NEWS
5 Sep 2023 - The Experiences Megatrend
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The Experiences Megatrend Insync Fund Managers August 2023
Despite Covid's interruption it has continued to gain momentum. Its recovery is proving remarkable, as experiences remain a potent megatrend with substantial growth potential ahead, even amidst short-term economic woes. Despite the headlines throughout the pandemic and general market commentator's gloomy predictions, our research at Insync told us otherwise. For players that had strong capital bases, tight reins on expenses, and prudent investment allocation strategies, they could endure the worst the pandemic could throw at them. These businesses emerged stronger, such as the prime stock in our portfolio did. Many of its peers however weren't as strong, with some folding or forcibly downsized. Additionally, entire sectors of travel/experiences almost collapsed (e.g. cruise lines). For those left standing, their hold on the market and thus their margins became bigger and stronger. An increase in interest rates and inflation had minimal impact on their performance in the post pandemic recovery.
These businesses emerged stronger, such as the prime stock in our portfolio did. Many of its peers however weren't as strong, with some folding or forcibly downsized. Additionally, entire sectors of travel/experiences almost collapsed (e.g. cruise lines). For those left standing, their hold on the market and thus their margins became bigger and stronger. An increase in interest rates and inflation had minimal impact on their performance in the post pandemic recovery. What and who is driving this megatrend? Over the past decade, the desire of consumers has shifted towards experience-based offerings and is influencing people's spending priorities. This shift spearheaded initially by millennials has spread across all age groups. Ironically it gained further traction from covid's travel restrictions. A proof point can be found in air travel; that whilst business trips are relatively flat compared to pre-covid, overall commercial flights hit a global record in June this year. A significant majority of 74% of Americans, as a further example, now prioritize experiences over material possessions according to a third-party research study. This is no different to us here in Australia and New Zealand or in Europe. Notably, millennials and Gen Zers are leading this trend as travel becomes an increasingly regular and a vital priority for these age groups . With 44% of travellers aged 18 to 34 asserting that travel is more important post-pandemic, it's evident that this generational shift is taking hold.
The fast approaching impact of AI on this megatrend. With AI developing quickly it is vital to understand its impact on business models of all companies that we invest in. Our research shows that online travel agencies(OTAs) are extremely well placed, contrary to many investors placing them in the AI loser's basket.
This is because the OTAs operate far downstream of where AI will have its heaviest and nearest impacts. Consider this single aspect; OTAs employ tens of thousands of staff in local markets around the world to source then continue to manage the fragmented accommodation supply to make it homogenously, digitally bookable globally. Importantly, our prime holding is already investing heavily in utilising AI. This is a critical piece of OTA infrastructure that the likes of Google or ChatGPT will both struggle to execute and match the capabilities of dominant OTAs. Indeed Google recently tried and failed to gain a foothold in this sector after significant investment and effort. Funds operated by this manager: Insync Global Capital Aware Fund, Insync Global Quality Equity Fund Disclaimer |
4 Sep 2023 - Hybrid securities - How risky are they?
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Hybrid securities - How risky are they? PURE Asset Management August 2023
Hybrid securities is a catch-all term and refers to both preference shares and convertible loan notes. They are financial instruments that combine the characteristics of both debt and equity. This article will focus on Convertible Loans, or simply, Convertibles. These instruments, like traditional debt, pay a rate of interest and have more protections than shares, but they also have the option to be converted into the shares of the Company at some point in the future. The conversion feature makes them attractive to investors who believe that the value of the Company's shares will increase over time. By holding a Convertible, investors have the potential to participate in the share price appreciation, while also receiving interest while they wait. The conversion price is typically set at a premium to the current market price of the shares, or it can be based on a discount to a future pricing event, for example an IPO. When the share price rises above the conversion price, the holder can convert into shares and make a profit. Convertibles can be a way to gain exposure to both income and growth, but like any investment they come with some risks, which could largely be considered to sit between the risk of shares and the risk of traditional debt. What are the main risks?Credit riskThe largest risk of a Convertible is credit risk. Credit risk is the risk of default, if the borrowing Company is unable to pay the interest on the loan, or even payback the original capital, which may be result in a partial or a complete loss of capital. A key factor influencing the level of risk is the level of security attached to the Convertible. The capital of all companies sits in a capital stack (see below). At the top of the stack is a senior secured loan and at the bottom, equity. The risk of an investment is largely correlated to where the capital sits in the capital stack. Convertibles are typically the top three, so less risky than preference or ordinary shares. (Note that a Company may not have all the layers in the table, but most will have several.)
