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Koda Capital is one of Australia's elite wealth management firms, charged with allocating over $11.5 billion of capital on behalf of high-net-worth individuals, family offices, and charitable foundations.
For the past decade, Brigette Leckie has played a pivotal role in shaping the firm's views on where the best opportunities lie across global asset markets. Leckie firmly believes that understanding the macro environment is the starting point for building an investment strategy.
And while it's not every day that investors like you and me get to pick the brains of an asset allocator with Brigette's experience. In this episode of the Rules of Investing, you'll get a front-row seat and learn how Brigette makes sense of the dynamics in global economies and what that means for investors.
With a new regime set to take office in the world's largest economy and Australia's largest trading partner, China, amid a generational economic transition, the macro environment requires careful consideration for investors.
Around the world with Brigette LeckieFresh off the back of visits to Europe and the United States, Brigette made these observations.
Europe: Better than the headlines and muddling through 'muddle through'
Traffic is everywhere (yes, worse than Sydney)A change in attitudes towards experiences over spending on goods persists.Restaurants and streets are buzzing, and with the exception of Germany, economies will continue to muddle alongManufacturing in Germany remains sluggishUnited States: The gap is widening
Inflation is real. Flights are at capacity, it's hard to get an Uber, and the streets are buzzing in many cities.The gap between the haves and the have-nots is widening.Politics remains highly divisive for families and corporations."I did see divisiveness in a couple of things I did see on the corporate side. So, for example, getting into a car and asking the driver what his views on the election were, and he said, "Company policy is we don't talk about the election or politics." So that surprised me," said Leckie.China: Three significant issues to deal with
Leckie says that China has been letting market forces deal with three major issues in its economy, and she expects these will take some time to resolve.
Deflation: This remains an issue caused by excess capacity in the economy.Weak consumer: Consumer sentiment is fragile, creating a downward deflation spiral.Excesses of the property market: This is a well-documented issue that will take time to work through.Historically, China's policy has been boom or bust. Leckie believes that a mindset shift has taken place, and the old approach is being replaced by genuine reform. The goal is to gradually turn China into a more consumer-based economy. A stronger China is good for global economies, especially Australia; however, we should not expect the boom days of the past to return.
So does macro matter?Leckie emphatically believes that understanding macroeconomics is the foundation of good investment strategy and asset allocation. She cites the example of interest rates near zero or negative as a point in time when the macroeconomics was 'out of whack' and providing a clear signal. Developed market bonds were 'uninvestable' in her eyes—a call that has been vindicated in recent years.
Currency markets can also provide a signal. Most of the time, currencies trade in a narrow range, but there are times when they get to extremes. For example, the Australian dollar was worth less than US50 cents, and equally, it traded at parity. For globally diversified portfolios, these extreme moments matter.
Three points for asset allocation right nowLeckie says returns in recent years have been exceptional, and investors should be mindful not to extrapolate these into the future. Knowing what risk you will tolerate is easy to underestimate when markets are ripping higher. Leckie had these key messages for investors.
Hold your conviction on big calls. If you have a strong foundation for your positions, you need to be willing to ride out short-term noise.Investors are too bullish on risk assets and should be cautious about expecting these returns to continueDiversification will be crucial over the period ahead. Investors must ensure their portfolios are properly diversified with uncorrelated investments. -
For those who love equities, you’re in for a treat with the latest Rules of Investing podcast. This week's episode features First Sentier Investors’ Deputy Head of Australian Equities Growth, David Wilson.
Wilson's bread and butter is picking high-quality growth companies - a role he executes every day as part of the team that runs the First Sentier Geared Australian Share Fund. He is not afraid to explain how he goes about doing this while acknowledging his missteps and sharing a handful of stocks he likes right now.
When it comes to his process for picking stocks, Wilson says it’s all “pretty logical”.
“We just try to invest in good businesses with management that are trying to do the right thing for you and with the right sort of balance sheet.It's pretty straightforward. You can overcomplicate these things, but generally, that's our approach”, says Wilson.Wilson adds that the team watches company management very closely:
“What they're trying to achieve, what their goals are, but also at their actions, particularly when they make an acquisition or divestment - that's a point where you get a real insight into how a company is thinking," says Wilson.
