April 2012 Review Comments
Written by Tony Gray   
Tuesday, 24 April 2012 15:45

Portfolio Valuation & Comment

There has been little change in view since our March letter.  On the one hand the income yield from listed property and shares compared to deposit rates suggests those asset classes are a buy.  On the other hand there is the risk of another shock to markets – whether it be from a China slowdown, Europe or US induced debt crisis, or inflation arising from the massive creation of money by central banks.

In relation to growth linked assets, at least local shares and property generate relatively attractive income returns while we await the day when earnings rise and capital gains are generated.  With international shares, while income returns are unreliable and tend to be lower, the potential for very strong growth exists courtesy of a potential devaluation of the Australian dollar.  International shares also provide diversification against a local recession – in which instance shares, property and fixed interest rates would likely fall.

Further declines in cash interest rates are expected, although far from certain.  Term deposit rates are relatively attractive and extending the term of deposits is generally recommended.

QBE Insurance – ordinary shares

Many investors hold this asset in portfolios.  Application for stock at $10.70 through the share purchase plan was cut back severely due to demand, with allocations based on 1/12 of your original holding in the stock.  Stock has been allocated and the company has refunded monies directly into the bank account nominated to receive dividends.  This occurred after the date of the attached portfolio.

As always, if there is a material change in your position or goals, or if you have any investment or planning queries or concerns, please contact me. 

Best wishes,

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

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

Last Updated on Thursday, 26 April 2012 10:35
 

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