In an efficient market, higher levels of credit risk will be associated with higher borrowing costs as the investor wants to receive a higher return for the perceived risk of the investment. In simplistic terms, the higher up the stack, the more other investors' capital there is that would first need to be lost, before the investors above them suffers loss. In a private market, lenders and borrowers negotiate directly. A savvy lender/private debt manager will attempt to negotiate with the borrower the appropriate terms and conditions, controls, reporting obligations, covenants, and security to ensure the lender has greater influence over the loan terms in an effort to mitigate potential loss risk. Covenants and ongoing borrower reporting requirements are negotiated in order to provide protection and early warning of changing risks. Liquidity riskLiquidity risk refers to the inability to sell or trade an investment when needed. Unlisted hybrid securities are an illiquid investment, and therefore carry the risk that if something goes wrong in the Company, such as a credit risk event, the holder may not be able to liquidate their position in a timely manner. While hybrid listed on the ASX may offer some liquidity, most are often less liquid than the ordinary shares making them harder to sell. Conversion riskWhen the Convertible converts into shares, the number of shares to be issued to the holder will typically be calculated by dividing the loan amount plus any accumulated interest by a certain share price. This conversion price will often be pre-determined as a fixed price, or it can be priced with a reference to future prevailing share price. What is not know at the time of investing is what level of profit, or even loss, will result at the conversion event. Some Convertibles have an enforced conversion event, for example at IPO, and in other cases, the Conversion is at the direction of the holder. If the holder retains the right to choose and elects not to convert, the Company must repay the capital plus any accrued interest. This structure is preferable as it carries less risk of loss on conversion if the Company has performed poorly. Convertibles vs. traditional debtConvertibles can be more complex than traditional debt and may have a higher level of return because of the attractive feature of being able to participate in the upside if things go well. Convertibles vs. equitiesEquities represent ownership in a Company, and their value can fluctuate based on a variety of factors such as company performance, industry trends, and overall market conditions. They can be considered riskier than debt because the value of the shares can fluctuate greatly. Convertibles, on the other hand, pay a fixed or floating rate of interest and also have some of the characteristics of ordinary shares, such as potential for capital appreciation. They tend to be less risky than equities because they typically provide a consistent income stream and also have some or all of the protections intrinsic to debt. As with any investment, it's important for investors to conduct their own research and consider their own risk tolerance before investing in hybrid securities. It's also important to diversify your portfolio and not to put all of your eggs in one basket. Funds operated by this manager: |
1 Sep 2023 - The dangers of long COVID
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The dangers of long COVID Challenger Investment Management August 2023 Like most, the memories of COVID seem like a dream. For most of society, lives have moved back to normal with a few exceptions such as the working from home revolution. But some are still suffering the after-effects of COVID and are a shadow of the people they were back in those innocent days of 2019. We still talk about long COVID, which refers to a bout of COVID where the symptoms persist for longer than 4 weeks, but these days we are talking about companies and not individuals. A company with long COVID is one where earnings are trailing 2019 levels combined with a balance sheet saddled with more debt. Even if they are still recovering, companies suffering from long COVID may never get back to where they were in 2019. Even if revenues get back to 2019, earnings will be weighed down by higher interest costs and elevated debt levels with balance sheets acutely exposed if a recession does happen in the next few years. If a recession does indeed eventuate, interest costs will likely increase pushing balance sheet repair further into the future. Long COVID could really be looooooooong COVID. In our view, credit markets are not sufficiently pricing for long COVID risk. For an investment grade borrower, long COVID may mean that a borrower can never return to the credit risk profile it had in 2019. For a high yield borrower, long COVID may mean that a borrower is wholly reliant on equity to avoid a default. We've already written about the office sector of the commercial real estate market. Over the last four years, gross effective yields rents have gone backwards as the same time as debt levels have increased. The rise in interest rates has pushed interest coverage close to one time meaning after interest payments there is little ability to pay down debt to right size the capital structure. The only cure for long COVID is for the asset owner to tip in more equity to pay down debt and right size the capital stack but who has appetite for that when asset values themselves are declining. Gross Effective Rents Melbourne (LHC) and Sydney (RHC) Source: JLL Research as at Q2 2023 However long COVID has spread well beyond commercial real estate. Across the ASX300, around 10% of companies have seen earnings decline over the past 4 years and debt increase by 50%. In the United States, 6% of companies have seen earnings decline and debt increase by 50%. Consider the tourism sector. The post COVID rebound feels immense but then so was the hole that COVID created. A good example of this is Carnival Corporation, one of the largest cruise line operators in the world. COVID was a horror period for them with effectively no revenue for two years but over the past 12 months their customers have returned in droves, seemingly putting COVID in the rear view mirror.
