short Equity Fund

15 Apr 2024 - New Funds on Fundmonitors.com

12 Apr 2024 - Hedge Clippings | 12 April 2024

12 Apr 2024 - Performance Report: Quay Global Real Estate Fund (Unhedged)

12 Apr 2024 - Performance Report: Glenmore Australian Equities Fund

12 Apr 2024 - Why reframing fixed income is key to portfolio stability

Protecting portfolios through the storm

Chart 1: Historical risk adjusted return comparison of bonds and equities

Source: Bloomberg, Yarra Capital Management

Chart 2: Australian equity and bond correlation (post 1989)

Source: Bloomberg, Yarra Capital Management

Chart 3: cumulative bond and equity returns

Source: Bloomberg, Yarra Capital Management

11 Apr 2024 - Performance Report: 4D Global Infrastructure Fund (Unhedged)

11 Apr 2024 - Performance Report: DS Capital Growth Fund

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