The Big Picture
A huge week for markets
Trade is one of the few areas in which a president can make sweeping changes without congressional approval, but at this stage, we think the tariff proposals look more like pre-election bluster.
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What's next for the RBA?
With the first rate pause of the current hiking cycle here and the flagged departure of controversial Reserve Bank of Australia governor Phillip Lowe, it's been an historic month for the RBA. We sit down with Morningstar's Peter Warnes to discuss what's next for the nation's central bank.
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Hope has no place in an investment strategy
“Fingers Crossed” read the headline of The Australian Financial Review last weekend. Two words investors should never rely on. Appeals to hope should be a wake-up call in the current environment. They should shake up the complacent and reinforce the need for capital preservation. Luck is not a sustainable investment strategy. There is likely to be much more economic pain ahead before greener pastures emerge.The Big Picture
Forecast 2022–23: A difficult path ahead to avoid a hard landing
Bringing inflation under control will probably require a meaningful contraction in economic activity. The nightmare scenario would be stagflation, where central banks do not kill growth, but inflation escapes unscathed.
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Cost-of-living payments could come back to bite if they add to inflation
The 2022/23 federal budget has delivered the third round of significant fiscal stimulus in as many years. While most of the stimulus was necessary, at some point the piper must be paid. Would the budget have been any different if it wasn’t an election year?
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Fossil fuels, ESG and investing opportunities post COP26
In the wake of the United Nations-sponsored Conference of the Parties (COP26)—now you know what it stands for—in Glasgow it is time to air some thoughtful disagreement again. Today the discussion revolves around environmental, social, and governance (ESG), green energy, decarbonisation and fossil fuels. You may ask, why go there? Because I sniff an opportunity.
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100 Aussies: five charts on who earns, pays and owns
Each year, the Australian Taxation Office (ATO) publishes a snapshot of the 14.7 million individuals who lodge tax returns. Many returns are not lodged on time, so the latest data is for FY2019, but it reveals some surprises. The ATO also summarises some of the demographics of taxpayers (and non-taxpayers).
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Best and worst performing equity funds of 2020
Growth was the place to be through the covid-19 pandemic while value managers couldn't catch a break. This is a round-up of the best and worst performing equity funds under Morningstar coverage for 2020. Morningstar fund analysts conduct reviews of over 480 flagship Australian funds, exchange-traded funds and listed investment companies.
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How IFAs Can Appeal to Millennials
Financial advisers must adapt their business if they want to appeal to the younger generations, says Kind Wealth's David O'Leary. In this interview, O'Leary touches on his experience with dealing with the younger generation, 30 to 50-year-olds; in his financial planning business. We discuss the challenges in serving the young clientele as well as some interesting findings.
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Will a Turbulent Election Derail Economic Recovery?
As Election Day nears and the coronavirus vaccine trials continue, headlines may lead to volatility, but we expect economic rebound to keep on. While the consensus from market forecasters on Wall Street is that the market will be especially volatile come this November, it could also be relatively mundane.
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A tale of two markets
Well, that was quick. Despite bleak global economic outlook and the continued uncertainty brought on by the coronavirus pandemic, as of August 6, 2020, the US market recovered to its pre-pandemic high. The covid-19 bear market goes down in history as one of the least painful on record, lasting a total of about 120 trading days with a maximum drawdown of about 34 per cent.
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Investing basics: reasons NOT to invest in gold
Gold has hit a record high and investors have poured billions into gold tracker funds. But should you invest? Despite its allure and popularity, some experts say that holding gold is not a sensible investment move - particularly after its recent climb. Here are just some of the reasons not to invest in gold.
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Is the retirement ‘4 per cent’ rule broken?