While revenues have recovered, earnings are expected to finish 2023 around 20% below 2019 levels before returning to 2019 levels in 2024. Even at 2019 earnings, free cash flow is only expected to be $1-2 billion per annum implying that without an equity injection it would potentially take up to two decades to get back to 2019 levels of debt. While that may seem dire, consider that if a recession takes place and earnings flatline at 2023 levels there will be no free cash flow to pay down debt. Indeed in 2023 net debt is expected to increase by over $1 billion. Despite this outlook, S&P has Carnival B-rated with a positive outlook. Secured debt is rated BB-. S&P sees leverage at around 7 times, improving to 5 times by end of 2024, essentially implying earnings around 15% higher than 2019 levels. The market seems to agree with this sentiment pricing a recent senior secured deal at a spread of 2.85%, broadly flat to the BB high yield index. While it may seem as though we are trying to second guess the rating agencies and even market pricing of Carnival credit risk, that is not our intention. The key point is that sufferers of long COVID are acutely exposed to the combination of elevated interest rates and the risk of recession. We are still far from 2019 levels of health. If earnings flatline, it is difficult to see how borrowers who are still suffering from long COVID can return to health. Funds operated by this manager: Challenger IM Credit Income Fund, Challenger IM Multi-Sector Private Lending Fund |
30 Aug 2023 - Investing Essentials: How a financial adviser can help
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Investing Essentials: How a financial adviser can help Bennelong Funds Management August 2023 |
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Many of us want to save effectively, invest well, and generate sufficient funds to pay for a home, children's education, travel and, ultimately, a secure retirement. But navigating a complex financial landscape can be intimidating. Fortunately, there are professionals who can guide you. Seeking the advice of a qualified financial adviser may add significant value over your lifetime. Here is a snapshot of some of the things an adviser can assist with. Budgeting and managing debtIn order to invest, you need to work out where the money will come from. A financial adviser can help you manage your income more effectively by carefully identifying and monitoring your spending patterns and expenses. They can also help you get the full picture on your debt load and work out which parts are:
Insurance: the importance of securityAdequate insurance coverage to provide you and your family financial security is crucial, particularly if you are self-employed or own a business. A mix of suitable life insurance, income insurance, business insurance and general insurance is highly individualised. Your financial adviser's expertise in this area can save you a great deal of time and worry. Building an investment portfolioOnly after budgeting and insurance do we get to investment. Your financial adviser will gather all of the relevant information on your personal financial circumstances, objectives and risk tolerance, and help you choose the right types of investments to fit your needs, personality, goals and time horizon. Your adviser can help you build a diversified investment portfolio, often spread among a range of asset classes to aim for positive returns while balancing the overall level of risk. What's more, they will regularly assess the plan to ensure it continues to meet your needs, altering your investments as you reach different stages of life (for example, wealth accumulation for younger investors versus a steady income stream for retirees). The three pillars of retirementYour financial adviser should be an expert on Australia's 'three-pillar' retirement-funding system: compulsory superannuation, the government-funded age pension, and voluntary contributions by individuals to their super accounts. Australia's superannuation system can seem complicated, and most people can benefit from sound technical advice from a professional - whether it's to maximise the benefits, or minimise the tax burden. What to look forChoosing a financial adviser is an important decision. Ideally, it will be a lifetime partnership (and even a multi-generation partnership, taking care of your family's needs). You need to establish a strong rapport: they will know all about your financial affairs, your dreams and aspirations, and even how you want your affairs managed after you die. You therefore need to ensure the person is a trustworthy and knowledgeable professional, and someone with whom you're comfortable working with over the long term, who can regularly maintain and review your financial goals as you enter different stages of life. There are several professional bodies who may be able to assist you in selecting a financial adviser, such as the Financial Advice Association Australia's find a planner page. |
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For more insights visit www.bennelongfunds.com Disclaimer The content contained in this article represents the opinions of the author/s. The author/s may hold either long or short positions in securities of various companies discussed in the article. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely as an avenue for the author/s to express their personal views on investing and for the entertainment of the reader. |
29 Aug 2023 - The Rate Debate - Ep 41: Uncertainty abounds in the face of economic challenges
