Hedge Clippings | Friday, 01 October 2021

Who'd be a politician in Australia?

Hedge Clippings is generally not forgiving of politicians, but we should all be thankful for them over the past 18 months or so, whatever their level, party, or persuasion. As much as we might think they should have done more, or could have done less (or in Clive Palmer's case, done nothing) they've each done what they thought was best for their respective electorate, given the information available.

Most importantly of all, we should be thankful we haven't been in their shoes. They stood as candidates, presumably with no knowledge of what Wuhan was about to unleash on the world. And the only people who should be more thankful than the public are their respective opposition parties, who're able to criticise from the sidelines without fear of having to manage the crisis themselves.

And so to markets:

Both the ASX200 and the S&P500 suffered a rare negative month in September, falling 1.85% and 4.65% respectively. As we come into October, which has historically been a troublesome month for equities, this might make some investors with long memories nervous. In Australia, you have to go back to September/October 2013 to find consecutive positive performances for these two months, and in fact, since the turn of the century that has only happened on four ('04, '06, '12, and 13) occasions.

September's fall on the ASX meant the first negative month in the past year, the first time in a long time, and certainly this century that we've had 11 straight months of gains. And apart from the 2 month COVID sell off, there hadn't been a real crisis since the GFC, which lasted from November '07 to mid-March 2009.

On the bright side, one could say the past 18 months has been a great time to be an investor in equities, as many fund managers would no doubt agree. Since April 2020, once the initial shock of COVID passed and government support kicked in, to the end of September 2021, the ASX200 Accumulation index has risen 51%. The S&P500 has fared even better, rising 71% in spite of its fall of 4.65% in September.

Inevitably, historian or otherwise, one has to question this current trend. There are those who point to the tail winds of technology, disruption, and a changing world, while the doubters point to inflation, tapering, and geo-politics, particularly in China, which is facing its own internal issues regarding credit, property and energy supplies.

Changing tack:

Tuesday next week sees the introduction of ASIC's new Target Market Determination (TMD) regime, requiring issuers and distributors of retail managed funds to specify the relative features of their products prior to the investor making a decision. Whether this will improve the investor's situation, or just create another layer of administration remains to be seen, but it is interesting to see that James Mahwhinney of Mayfair 101 fame (or infamy) still seems to believe he's done no wrong, in spite of burning his investors' millions.

At Fund Monitors we're constantly asked about the "best" fund, and we avoid the answer with good reasons. One, diversification across multiple funds, asset classes or strategies is the best way to reduce risk, and two, the best fund for one investor might not suit another.

So look before you leap - in other words, compare, and do your research, before you invest.

News & Insights

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Reduce your risk and pick outstanding companies | article by Airlie Funds Management

Global small caps: From unrecognised growth to future global titans  | article by Ausbil Investment Management

Crackdowns in China: Part 1 | article by Arminius Capital 

Banning unvaccinated workers could impact our economy | article by Pendal

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