Retirement researchers have been sounding the alarm about the 4 per cent guideline for a while. A combination of very low bond yields and not-inexpensive equity valuations mean that a starting withdrawal of 4 per cent, could cause a retiree to prematurely deplete his or her funds over a 25- to 30-year horizon. In this interview Wade Pfau and Christine Benz give new ways to avoid money running out in retirement.The Big Picture
Easy money: download Robinhood, buy stonks, bro down
Call it Robinhood traders, the corona generation, YOLO (You Only Live Once), TINA (There is No Alternative) or simply retail investors, but trading by individuals has hit global equity markets in massive numbers. Some daily moves are called a battle between the smart professional sellers and the dumb retail buyers, but since the 23 March bottom, the dumb money has been right. So far.The Big Picture
The vibe of future returns: tell ‘em they’re dreamin’
Retirement planning should start decades before the end of full-time work. In a wonderful world of returns well in excess of inflation rates, driven by compounding over long periods, bond and equity markets will provide the financial resources for a comfortable retirement far quicker than if returns struggle to beat inflation. But is all that in the past? Super balance calculations default to earnings rates of 7.5%, but that's in the past. Planning needs a more realistic view.
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Seeking a vaccine for that other virus going around: investor complacency
Financially, more serious than the outbreak of coronavirus would be an outbreak of investor complacency. Unknowns like the coronavirus are a compelling reason for investors to always be prepared and vigilant, even more so with markets near record levels.
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3 Key Conversations to Have With Clients to Prove Your Financial Adviser Value
Advisers face many obstacles, but when we asked them what their biggest challenge was, we quickly found that many related to one overarching theme: financial adviser value. In this article, we discuss these challenges and how advisers can overcome them.
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The Big Five and Behavioral Finance
Contributor Michael Pompian introduces a new series that examines the relationship between the "Big Five" personality traits and the behavioral biases of investors. The "Big Five" model is a classification scheme that attempts to cover the major aspects of one's personality.The Big Picture
Retirees: Are you Spending Too Much?
At a bare minimum, anyone embarking on retirement should understand the basics of spending rates: how to calculate them, how to make sure their spending passes the sniff test of sustainability given their time horizon and asset allocation, and why it can be valuable to adjust spending rates over time. Here are the key steps to take.
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The Fruits of ESG - Advisers find that sustainable investing is good for business
Just a few years ago, advisers would only discuss ESG investing with clients and prospects after they were asked about it. Today, these advisers incorporate ESG strategies into their practice just as they would any other kind of investment strategy, and they’re asking most, or even all, clients about their interest in ESG investing. This shift, which advisers say has built momentum over the past three years, has coincided with a change in the ESG investment landscape.
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How Does the Timing of Fund Selection and Sale Impact Investor Returns?
Bad timing can undermine good fund selection and substantially impact investor returns. To understand how much of a difference timing can make, and the factors that contribute to this discrepancy, we took a closer look at our investor-return data.
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7 Elements of Great Investing Advice
There’s a huge need for great investing advice, and great advice begins with us. Not just with Morningstar, but with the institutions building investment products; with the plan sponsors trying to help a workforce unlock the power of their retirement plans; and with the advisers who face the push and pull between serving clients and building successful practices.
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The World in Transition
The world is changing, the levers of central banks no longer have the same power to contain the global economy, and China’s growing presence on the world stage is reshaping geopolitics and markets. These are just some of the observations of Capital Group, Michael Thawley.
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Markets Rebound, but May Not Be Sustainable: A Quarterly Market Update in 6 Charts
Every quarter, Morningstar’s quantitative research team reviews the most recent global market trends in finance and evaluates the performance of individual asset classes. The findings are then shared in the Morningstar Markets Observer, a publication that draws on quantitative analysts’ careful research and market insights.
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What Is Financial Health?
Financial advisers often find themselves playing the role of counselor, and they are confronted with clients whose emotional health is wreaking havoc on their finances. It’s time to redefine the term “financial health” so it includes both a person’s economic stability and emotional wellbeing around his finances.
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Vanguard Investments Australia Wins Morningstar Australian Fund Manager of the Year Award
The 2019 Australian Morningstar Awards took place last Friday evening at the Establishment in Sydney. Congratulations to Vanguard for taking out the overall Fund Manager of the Year, and all our category winners. All winners in the Morningstar Awards have demonstrated themselves to be good stewards of investors’ capital.The Big Picture
Rising Volatility: How Concerned Should Investors Be?
Volatility returned in October, sending the equity market spiralling downward for a second time in 2018. When this happens, investors naturally look for explanations for the downturn and wonder whether they’re in the right investments. So how can you respond?