Wilson points to Car Group (ASX: CAR) as a company with a solid acquisition history. The company is a recent addition to the portfolio, though Wilson acknowledges that he was a bit late to the party.
Another stock he particularly likes right now is pallet-maker and logistics company Brambles (ASX: BXB), saying that “the new management team has brought in a real pricing discipline over the last five years”, which has allowed them to cement a dominant position as a global leader.
In the following episode, Wilson also discusses the Fund's current overweights in tech and healthcare and names one stock from each sector that stands out (one of which is also the stock he would own if the market closed for five years).
In terms of what Wilson doesn’t like right now, he talks about the shrinking position of consumer staples and explains why they haven’t been “quite so staple” over the past year.
He also talks to sector underweights in energy, financials and materials – despite being overweight BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO). For good measure, he also shares his thoughts on Rio’s takeover of Arcadium Lithium.
Finally, in explaining how valuations matter, Wilson shares why he is underweight Cochlear (ASX: COH), despite it being a great business.
Listen to the podcast to learn what keeps Wilson motivated after 40 years in markets, how he sees the current market conditions, and learn a little more about his process for picking stocks. For good measure, he'll even share with you which financial metric is a waste of time!
Note: This interview was recorded on Tuesday22 October 2024.
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In a world where artificial intelligence dominates headlines, few fund managers have harnessed it as boldly as Armina Rosenberg.
For those who don't know her, "Arms" made a name for herself at Grok Ventures, the family office of Mike Cannon-Brookes.
Now, she's paving a new path at AI-backed Minotaur Capital, alongside Perpetual alumnus Thomas Rice.
The duo have developed Taurient, a software system that uses large language models for everything from idea generation to portfolio construction.
In this episode of The Rules of Investing, Arms outlines how you can use AI to level up your own investment strategy, as well as a few stock ideas to get you started.
Note: This interview was recorded on Wednesday 9 October 2024.
Timecodes0:00 - Intro 2:13 - Lessons learnt from managing the wealth of Australia's mega-rich 7:32 - Family involvement in investment in family offices 8:56 - Differences between how retail investors and mega-wealthy invest 10:01 - What makes Minotaur Capital different from its peers13:23 - How Arms and Thomas met 15:26 - How Minotaur's AI system Taurient works 25:21 - Mix of fundamental investing and AI 26:30 - Can AI help to know when to sell a stock? 27:37 - Can investors develop an AI-backed system themselves? 29:04 - How investors can use ChatGPT to make smarter investing decisions 31:21 - The future of funds management in an AI world 34:32 - Where the team sees opportunity today i.e. exciting themes37:13 - Energy companies making waves on the global stage 39:10 - AI winners - why Minotaur is backing smaller players over the behemoths 39:55 - Healthcare ideas - and an emerging oral GLP-1 winner in Japan 41:25 - Why Japan is a "once in a generation opportunity"42:53 - An example of a company Minotaur is shorting 45:18 - What the market is getting wrong today - private credit 47:36 - Stories of wins and losses and lessons from these 51:51 - Two stocks for the next five years (if the market were to close in that time) -
Today, we’ll be bringing all the insights from Livewire Live together with the help of one of Australia's leading financial advisers and one of the country's top wealth managers.
Livewire’s James Marlay sat down with Alexandre Ventelon of Morgan Stanley Wealth Management and Charlie Viola of Pitcher Partners to answer our audience’s questions about asset allocation and give investors some tangible ideas on how to apply the lessons and insights from a full day of sessions covering multiple asset classes, themes and ideas.
This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
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This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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Today, you’ll be learning about the good, the bad and the ugly of equities markets - with the help of:
Dr David Allen, Head of Long/Short Strategies, Plato Investment ManagementBen Griffiths, Executive Chairman, Eley Griffiths GroupJames Hawkins, Partner & Head of the Catalyst Fund, L1 CapitalDushko Bajic, Head of Australian Equities Growth, First Sentier InvestorsThis panel is hosted by Centennial Asset Management’s Matthew Kidman.
