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First and foremost, may we wish you and your families a Happy and prosperous New Year.
Over the Christmas / New Year break, we at FYM spent considerable time discussing and analysing how we should position portfolios for 2012.
We spend considerable time studying the Chinese economy given Australia’s strong economic ties and dominant mining sector.
The state of China is also a topic of regular discussion with clients.
Having manufactured a slowdown in 2011, bringing inflation under control the Chinese Government has for the first time in 3 years commenced easing, or stimulatory economic policy.
We see the Chinese economy accelerating over the course of 2012, which should see far better share price performance from our major Resource companies this year.
Attached is a well written article addressing the most commonly asked questions about China.
China's Longer Term Challenges - Stephen Roach - Morgan Stanley
Structured Products - Investment Strategies For Volatile Markets
These ‘interesting times’ have seen all Financial Institutions reassess their investment strategies and with that bring to market a myriad of different investment products that we assess and utilise for clients where appropriate.
With this in mind there are ways to gain market exposure via a protected position with a defined, limited downside and take a longer-term investment view. It is important to remember that historically the share market has led the broader economy in its recovery by an average period of six months, so investors waiting for positive macro data to make them feel more comfortable will miss the initial market upswing which could well be substantial. For these reasons we believe the following structured investment is a compelling opportunity.
The market has been sold down aggressively, rebounded, sold down…and so on, in recent months and is currently priced at very attractive levels. While there will no doubt be more volatility as the issues causing market weakness continue to be resolved, by taking a three year time frame we believe you will capture the markets inevitable upswing. As mentioned in the most recent Charlie Aitken article, it is very difficult to be bullish at the bottom when fear abounds.
This Product could be suited for those:
- still nervous from market volatility and wanting to place a larger allocation of their portfolio to defensive assets such as bonds and cash, yet wanting to get the exposure and potential upside of the Australian share market over the next 3 years, or
- those who have excess cash sitting idle and want to invest in the market but also want downside protection, or
- for investors starting out with limited cash wishing to commence a $100,000 portfolio.
Brief Product Specifications:
- An investment amount of $9,250 gives you an uncapped exposure of $100,000 to the S&P/ASX 200 index for a twelve-month period, with the ability to roll the investment in to a 2nd & 3rd year.
- If the index falls or stays at currents levels your loss is limited to $9,250 (the interest paid) – irrespective of how far the index falls.
- The $9,250 is fully tax deductible.
- The ability to walk away at any time without incurring any further costs, penalties or anything further to pay on the loan at any stage (or annually).
- The potential for annual coupons (dividends or interest) to help fund your interest.
The following links provide case studies and futher details.
Should this Product be of interest to you, please do not hesitate to contact:
FYM Financial - Portfolio Management
p: 61 3 9629 9900
Please find attached a tactical asset allocation piece outlining the adjustments made to our model SMA portfolios. This note also highlights our current market and economic views and portfolio positioning.
At FYM, we aim to outperform each stated benchmark for a particular asset class whilst remaining within defined risk parameters.
Many of our clients are conservative in nature and so the portfolios we create for them focus very much on what we consider the high quality end of the market.
We currently offer two tailored services to clients:
- Those clients who desire and require an IMA (individually managed account) service, where we construct portfolios with directly held investments, and
- Those clients who wish to utilise an SMA (separately managed account) service, whereby they are able to access portfolios of directly held investments.
The two SMA portfolios that are largely reflective of the bulk of clients direct investments are our:Income SMA
For nearly all clients, we also overlay a tactical asset allocation process as detailed in our latest Tactical Asset Allocation update attached:
Peters' presentation gave a broad macro-economic global overview, before focussing on the Australian market and in particular the sectors he favours moving forward.
The presentation was informative and insightfull, delivered in a lighthearted and entertaining manner.
For those who weren't able to attend, here is a copy of the presentation.
Naturally if you have any questions, please do not hesitate to contact us.
Attached is a link to an article by renowned Institutional Investor Charlie Aitken, Head of Wholesale dealing at Bell Potter. We feel this piece encapsulates some of the themes we have mentioned in our last few articles and lends credence to our view that at these depressed prices, high quality stocks offer exceptional long-term value. Some of the issues he discusses are:
- As an asset class shares offer outstanding value with the equity market paying you an enormous risk premium over bonds to simply invest
- Investors need to look beyond near-term issues that will create volatility in stock portfolios and take the view of an investor as opposed to a trader
- Three of the major four banks are about to report their results and when one factors the fully-franked dividends on offer it would be a mistake to short the sector
- In keeping with our quote from Sir John Templeton last week about viewing a miserable near-term market outlook as an opportunity, he writes “the biggest crime I can commit in writing equity strategy is to be bearish at the bottom”