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The Rate Debate - Ep 41: Uncertainty abounds in the face of economic challenges Yarra Capital Management August 2023 Amidst ongoing economic uncertainties, the RBA has seen fit to keep rates on hold for a consecutive month and wait to see how the lagging effects of 12 rate hikes play out. |
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Funds operated by this manager: Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund |
28 Aug 2023 - What really matters in investing
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What really matters in investing Magellan Asset Management August 2023 |
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Global Portfolio Managers, Arvid Streimann and Nikki Thomas dissect what's important and what's a distraction in the investment world. They talk us through where they are currently finding opportunities and how they are positioning the portfolio to benefit from structural tailwinds. Investment Analyst, Emma Henderson joins them to provide a deep dive into our restaurant holdings and why we like them. |
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Funds operated by this manager: Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure 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 ('Magellan') 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 a Magellan financial product may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.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 a Magellan 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. Magellan 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 Magellan. 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. Magellan 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 Magellan 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 Magellan. |
The three factors driving stock returns (pdf format)
25 Aug 2023 - Touchstone podcast: The state of consumer spending
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Touchstone podcast: The state of consumer spending Touchstone Asset Management August 2023
"In Australia, consumer spending, historically, has been about 50% of GDP. This year it's been closer to 80% of GDP growth. There seems to be a view that, well, the RBA's ... more or less done what it's gonna do. I think what the market's missing, though, is there's a huge lag from when the RBA increases rates to when households actually have to pay the higher interest rates."
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Funds operated by this manager: The content contained in this audio represents the opinions of the speakers. The speakers may hold either long or short positions in securities of various companies discussed in the audio. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely as an avenue for the speakers to express their personal views on investing and for the entertainment of the listener. |
24 Aug 2023 - Digital assets: unlocking value in the technology of the future
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Digital assets: unlocking value in the technology of the future abrdn August 2023 Blockchains and other forms of distributed ledger technology (DLT) are set to transform the way organisations across industries operate and, ultimately, the way individuals live their lives. Fast, transparent and secure, they offer more efficient, lower cost and permanent ways to process, verify and store data. In many cases, DLTs can vastly improve existing processes both within, and between, organisations and individuals. They can also create new opportunities to innovate. Investors wishing to participate in the adoption of DLTs can do so by investing in their native digital assets, which are needed to pay for usage. Given the short history of the industry, a diversified approach across several is preferred. DLT and how it worksDLTs use cryptography to store data securely on digital ledgers. These ledgers are then distributed across networks of nodes (individuals or groups who operate the network), where the nodes validate updates of their respective ledgers through a consensus algorithm. DLTs can vary in the way they reach consensus and have different characteristics in terms of speed, security, running costs, transparency and options for customisation. Proof-of-workThe Bitcoin blockchain uses a proof-of-work (PoW) consensus algorithm which requires the operators (in this case, 'miners') to update the blockchain by solving a simple, but extremely large, mathematical puzzle. Miners are rewarded for performing this service in the form of Bitcoin, the native token of the Bitcoin blockchain. As miners compete for rewards, the mathematical puzzle increases in size, requiring more energy to be expended to solve it. PoW is very secure by design as 'bad actors' would be required to expend more energy (and thus more cost) to alter records on the blockchain. However, PoW is also slow to process updates and can be extremely energy intensive, resulting in high running costs and large carbon emissions. Proof-of-stakeProof-of-stake (PoS) is another consensus algorithm whereby, instead of solving a puzzle, nodes (called 'validators' in this case) check and come to a consensus on the updates to their respective ledgers. Validators are rewarded in the native token for validating transactions on ledgers. To ensure that PoS is secure, nodes must own some of the native DLT token (hence the 'stake'). This means a bad actor would need to acquire a large proportion of tokens to attack the DLT. PoS consensus DLTs vary in how they treat this token ownership and the rights it confers. Importantly, PoS requires significantly less energy to validate transactions than PoW. For example, when Ethereum, the largest PoS consensus