They explore the stocks they are bullish on today, the themes they believe are likely to suffer, and the stocks they recommend investors avoid (or short, if they can) over the months ahead.
This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
________________
This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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Many of the best investing opportunities emerge when you think differently from the herd. This session will feature five high energy predictions that will challenge consensus thinking as investors look towards 2025 and beyond.
You’ll be hearing from five of Australia’s leading investment minds, including:
Kellie Wood, Head of Fixed Income at Schroders Vihari Ross, Portfolio Manager at Antipodes,Bob Desmond, Co-Portfolio Manager and Head of Claremont GlobalJosh Clark, Lead Portfolio Manager at QVG CapitalMatthew Kidman, Chief Investment Officer at Centennial Asset Management.This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
________________
This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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In this session you’ll be hearing a fireside chat with Todd Barlow the CEO of Soul Patts, Australia’s oldest listed company.
Soul Patts is a diversified investment house often described as Australia’s answer to Warren Buffett’s Berkshire Hathaway. The company has established an incredible record of dividend payments to shareholders and today you’ll be getting an asset allocation masterclass from Todd and hearing about the opportunities he sees in the market today.
This session was moderated by James Unger, Head of Corporate Finance and Bell Potter Securities.
This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
________________
This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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Artificial Intelligence is surely the hottest topic right now powering returns in stock markets and capturing our attention with its promise of productivity and innovation. But with such spectacular interest and returns I’m sure many investors are wondering if the opportunity has passed.
Our next panel will be picking the eyes out of the AI opportunity. How big is it and where are we in the cycle for this industry? Who will be the winners? And who will get crushed?
The panel features:
Nick Griffin, Founding Partner & Chief Investment Officer, Munro PartnersJun Bei Liu, Lead Portfolio Manager, Tribeca Investment PartnersJacob Mitchell, Chief Investment Officer & Lead Portfolio Manager, AntipodesThis session was moderated by Livewire’s Deputy Managing Editor Ally Selby.
This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
________________
This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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In this episode, you’ll be hearing a panel exploring a number of big topics dominating conversations around markets right now.
From the changing macro backdrop and debate over the merits of public vs private markets to the implications of ageing populations, the energy transition and digital innovation these are Seismic Shifts and we’re going to hear about the opportunities they present for investors.
The speakers in this session are:
Matthew Haup, Lead Portfolio Manager at Wilson Asset ManagementSrdjan Dangubic, Partner at Five V CapitalJames Abela, Portfolio Manager at FidelityAndrew Lockhart, Managing Partner at Metrics Credit PartnersYou moderator is Livewire’s managing editor Chris Conway
This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
________________
This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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In this episode, you’ll hear from Scott Kleinman, the co-president of Apollo Global Management, as he sits down with Livewire’s James Marlay. Kleinman shares his views on why he believes markets are getting ahead of themselves with rate cut expectations, where he sees value across various sectors, and how Apollo is positioning to take advantage of mega trends such as digital transformation, the energy transition, and ageing populations.
This episode is part of our special mini-series of The Rules of Investing, giving you a front-row seat to discussions from Livewire Live 2024, our flagship investor event.
Whether you’re after big-picture market insights or actionable investment strategies, this series offers exclusive insights to help shape your investment decisions.
We hope you enjoy this special 7-part series. We’ll return to our regular programming with the next episode of The Rules of Investing.
________________
This series is proudly sponsored by Bell Direct Advantage.
Bell Direct Advantage is a premium trading platform designed for active and sophisticated investors. Offering access to Bell Potter research, exclusive IPOs, and advanced trading tools, it’s built to give you a competitive edge. Whether you’re a frequent trader or a high-net-worth individual trading shares, options, or warrants, Bell Direct Advantage delivers tailored solutions and superior service to sharpen your investing edge. [Find out more here]
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Behavioural economics explains why we make such stupid decisions with our money. Unfortunately, the study has found that behavioural biases are very hard to control and, even if you are aware of them, no one is immune from poor decision-making when it comes to both life and our finances.
