Long-term Investing

Airlie Funds Management

December 2024

Investing in Australian listed companies with a long-term outlook entails retaining investments for a minimum of five years or longer. While the exact time frame for long-term investing can differ, the core principle is dedication, regardless of market turbulence and fluctuations in asset prices.

We delve into key strategies tailored for those investors keen on harnessing the potential of Australian listed companies for long-term wealth accumulation.

Objectives, risk tolerance and investment horizon

Long-term investing begins with a clear understanding of your financial objectives, risk appetite, and investment time frame. Whether your aim is to secure your retirement, finance education expenses or a dream property, clearly defining your goals is essential.

Assessing your risk tolerance, which means finding out if your risk level is conservative, moderate or aggressive, helps you understand the level of risk you're willing to accept in pursuit of your investment objectives. Generally, investors with longer horizons can afford to embrace higher risks compared to those nearing retirement.

It's important to consider your investment time horizon, as this is when you'll need access to money to achieve your financial objectives. Some of the factors that influence your time horizon include your financial goals, income, age and risk tolerance.

Tailoring your investment strategy to align with your unique circumstances is foundational for long-term success in the Australian market.

Diversify your portfolio

The Australian investment landscape, like any other, is prone to unpredictability and market fluctuations. Spreading your investments across different industry sectors can potentially help to mitigate risk. Diversification may help reduce the potential negative impact of any single asset's downturn on your overall portfolio. This approach helps in balancing out the performance, as when one asset or sector underperforms, another may outperform, stabilising the portfolio's returns. It's important to align diversification with your individual risk tolerance and investment goals, ensuring a well-rounded and resilient investment strategy.

Stay committed

Emotions often run high during market downturns, tempting investors to deviate from their chosen investment strategies. However, succumbing to fear-driven decisions can jeopardise long-term returns. Resist the urge to time the market, as consistently predicting market movements is exceedingly challenging. Long-term investing requires discipline and resilience, where investors are encouraged to adhere to their investment strategies even amidst turbulent market conditions. Avoid falling into the trap of chasing short-term profits, as maintaining investment during market cycles can be essential for realising the full potential of the market.

It's easy to feel drawn to timing the markets, aiming to choose tomorrow's winners from yesterday's winners. However, evidence suggests that market timing is a tough game. Take the buy low, sell high approach, for instance; it hinges on predicting when a stock will rise or fall, a task fraught with complexity. Successful long-term investing, on the other hand, demands a commitment to staying invested, resisting the urge to constantly chase the next big thing.

The chart below illustrates the risks of trying to time the market.

Leverage expertise and regular review

Achieving success in investing requires a thorough understanding of market dynamics and investment strategies. Consider investing in managed funds where investment experts are actively researching and managing a portfolio, aiming for optimal diversification with continued dedicated oversight.

Review your investment strategy regularly to ensure it remains aligned with your long-term objectives. Rebalancing your portfolio and adjusting the weightings of your portfolio helps to ensure alignment with your intended long-term goals. Over time, some investments may perform better than others, causing your portfolio to shift from its original strategy. Rebalancing brings your portfolio back to its original plan, ensuring it continues to reflect your investment goals and risk tolerance.

Long-term investing in Australian-listed companies entails a strategic approach tailored to your unique financial goals and risk tolerance. By embracing diversification, maintaining discipline, and leveraging expert guidance, investors may have greater confidence in navigating the dynamic Australian market landscape.

Funds operated by this manager:

Airlie Australian Share Fund, Airlie Small Companies Fund

Important Information: 

This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 trading as Airlie Funds Management ('Airlie') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to an Airlie financial product or service may be obtained by calling +61 2 9235 4760 or by visiting www.airliefundsmanagement.com.au.

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of an Airlie financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. Airlie makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Airlie. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Airlie will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Any third party trademarks contained herein are the property of their respective owners and Airlie claims no ownership in, nor any affiliation with, such trademarks.   Any third party trademarks that appear in this material are used for information purposes and only to identify the company names or brands of their respective owners. No affiliation, sponsorship or endorsement should be inferred from the use of these trademarks.  This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Airlie.

Market Commentary - December

Glenmore Asset Management

January 2025

Funds operated by this manager:

Glenmore Australian Equities Fund

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Hedge Clippings | 17 January 2025

Happy New Year! It's January 2025, and it's a Friday, so welcome back to Hedge Clippings' first weekly commentary and round up of performance updates and insights articles for the year, gathered from FundMonitors.com's database of over 900 managed funds. Before we take a look at what's been holding our attention in the world of geo-politics and economics, it's worth taking a quick backward glance at fund performances over the past 12 months.

To date (17th of the month) we have received performance updates from 73% of the funds in our database, so the full picture will only emerge in the next week or so, but the funds making the Top 5 performing Peer Groups were all investing globally, reinforcing the rule that asset allocation (or in this case designated as Peer Group) underlines successful performance.

Topping the list were funds investing in Digital Assets, which averaged a 12 month return of 70.36% on the back of the rally in Bitcoin (along with other digital coins) which topped US$100,000 for the first time, spurred on, like many things, by Donald Trump's election in November. Equally unsurprising was the average return of Global Equity Long Peer Groups - both Small/Mid cap and Large cap, at 22.6% and 22.04% respectively for the year, against strong benchmark returns - All Countries World Index +29.68%, and the S&P500 Accumulation Index's return of 25%.

Australian Equity Funds' average 12 month performance was much in line with the ASX200 Accumulation Index (+11.44%), with Small/Mid Cap funds outperforming at 13.7%, while Large Caps underperformed at 10.4%.

All these of course are averages (as are the underlying indices) which leads to the next rule which reinforces the importance of Manager and Fund selection - assuming the objective is to outperform the average, unlike index and ETF funds which aim to replicate the index. The Top 10 Australian Equity funds' 12 month returns ranged from 43.27% to 32.51%, while their peers investing globally ranged from 109% down to 45%.

The statistics above are not complete as only just over 70% of December's returns have been reported. Once we have the full data we'll provide the full "Top Ten" lists.

And so to the future: Politically - and economically - Donald Trump will continue to dominate globally, while locally, the upcoming Federal election due in mid-May will take centre stage, with Albanese's government dependent on the course of inflation and interest rates - and the possibility of a rate cut - in the intervening period. Jim Chalmers is trying to tell us what a wonderful job he's been doing with the Treasury portfolio, but if that's the case, why are so many people unhappy?

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