blockchain, moved from PoW to PoS last September, energy consumption for the network dropped by 99.95%. Some DLTs, such as Hedera Hashgraph, are able to reduce energy consumption for validation even further. The power of DLT to improve...DLTs process and store data quickly and securely, and are immutable, meaning they can't be altered. As such, they have broad applications across most industries where data processing is required. For example, in financial services, DLT can be used to streamline 'know-your-client' processes. Individuals and groups can have sensitive data verified seamlessly, without the need for openly presenting this data (and having information divulged unnecessarily). In the manufacturing and consumer goods industries, supply chains can be monitored and analysed on a digital ledger. In a world where transparency of supply chains is becoming increasingly important, a public distributed ledger can provide the trust that consumers and intermediaries require. The health industry is home to some of the most sensitive personal data, with public and private healthcare providers across the world suffering data breaches. DLT can provide a safe and secure solution to storing sensitive data while also making it usable only by authorised people, such as medical professionals. Additionally, interoperability between DLTs would allow for easy access and transfer of information for patients moving healthcare providers. ...and to create something newIn addition to making existing processes more efficient, DLT opens up the possibility for new forms of data management that would otherwise be impractical. The technology can also be used to tackle piracy issues in music and entertainment by memorialising the unique data behind songs or films on a ledger, while artists can benefit from greater financial democratisation and autonomy through royalty distribution built into smart contracts. In financial services, DLT offers powerful democratisation benefits through the tokenisation and fractionalisation of financial assets. Investment opportunities previously available to only the largest institutional investors (such as direct real estate, infrastructure and other alternative asset classes) can now be offered to individuals seeking greater control and diversification of their financial investments. The investment case for digital assetsValidator 'rewards' in a PoS consensus DLT are provided by users of the technology. When a company uses the technology, they must purchase and 'spend' the native token for that DLT. For example, in the case of Ethereum, validators are rewarded by users in ether (also known as ETH). Many DLTs have a controlled and, ultimately, finite issuance of tokens. Therefore, as adoption and use of public DLT increases, demand for digital assets will increase, leading to a rise in their value. Currently, speculation clearly dominates these markets. However, this is a nascent technology and adoption is at an irreducible fraction of its ultimate potential. In that sense, it is reasonable to expect that, in the future, a far greater proportion of the demand and activity in digital assets will come from the application of DLTs rather than from speculation. Investing earlyGiven what we now know about the success of Excel, most people would jump at the chance to go back in time and invest in that technology (were it investible). However, we now have the benefit of hindsight, while in its infancy, Excel was competing with several other spreadsheet packages as well as resistance from users of 'old' tech. The DLT industry is in a similar position now. We can see the momentum of adoption building but it's still unclear which technologies will see the greatest adoption over time. Investors can participate in, and profit from, the growth of individual DLTs by purchasing and holding the related digital assets. Over time, adoption metrics may provide an indicator for future price movements. However, it is still too early to make these predictions. Therefore, the suitable approach for most investors is to allocate to a diversified basket of assets, with some consideration for liquidity and market capitalisation. This would be considered better than an 'eggs in one basket' strategy, while also giving broader exposure to the industries that may adopt different DLTs based on their specific use cases. Author: Duncan Moir, Senior Investment Manager, Alternatives |
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Funds operated by this manager: Aberdeen Standard Actively Hedged International Equities Fund, Aberdeen Standard Asian Opportunities Fund, Aberdeen Standard Australian Small Companies Fund, Aberdeen Standard Emerging Opportunities Fund, Aberdeen Standard Ex-20 Australian Equities Fund (Class A), Aberdeen Standard Focused Sustainable Australian Equity Fund, Aberdeen Standard Fully Hedged International Equities Fund, Aberdeen Standard Global Absolute Return Strategies Fund, Aberdeen Standard Global Corporate Bond Fund, Aberdeen Standard International Equity Fund, Aberdeen Standard Multi Asset Real Return Fund, Aberdeen Standard Multi-Asset Income Fund |
23 Aug 2023 - AI reaches an inflection point
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AI reaches an inflection point Insync Fund Managers August 2023