This is where quantitative or systematic investing comes in - a realm of investing typically reserved for institutional investors like super funds and the ultra-wealthy.
Quantitative investing removes emotion and behavioural biases from investing. Instead, it relies on some of the smartest people in the world to put together hundreds to thousands of signals and data points for a large language model to make decisions. Humans are involved but just for oversight, in case the model does not truly understand a situation. For example, it may not understand that airlines were not a fantastic short-term opportunity amid a significant sell-off during the COVID-19 crash.
This is a far cry from fundamental investing, which relies on a fund manager or investor analysing macroeconomic and stock-specific factors, meeting with management teams, trying out products and services and reviewing a business's balance sheet before making an investment decision of their own.
The gains from quantitative strategies are typically small, but they're consistent over time. You are not going to have years of 10-20% plus outperformance over an index, but equally, you shouldn't experience huge drawdowns either. And over the long term, this small amount of alpha adds up.
Interestingly, Macquarie Asset Management was one of the few firms that saw its funds achieve 100 batting averages - for both the large-cap and small-cap categories - over a 10-year period. This means that these funds, which are all quantitative strategies*, have outperformed the benchmark 100% of the time in every three-year rolling period over the past decade.
So, to learn more about quantitative investing, quantitative ETFs and the major trends shaping ETF markets, Livewire's Ally Selby was joined by Blair Hannon, ETF Strategist at Macquarie Asset Management.
We discuss some common misconceptions surrounding quantitative investing, the signals that have worked over the last few years, and the magic of compounding over the long term.
Plus, Hannon also shares why he strongly believes that passive investing is not creating a bubble in markets - despite what some of the world's most famous investors (like The Big Short's Michael Burry) would have you think.
Note: This interview was recorded on Tuesday 24 September 2024.
Timecodes 0:00 - Intro 1:54 - Difference between fundamental and quantitative investing 5:28 - Removing the emotion from investing 6:55 - Signals that are used to avoid behavioural biases 8:56 - Do we need human touch on quant funds10:31 - Common misconceptions of quant investing 14:44 - The signal that has been working over the last year 18:20 - Turnover of stocks in the portfolio20:10 - The signal that has worked over the long term 21:32 - Why 1% alpha is attractive over the long term 24:38 - Macquarie's batting average scores over 10 and 5 years 27:37 - Why ETF popularity will continue to soar 29:57 - Why active fund managers need to innovate on ETFs32:50 - Innovation in the US - and what we can expect in Australia 35:08 - Why ETFs aren't the death of managed funds 37:10 - Why passive investment isn't creating a bubble in markets39:07 - Something that worries Blair about the direction of ETF markets 41:21 - One ETF to hold for the next 5 years if markets were to closeDisclaimer:
Product Disclosure Statements and Target Market Determinations for Macquarie ETFs can be found at etf.macquarie.com and should be read before making a decision to invest.
*The Macquarie Australian Shares Fund, Macquarie Australian Equities Fund and the Macquarie Australian Small Companies Fund’s investment strategies changed effective 18 December 2017. Until 17 December 2017, the strategies were managed with a fundamental approach. From 18 December 2017, the strategies were restructured such that they are managed with a quantitative, systematic investment approach.
