Hedge Clippings | Friday, 11 September 2020

One can't let the dateline on today's edition of Hedge Clippings pass without remembering that 19 years ago today (now forever simply known as 9/11) a series of four coordinated terrorist attacks shook the world, the most visible of which, captured on the TV news, saw United Airlines Flight 175 follow American Airlines Flight 11, and crash into New York's World Trade Centre. A third aircraft hit the Pentagon, and the fourth, heading towards Washington, crashed into a field after the passengers attempted to overcome the hijackers. Across all four attacks, a total of 2,977 people were killed, and over 25,000 were injured. Approximately 18,000 people are estimated to have since developed illnesses as a result of the toxic dust released from the collapse of the WTC Towers.

The reaction was shock, horror and swift retaliation. The attacks triggered both the war in Afghanistan (starting on October 7, 2001) and later, in March 2003, the invasion of Iraq, both of which have since had a major impact on the world - as intended by the backer and architect-in-chief of 9/11, Osama bin Laden.

It is estimated that from March 2003 to October 2018 between 268,000 and 295,000 people were killed in the Iraq war. Figures for Afghanistan are more difficult to define, but according to this article more than 100,000 Afghans have been killed or wounded since 2009, which is when the UN Assistance Mission in Afghanistan began documenting casualties.

So let's assume 500,000 deaths over 19 years. COVID-19 has killed almost double that (905,000 across the globe, including 194,000 in the US and counting) in less than a year. We are not sure where this leads, or what point we're making, but both are sobering statistics on the anniversary of 9/11 - a date which means little to many millennials, who might not recognise its significance.

Meanwhile, Australia is stalled, and some turkey from the bush wants to distract the NSW government's focus on health, safety and the economy to force an immediate and one-off cabinet meeting to discuss land clearing vs. the protection of the endangered and dwindling koala population.

Did we say turkey? Maybe we mixed our fowls up. Goose.

Changing tack - to markets and fund performance, with the former experiencing some renewed volatility, and a long-awaited pullback following the FOMO rally which began in March. In August the ASX200 Accumulation Index rose 2.83%, still -7.43% below its level at the beginning of the year, and -5.08% below the same time last year.

Drilling down to individual fund performance in August, which whilst good overall was varied - ranging from -5% through to +18%, and with 45% outperforming the ASX200. Over 12 months the range has been extraordinary, from -88% to +79%, with 70% of funds outperforming the index, and 50% with positive returns

Meanwhile, the 300+ Active Equity funds in AFM's database rose by an average of 4.41% in August, are up +0.58% since January, and +5.19% over the past 12 months, for an annual outperformance of over 10.20%.  

As always sound information is therefore vital to informed fund selection and portfolio construction. Given the range of returns above careful analysis more important than ever, when the implications of the right or wrong choice leave the debate about fees a secondary consideration.

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