February 2015 Review & Comments
Written by Tony Gray   
Saturday, 28 February 2015 11:30

Portfolio Valuation & Comment


Key take-outs for markets at present:

  1. The Reserve Bank has signalled further cuts in the overnight cash rate are likely;

  2. By comparison, bond yields have stabilised and are showing some signs of rising – including in the key US market;

  3. Term deposit rates continue to fall – a challenge as existing deposits mature.  On balance we intend to maintain exposure, as growth asset classes are relatively expensive;

  4. The Australian economy is undoubtedly weak/fragile/slowing (you get the picture).  The sharemarket normally foreshadows recession, but so far has in fact risen due to the chase for yield.  I’m not sure how robust this scenario is – I suspect there are many investors buying shares only for the cash-flow and little appreciation of the underlying business or risk (especially with regard to the baking sector and the more recently issued hybrid income securities);

  5. Listed property trusts have become expensive and we may well exit completely in 2015 if prices continue to trend higher;

  6. International shares still provide useful diversification – although we have seen the best of the currency declines (in percentage terms) – the US market is expensive; and

  7. We see the better opportunities at the smaller end of the Australian sharemarket – in terms of resilience of the businesses and potential to do well despite the broader economy/market – especially for those with the majority of earnings sourced from overseas.

I intend, during my time away from the office, to conduct more research on specific assets and to review portfolios and positioning.  While portfolio values have benefited nicely from the rally across international shares, local shares and property, the return potential from this point is lower and the risks higher.

 

Best wishes

 

 

A.W. (Tony) Gray BCom, LLB, Dip FP, GDipAppFin, CFP, FFin

Principal, TG Financial

Please treat the above comments as General Advice or general information, with no action to occur until we have considered with reference to your financial position, needs and goals.


Last Updated on Wednesday, 11 March 2015 11:33
 

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