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While Warren Buffett's favourite holding time may be forever, the average holding period for a typical investor is now just 5.5 months. In a world where news, analysis and investment ideas are readily available at our fingertips, investors have quickly forgotten the benefits of long-term compounding and instead are focused on the next great stock, driven likely by their fear of missing out. We've all succumbed to it, there's no point denying it. How many of us jumped on the buy-now-pay-later trend, the lithium trend, the uranium trend, and now, the AI trend, as stocks soared to stratospheric heights? How many of us have attempted to hold on for dear life (HODL) as some of these companies crashed back to Earth? So, how can you identify the companies that continue to win over the long term? And by long term, I don't mean five-plus years, but 20. In this episode of The Rules of Investing, Janus Henderson's Josh Cummings outlines what makes a winning long-term stock - a process that has helped the team top the league tables for their consistent outperformance over the last five and 10 years - and provides a few examples.We also take a deep dive into artificial intelligence - and why Cummings believes AI will become even larger, more pervasive, and more impactful on our lives than we could ever conceive of today. https://www.livewiremarkets.com/wires/the-secret-to-finding-stocks-you-can-hold-for-20-years Timecodes0:00 - Intro2:16 - The secret to consistent long-term outperformance3:30 - What the team got right and wrong over the last 12 months4:38 - The impact of AI on mega-cap tech companies7:19 - Is there too much "faith" in the AI theme?9:48 - Is this the death of value investing?11:58 - What it's like on the ground in the US right now15:14 - Impact of cumulative inflation on businesses18:13 - Nvidia's antitrust charges20:42 - Factors that can help investors identify consistent winners22:58 - Celebrity CEOs and red flags25:20 - Should you really HODL?26:58 - Smaller companies employing disruptive innovation31:13 - Lessons from the team's meeting with OpenAI CEO Sam Altman33:49 - Innovation is a scale game - why the big are only going to get bigger35:01 - What could go wrong with AI (i.e. are we in for an iRobot scenario)40:22 - Two things investors are getting wrong today42:36 - Why you should invest in what you know (and trust your gut)46:45 - One stock Josh Cummings would own if the market closed for 5 years
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Nowadays, it’s quite easy to get swept up in the negativity around our economic plight. Living costs are a very real concern, as are increasingly unaffordable house prices. But, as Australians, we’re also quite fortunate.
Our economy has enjoyed an unprecedented run of growth, we’re highly educated, we’re resource-rich, and we have opportunities – one of which lies in energy creation.
As Darren Brown, Co-Managing Director, Renewables Australia at Octopus Investments tells it, there is “a really unique opportunity for Australia to become a superpower in renewable energy”.
The conversation highlights the transformative changes in the energy sector, the strategic initiatives underway, and the opportunities for investors in the renewable energy market in Australia.
Brown's unique perspective, gained from his experience in both fossil fuels and renewables, provides valuable insights into the industry's evolution and the potential for long-term growth in the renewable energy space.
Note: This episode was recorded on 29 August 2024.
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In 1990, then-Treasurer Paul Keating famously said that the country's economic downturn was the “recession that Australia had to have.”
Although Keating was responding to a poor GDP print and doing his best to control the narrative, at the start of the rate hiking cycle in mid-2022 most in the market spoke of an impending recession with almost as much certainty. As it stands today, said recession is yet to materialise.
So, what happened? And perhaps more importantly, what does it mean for investors?
In explaining why a recession hasn’t occurred, Sebastian Mullins, Head of Multi-Asset, Australia at Schroders points out that both the Australian and US governments pumped money into their respective economies—something we hadn't seen in a long time.
“During the GFC, you had targeted programs to bail out banks and stimulate the economy, but on average, you had a very, very loose monetary policy and very tight fiscal policy to preserve balance sheets – i.e. improve the fundamentals of both corporate and government balance sheets”, says Mullins.
“This time around, it's the reverse. We're hiking rates but the government's stimulating aggressively. So that has offset quite a bit of it”, says Mullins.
Regarding America, where most of the recession indicators have been flashing red, Mullins adds that the US went into the current downturn un-levered – at least compared to previous episodes.
“If you think about what the pillars of the economy are, you have the consumer, you have corporates, and you have the government”, notes Mullins.
The US consumer de-levered after the GFC, reducing their amount of debt to GDP, as did corporations. “You'd expect higher interest rates to crack corporates”, says Mullins, but that hasn’t happened.
And while the government has been hurt by higher rates due to the bigger interest payments on its debt pile, “If the two pillars of the private economy are fine and the corporates are all fine, then there's no recession”, says Mullins.
Great, no recession. What about inflation?For Mullins, the inflation conversation depends on how far into the future you look. “So in the short term, inflation's definitely coming down,” says Mullins.
