Quarterly consumer price index update

Montgomery Investment Management

May 2024

The long-awaited quarterly consumer price index (CPI) figure was reported this week. Over the March quarter, CPI rose by 1.0 per cent, which follows the previous 0.6 per cent December quarter increase. Over the 12 months to March 2024, CPI rose by 3.6 per cent. Whilst the annual rate of inflation is trending downwards, the quarterly figure increased by 0.4 per cent and poses ongoing challenges.
The leading drivers behind the quarterly increase:

Education fees rose by 5.9 per cent. This uplift was the strongest quarterly rise reported since 2012.
Housing rose by 0.7 per cent. The rental market is incredibly tight, with a 2.1 per cent increase due to an ongoing mismatch between supply and demand. Property prices also rose by 1.1 per cent. This was an improvement from the 1.5 per cent read in the December quarter. High material and labour costs continue to contribute to the housing pricing pressure.
Food and non-alcoholic beverage increased by 0.9 per cent.
The most recent quarterly results have presented a slight blip in the data, however, on an annualised basis the inflation figure is heading in the right direction, approaching the Reserve Bank of Australia's (RBA's) 2-3 per cent target range. Despite this, markets are now concerned that these latest figures have potentially pushed out the RBA's timeline, and there is not enough data to warrant an RBA rate cut in the coming months. The latest read is stoking fears that inflation is sticky and there is an ongoing battle in achieving a consistent path to their inflationary target range, within the expected timeframe.

Similarly, the U.S. faces ongoing inflationary challenges. The annual inflation rate rose by 3.5 per cent in March, a 0.4 per cent increase from the 3.2 per cent reported in February. The market anticipated 3.4 per cent. Both central banks require confidence that inflation is steadily slowing back within their respective target ranges. Widely speaking, it is evident that there is economic turbulence with ongoing geopolitical uncertainty having widespread global economic affects. Back home, other factors to consider are the strong labour market and upcoming tax cuts. The labour market remains relatively tight with the unemployment rate at 3.8 per cent in March. This coupled with the incoming stage three tax cuts, provides more turbulence and adjustment in the RBA's economic outlook and monetary policy decisions.

Author: Natalie Kolenda

Funds operated by this manager:

Montgomery (Private) Fund, Montgomery Small Companies Fund, The Montgomery Fund

JH Explorer in Charleston: Power cabling the energy transition

Janus Henderson Investors

April 2024

Funds operated by this manager:

Janus Henderson Australian Fixed Interest Fund, Janus Henderson Australian Fixed Interest Fund - Institutional, Janus Henderson Cash Fund - Institutional, Janus Henderson Conservative Fixed Interest Fund, Janus Henderson Conservative Fixed Interest Fund - Institutional, Janus Henderson Diversified Credit Fund, Janus Henderson Global Equity Income Fund, Janus Henderson Global Multi-Strategy Fund, Janus Henderson Global Natural Resources Fund, Janus Henderson Tactical Income Fund

This information is issued by Janus Henderson Investors (Australia) Institutional Funds Management Limited (AFSL 444266, ABN 16 165 119 531). The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

Whilst Janus Henderson Investors (Australia) Institutional Funds Management Limited believe that the information is correct at the date of this document, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson Investors (Australia) Institutional Funds Management Limited to any end users for any action taken on the basis of this information. All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson Investors (Australia) Institutional Funds Management Limited is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect.

Magellan Global Quarterly Update - April 2024

Magellan Asset Management

April 2024

Nikki Thomas and Arvid Streimann discuss key themes impacting the markets and providing opportunities for investors. Arvid discusses his recent trip to Washington which provided valuable insights into the future growth of AI innovation and adoption. Nikki touches on her future trip to China and how understanding the interplay between China and other economies is essential for businesses operating within China or competing against it in various sectors.

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, Magellan Core ESG 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.

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Chris Gosselin, CEO of FundMonitors.com, speaks with Winston Sammut, Director Property at  Euree Asset Management.

Euree's funds cover multiple asset classes including Equities, Fixed Interest, Property, Commodities, and Alternate Assets. Euree's team has over 40 years of experience in the industry. 

Hedge Clippings | 10 May 2024

As widely expected the RBA kept rates on hold following this week's board meeting, surprising no one, except possibly those brave souls predicting either a rate cut, or even a couple expecting a rise. The bottom line is inflation at 3.6% is only slowly moving - at least not in the direction the RBA would like it to, and certainly not fast enough. Adding to their concerns underlying inflation is higher than the headline number and declining even more slowly, and services inflation is even more stubborn.

So if no rate cut now, when?  Based on all the numbers - and it'll be the numbers that count - not for some time yet, with the RBA's statement that the outlook remains highly uncertain hitting the nail on the head. Their current expectation is for inflation to return to the preferred 2-3% range in the second half of 2025, and the middle of that range - i.e. 2.5% - sometime in 2026. Between now and then there's a whole raft of uncertainty, and we would expect the RBA to be more inclined to raise rates if the numbers look bad, than to drop them on the back of one good month, or quarter.

With Australian interest rates close to 1% lower than the UK (5.25%), lower than most of Europe - range 1.5% (Switzerland) to 50% (Turkey) and 1% lower than the US, like almost everyone else, we would expect any downward movement to be relatively slow.

Meanwhile next Tuesday's budget is unlikely to help, neither will the release of April's Wage Price Index numbers the next day, and looking further out neither will tax cuts due in July. Unemployment is still (just) sub 4%, and while there are certainly pockets of the workforce and economy doing it tough, the fact of the matter is that the best news on the inflation front will be an unemployment rate closer to 5% - or more.  If that were to occur, then instead of inflation being stronger, and rates being higher for longer, we'd all be talking about the R word. It's too early to start that conversation, but harking back to the RBA's release on Tuesday, they noted that household consumption has been particularly weak, and discretionary spending subdued.

Whatever the numbers, predictably as ever, the RBA re-enforced their dual mandates - price stability (in other words inflation) and full employment, with returning inflation to target being the priority.

Turning to fund performances, and with almost 70% of April results in to date, for the first time this year there were widespread negative returns across nearly all peer groups, with the exception of Alternatives, Debt, Private Credit, and Asian Equities. That still leaves all peer groups in positive territory over 1, 3, and 5 years, with only the Property sector struggling over successive years. Property is of course notoriously sensitive to interest rates, so we were fortunate earlier this week to catch up with Winston Sammut from Euree Asset Management's A-REIT Securities Fund to discuss both the RBA's decision, the outlook for inflation, and the varied nature and sectors that make up the overall property market. While Winston is a veteran of the sector, his Euree A-REIT Fund is relatively new, launched last August. In spite of that, the Fund is topping the Property Peer Group over the last 6 months with a return of almost 27%.

You can watch the interview below (recorded with the assistance of, and in the studios of Finance News Network) and see the Fund's Profile here.

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