Insync Funds Management believes Artificial Intelligence (AI) has reached an inflection point, brought about by a new phase in the creation of generative AI and large-language transformer models such as ChatGPT. It sees this new leap forward in AI as highly disruptive to most industries, and as such will have a profound impact on where to invest, and importantly where not to. 'We are heavily engaged in deep specialist research to gauge who will be empowered, what to avoid, and where the most significant value and differentiation lies,' says Insync CIO, Monik Kotecha. 'One key area of more immediate benefit is in data.' RELX is one global company in the Insync portfolio that has a distinct data advantage, making it a major beneficiary of the acceleration of AI. A global provider of information-based analytics and decision tools, RELX provides products that help researchers advance scientific knowledge across medical, legal, financial services, and government industries and sectors. 'What RELX does so well is gather, analyze, and deliver valuable knowledge and insights to businesses and professionals across industries globally, empowering people and organizations to make better-informed decisions.' Mr. Kotecha said. The company has been using machine learning natural language processing for well over a decade and has been experimenting with generative AI for over 18 months. It employs 10,000 technologists spending about $1.6 billion a year on technology alone. 'Similar to one of our other holdings, Adobe, it possesses multiple gargantuan databases that result in reliable and trusted sources of data its customers can depend on,' Mr Kotecha said. 'Like all companies in our portfolio, both Adobe and RELX are highly profitable companies based on their Return On Invested Capital (ROIC), have a long runway of growth, modest levels of debt, substantial R&D, and are generating prodigious amounts of cash flow year after year,' Mr Kotecha said. 'While investors are fretting over when interest rates will peak, and the impact on both the economy and company earnings, a select group of companies often deliver excess relative returns versus the benchmark again and again,' he said. 'This is especially so during historical periods of monetary tightening and general gloomy headlines, such as we are experiencing today.' Results from such companies, even in the current environment, should not be surprising he said. 'We find they often maintain and even strengthen their strong competitive advantages during challenging times, and this enables them to consistently generate economic value even as the cost of capital is rising.' Funds operated by this manager: Insync Global Capital Aware Fund, Insync Global Quality Equity Fund Disclaimer |
21 Aug 2023 - Australian Secure Capital Fund - Market Update July
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Australian Secure Capital Fund - Market Update July Australian Secure Capital Fund August 2023 In a positive sign for Australian property prices, the RBA has elected to keep the cash rate on hold for the second consecutive month, suggesting that interest rates may have peaked, or at a minimum, are close to peaking. The CoreLogic Home Value Index shows that property values experienced growth across all capital cities except for Canberra (-0.1%) for the month of July, with Brisbane and Adelaide performing strongest with 1.4% monthly growth. Perth (1%), Sydney (0.9%) Melbourne (0.3%) and Darwin (0.3%) also received strong monthly growth. These strong monthly results have lead to all capital cities now recording positive growth for the quarter. The regions have not performed as strongly, with only regional South Australia (1.1%) and Queensland (0.7%, primarily driven by strong growth on the Gold Coast) recording growth for the month, with Victoria (-0.4%), Western Australia (-0.3%) and Tasmania (-0.1%) experiencing a reduction in value. In a sign of slowly increasing supply, Auction numbers for the last weekend of July were above those of the same weekend last year, with 1,961 auctions taking place, up from 1,913 in 2022. This was predominantly due to strong auction numbers in Melbourne (846, up from 809) and Sydney (760, up from 624), however Brisbane (174), Adelaide (113), Canberra (53) and Perth (14) were not far off last year's results. Despite the number of auctions increasing, clearance rates remain strong, suggesting buyers and sellers are "on the same page" in regards to property price expectations. Adelaide (82.8%) leads the way, followed by Sydney (72.4%), Canberra (70.6%), Melbourne (69.9%) Brisbane (58.3%), contributing to a weighted average clearance rate of 70.2% for the weekend, well above the 54% result of the previous year. Clearance Rates & Auctions 17th June - 23rd of July 2023
Property Values as at 1st of August 2023
Median Dwelling Values as at 1st of August 2023
Quick InsightsWay High WestpacAccording to Westpac's latest forecast, Sydney house prices are expected to rise as much as 10% this year, propelled by surging migration, a tight rental market and scant housing supply. Sydney prices are anticipated to gain another 6% in 2024, and 4% in 2025. Perth is expected to achieve the second strongest growth, with an 8% gain this year, followed by Brisbane with 6% and Melbourne prices at 4%, said Westpac senior economist Matthew Hassan. Source: Australian Financial Review The Harborside HomeDavid Waterhouse, the estranged member of the famous racing clan, has sold his iconic harborside home Villa Biscaya for about $28 million. Designed by prominent architect Alan Edgecliff Stafford in 1929, the three-bedroom home features a grand stone staircase flanked by wrought-iron balustrades. The sale comes just three years after the former art dealer and options trader paid $10.25 million, almost tripling the purchase price. Source: Australian Financial Review Author: Filippo Sciacca, Director - Investor Relations, Asset Management and Compliance Funds operated by this manager: ASCF High Yield Fund, ASCF Premium Capital Fund, ASCF Select Income Fund |