As for the next five years and beyond, Mullins believes there are structural forces that will mean inflation could stay above the long-term targets of central banks – although that doesn’t have to be a bad thing.
“There are more inflationary forces in the system now than they were over the past decade” notes Mullins, adding that “things like fiscal stimulus that's here to stay”.
“You're seeing more populous governments come in around the world. You're talking about the election in the US, they're both going to spend.
"It doesn't matter who wins, it just depends on who they spend on. But there's no tea party candidate or fiscal conservative”, says Mullins.
Mullins points to other inflationary factors, including de-globalisation, on-shoring, and increased security spending—whether that means military, food, mineral, or cybersecurity.
“So all that is to say, we're not saying we're going to 1970-style inflation, but if in the US 2% was the ceiling of inflation for the past decade, we think it's going to become a floor. So, it might be between two to three, maybe two to four [percent]”, says Mullins.
So, how are you investing?A potentially higher floor for longer-term inflation seems like a small price to pay following the most aggressive rate-hiking cycle in living memory.
If someone offered the current economic and investing scenario back in late 2022 and early 2023 – with equity markets near all-time highs, bonds providing a decent yield, and an absence of recession – we’d all likely take it in a heartbeat.
So, as a multi-asset strategist, how is Mullins shaping portfolios in light of macro developments and a seemingly benign backdrop? Find out in this edition of The Rules of Investing, presented by James Marlay.
Mullins provides a view on Australian, US, Chinese and Japanese equities, bonds, and Australian vs. US credit. Finally, he outlines the bull case moving forward as well as the biggest risk to the outlook.
Note: This episode was recorded on 27 August 2024.
https://www.livewiremarkets.com/wires/what-happened-to-that-recession-we-were-promised
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In this episode of The Rules of Investing, Livewire's Ally Selby learns about some of the companies that meet these criteria, why Rizzo believes AI will be far more transformative than investors currently think, as well as why he believes that investors are likely to do more harm waiting for a correction in some of these tech winners than a correction itself.
Plus, he shares what he is seeing on the ground in the US right now in terms of economic weakness, the stocks he believes are worth paying up for right now, and how he takes advantage of sell-offs when he holds very little cash.
Note: This episode of The Rules of Investing was recorded on Wednesday 14 August 2024.
https://www.livewiremarkets.com/wires/why-ai-will-have-a-bigger-impact-on-the-world-than-the-invention-of-electricity
Timecodes: 0:00 - Intro 2:10 - Making sense of the volatility in tech stocks 3:11 - This is a healthy bull market correction 4:44 - The true transformational nature of AI 8:11 - Spotting the imposters from the real AI winners11:06 - There are risks but we are starting to see business acceleration from AI13:27 - Should you take advantage of sell-offs in AI companies? 15:08 - What Dom is seeing on the ground in the US in terms of economic stability17:08 - How to identify winning tech stocks 19:53 - How Dom thinks about risk 22:01 - Dom's wishlist of stocks he would own at a cheaper price 24:15 - Stocks it is worth paying up for right now 26:32 - A deep dive into semiconductor stocks and cycles 30:20 - NVIDIA at the point of deceleration and what this means for investors31:16 - How to take advantage of sell-offs with very little cash 34:19 - One thing investors are getting wrong about markets 34:53 - Biggest lessons Dom has learnt during his career 39:06 - One stock Dom would hold if the market closed for 5 years. -
Much has been made of the “Great Rotation” of late and the move away from highly concentrated large caps into small-cap equities, particularly in the US.
Greg Dean, founder of Langdon Equity Partners, is having none of it. When quizzed about whether the rotation was impacting how Dean and his team invest, the short answer was ‘no’.
Late last year, amid widespread commentary about 2024 being the ‘year for small caps’, Langdon wrote about the time and energy people spend talking about timing in small caps and called it a “big waste of time”. Dean feels a similar way about the rotation.
“The reality is if you wait for the perfect time, you've probably missed out on a lot of opportunity during that period when fewer people were interested”, says Dean.
Dean founded Langdon in 2021 on the concept of a “clean sheet of paper” – i.e. not being beholden to anyone but investors.
His philosophy is built on deep research and holding management to account, allowing him to ‘trust but verify’. He adds that speaking with management is a delicate balance that is often “executed poorly”.
“You think you have to be aggressive and definitive or you have to be a “yes” person and agree with everything that they're telling you, and neither of those is optimal”, says Dean.
In the following episode of The Rules of Investing, Dean delves deeper into small-cap investing, explains why he and his team take more than 300 individual company meetings each year, talks through the current portfolio tilt, and shares why the fund favours Europe over the US.
He also upacks two global small-cap stock ideas that highlight Langdon’s approach.
Note: This episode was recorded on 31 July 2024. You can watch the video or listen to the podcast below.
https://www.livewiremarkets.com/wires/why-trying-to-time-small-caps-is-a-big-waste-of-time-and-2-long-term-stock-ideas
Timecodes0:00 - Intro1:36 - Investment background and founding Langdon5:05 - Biggest influences over the journey and why small caps?8:39 - Investment philosophy origin story11:01 - When is enough, enough?12:45 - The Great Rotation and current market conditions15:31 - Company meetings how the best stand out20:09 - Honing the craft23:42 - Current portfolio: underweight US, overweight Europe26:58 - Why cashflow is Landon's North Star28:07 - Other non-negotiables29:12 - Testing beliefs30:40 - Navigating patience as a small-cap investor32:57 - Small-cap stock ideas37:52 - What are investors getting wrong about today's markets?49:27 - Courage of conviction41:29 - The five-year stock
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In tennis, just as in investing, it's the points that you win that matter. After all, Roger Federer played 1,526 singles matches throughout his career, and while he only won 54% of the individual points within those matches, he walked away with the win 80% of the time.
Ausbil Investment Management's fresh-faced co-head of emerging companies, and portfolio manager for its small and micro-cap strategies, Arden Jennings, is focusing on just that.
"Stocks are just points. But it's the points that matter that win you the game. So for us, our largest detractor was still smaller than our 17th biggest winner. Even though we had an even spread of winners and losers, it was the ones that were successful that made it a good year," he says.
And a good year it was. The Ausbil MicroCap Fund returned 33.53% in FY24, while its Australian Small Cap Fund delivered investors a nice 25.73%. Since inception, these funds have returned 20.08% (since February 2010) and 24.17% (since April 2020), respectively.
So, where is the Roger Federer of Australian small caps seeing the most opportunity today? You'll find out in this episode of The Rules of Investing.
Note: This episode was recorded on 30 July 2024. You can watch the video or listen to the podcast below.
https://www.livewiremarkets.com/wires/where-the-roger-federer-of-australian-small-caps-sees-the-most-opportunity-today
Timecodes:
0:00 - Intro2:36 - Decisions that lead to outperformance in FY245:04 - Roger Federer's streak and lessons for investing6:13 - Interest rate expectations7:00 - Why the small-cap rebound can continue and the Great Rotation in Australia8:03 - The stocks that will benefit - HUB24 (ASX: HUB), Zip Co (ASX: Z1P), Credit Corp (ASX: CCP)9:24 - Wildcards that could impact investors' portfolios11:41 - What to expect this reporting season12:29 - Why investors should be wary of crowded trades13:24 - A stock to watch this reporting season: Aussie Broadband (ASX: ABB)14:15 - One thing the market is getting wrong right now16:24 - A story of a big win or loss from Arden's investing journey17:27 - Stories from childhood - investing at 10 years old18:01 - One stock to hold if the market were to close for the next 5 years... you'll have to listen to the interview for that one! -
There's no supply in residential housing nor the majority of segments of the commercial real estate market. Sky-high construction costs are now too prohibitive. Bandaid solutions, like rent control, only backfire. And inconsistent state, federal and local policies are not helping either.
That's according to this week's guest on The Rules of Investing, Andrew Parsons, a founder and the chief investment officer of global listed real estate manager Resolution Capital.
While these factors continue to perpetuate Australia's housing problem, they are actually positive for long-term investors in real estate.
In this episode of The Rules of Investing, Parsons dives into Australia's property problem, outlines what he believes to be the solution, and shares why listed property is in for a strong three to five years ahead of us.
Note: This episode of the Rules of Investing was recorded on Wednesday 17 July 2024.
https://www.livewiremarkets.com/wires/30-year-property-veteran-australia-has-its-head-in-the-sand-on-housing
Timecodes0:00 – Introduction2:06 – A fascinating, under-appreciated part of the market3:45 – What is a REIT?5:30 – The key distinctions between REITs and physical property assets8:45 – Which do you prefer: an investment property or listed property assets?9:50 – Where REITs sit alongside equities and fixed income10:55 – What you’re really paying for when you buy real estate12:50 – Why property development is so difficult currently13:40 – Australia’s troubling property supply shortfall15:04 – “We don’t want urban sprawl”16:30 – How do you solve Australia’s big property problem?20:50 – The effect of interest rates on listed property, versus equities and bonds23:40 – How Resolution Capital is currently positioned33:50 – What is your best investment of all time?38:08 – Resolution Capital’s five-year pick -
Investors are too focused on interest rates and are subsequently underweight risk assets.
That’s the, albeit US-centric, view from Global X ETFs’ Head of Investment Strategy, Scott Helfstein.
He elaborates by saying that the US economy is looking a lot more like mid-cycle expansion than late cycle and that “you don’t want to be sitting on the sidelines”.
A fan of thematic investing, Helfstein goes on to highlight three big investment themes that he likes right now, including one offering the opportunity for true transformation, that’s available for the same price as the S&P 500.
Don’t miss the latest Rules of Investing Podcast.
https://www.livewiremarkets.com/wires/3-compelling-long-term-etf-ideas-for-investors-still-on-the-sidelines
Timecodes
0:00 - Intro1:12 - A unique background for an investment professional7:17 - The current state of geopolitics12:00 - Australia's position in the global landscape14:10 - The appeal of thematic investing16:42 - Where is the puck going?22:53 - Sectors versus themes26:48 - The role of thematic investing in a portfolio28:46 - Nothing but ETFs?30:27 - Ranking the big themes34:22 - A theme that is flying under the radar36:40 - Risks in thematic investing38:32 - Mama's favourite son39:49 - What are investors getting wrong?41:07 - One theme for the next five years
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Fully franked dividends are a prized asset of the Australian market. While the lack of growth is often lamented, plenty of self-funded retirees are content to dine on the distributions of Australia's big miners and banks.
And who can blame them - high commodity prices, particularly in iron ore and lithium, resulted in record dividends from the top end of town. However, after peaking in 2021 and 2022, dividends from mining companies are steadily declining.
Research from Commsec published late in 2023 showed that the 12-month forward dividend yield for the ASX200 has been below the long-run average of 4.7%, and dividend per share estimates have been cut by 14 per cent.
The good news is that Australian banks have been increasing their dividends whilst also enjoying surging share prices. There is also a long list of consistent dividend paying stocks that often fly under the radar.
In this episode of the Rules of Investing, Livewire's James Marlay speaks with Plato Investment Management's Dr Don Hamson to get his diagnosis on the case of the 'disappearing dividends'. Hamson insists that diversification remains a free lunch for investors, especially for those seeking stable and consistent returns. He also emphasizes that fully franked dividends continue to stack up as the backbone of an income-generating portfolio.
Timecodes:
0:00 - Introduction1:43 - The outlook for dividends8:27 - Dividends versus Fixed Income10:25 - Dwindling dividends13:08 - The dividend outlook for mining shares17:00 - Tactics to combat declining dividends20:07 - Australian banks - stable but expensive22:10 - The case for diversification25:15 - Winning by avoiding the losers28:09 - What returns are realistic for Plato?31:26 - A lesson from Medibank Private34:10 - Don’t focus on the US election36:23 - The stock most likely to be a 5-year resident in the Plato Australian Shares Income Fund - Näytä enemmän
