NEWS
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15 Jun 2023 - Performance Report: DS Capital Growth Fund
[Current Manager Report if available]
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15 Jun 2023 - Performance Report: Airlie Australian Share Fund
[Current Manager Report if available]
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15 Jun 2023 - The Rate Debate - Ep39 - Monetary policy changing the goalposts
The Rate Debate - Ep39 Monetary policy changing the goalposts Yarra Capital Management June 2023 Australia has been delivered another rate hike in an attempt to "quash" inflation. This month Darren debates with special guest Tim Toohey, Head of Macro and Strategy, the risks posed by rising wages and weak productivity growth, and why the RBA continue to change its goalposts to drive down inflation.
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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 |
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14 Jun 2023 - Performance Report: PURE Income & Growth Fund
[Current Manager Report if available]
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14 Jun 2023 - Performance Report: Bennelong Long Short Equity Fund
[Current Manager Report if available]
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14 Jun 2023 - Demographics: how population changes will reshape global growth
Demographics: how population changes will reshape global growth abrdn June 2023 Low fertility is a problem for countries. Many developed markets (DMs) are starting to struggle with ageing populations and their associated social and economic issues. Meanwhile, it could be a problem even for emerging markets (EMs), which face a slowdown in the growth of their 'working-age' populations over the next 30 years. Last year, we published two papers - Emerging market demographics 'in focus' - implications for growth and the rise of the global middle class and Emerging market demographics 'in focus' - implications for equilibrium real interest rates - that examined the issues in developing economies. Our latest on the topic, Towards the peak: How the rise and fall of populations affects economic growth, seeks to advance the discussion by looking at things from a global perspective and asking what this may mean for investors. Population divergenceThe world's population is expected to grow by a further 1.7 billion people to reach 9.7 billion by 2050, according to the latest United Nations data. However, these numbers hide big differences between and within EMs and DMs. For example, the US' population is expected to increase by some 37 million by 2050, while Germany's could fall by some 4 million over the same period. Lower fertility in some European countries could be partially alleviated by immigration. Meanwhile, the number of people in developing economies is expected to continue growing, driven mainly by countries in Africa and developing Asia. That said, the population of the largest emerging market, China, began shrinking in 2022. Its impact on growth...EMs will drive global economic growth - accounting for some 75% -- in the coming decades. China and developing Asia alone will be responsible for some 60% of that. Despite their own demographic challenges, EMs will likely grow between two and 2.5 times faster than DMs (see Chart 1). Chart 1: Global GDP increasingly driven by Asia Source: Haver, abrdn, as at February 2023 India and Indonesia are set to join China among the world's top seven largest economies by 2050. What's more, Nigeria will be just outside the top ten (No. 11), while the Philippines, Pakistan and Vietnam will occupy places within the top 25. India and Indonesia are set to join China among the world's top seven largest economies by 2050 On the other hand, big oil producers - Russia, Saudi Arabia and Norway - will slip down the rankings as the world transitions to low-carbon energy sources. We found in our two previous papers that, while the percentage of 15-64-year-olds in EMs (often used as a proxy for the working-age population) is shrinking, the impact on growth isn't as bad as feared because social changes mean that people start and stop work later. What's more, there's a lot of scope for human capital - the economic value of a worker's skills and experience - to grow in EMs as more people attain higher education levels. That said, the next three decades will see labour playing a less important role in potential growth, as demographics hold back capital-stock growth. This means potential growth could fall close to zero in the Eurozone and Japan by 2050. But China's ability to improve the quality of its workforce could help offset the effects of its ageing population. ...and impact on productivityProductivity has been in gentle decline for many economies since the 2007/08 global financial crisis and we don't see much hope for a return to the boom years of the 2000s. Commodity-exporting countries have experienced productivity decline for years, while institutional weakness and political instability pose risks in EMs. The potential for demographics to create negative feedback loops, including for productivity, could result in additional risks. Ageing populations can strain the sustainability of social welfare models and public debt, which could reduce public spending in other areas and spur emigration. These risks are greatest in the ageing societies of China, Thailand and developed Asia. Other at-risk regions include Latin America (excluding Argentina, Mexico and Peru), central and eastern Europe, Japan and the Eurozone area. Only a few markets could see productivity improve if a feedback loop operates between demographics and growth. Pakistan, the Philippines, Israel, Nigeria and South Africa are among these as they benefit from improving dependency ratios - due to relatively youthful populations and falling birth rates. What this means for investorsHere are five things for investors to consider:
Author: Robert Gilhooly, Senior Emerging Markets Research Economist and Michael Langham, Emerging Markets Analyst |
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 |
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13 Jun 2023 - Performance Report: Argonaut Natural Resources Fund
[Current Manager Report if available]
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13 Jun 2023 - Performance Report: Cyan C3G Fund
[Current Manager Report if available]
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13 Jun 2023 - Chat GPT and the implications of this new technology
Chat GPT and the implications of this new technology Magellan Asset Management May 2023 |
Magellan Investment Analyst, Adrian Lu explains what Chat GPT is, how it works and what impacts this could have on society. He also discusses what this means for Microsoft and Alphabet. |
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 read and consider any relevant offer documentation applicable to any investment product or service and consider obtaining professional investment advice tailored to your specific circumstances before making any investment decision. A copy of the relevant PDS relating to a Magellan financial product or service 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 strategy, the amount or timing of any return from it, that asset allocations will be met, that it will be able to be implemented and 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. Any trademarks, logos, and service marks contained herein may be the registered and unregistered trademarks of their respective owners. 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. |
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9 Jun 2023 - Hedge Clippings | 09 June 2023
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Hedge Clippings | 09 June 2023 As previously suggested, it looks like inflation, and thus higher rates, are going to be more persistent, even if RBA Governor Philip Lowe suggested this week that it has "passed its peak". Having made that statement, he then went on to say that: ''Recent data indicate that upside risks to the inflation outlook have increased," which made it sound like he is having two-bob-each-way on the outcome. And who can blame him (apart from the Treasurer) as he increased rates by 0.25% yet again, given the issues he outlined in the statement released following the RBA's meeting on Tuesday? Against the background of a tight labour market, wages growth - not helped by an increase in award wages - is expected to pick up. Meanwhile, while there's been no improvement in labour productivity, resulting in a worrying increase in unit labour costs. Lowe's path to a soft landing - or in other words slowing the economy whilst avoiding a recession, is looking increasingly difficult to achieve with the latest GDP for Q1 just 0.2%, down from 0.6% in Q's 3 and 4, 2022. In the US a recession followed the last five instances when inflation peaked above 5%, in 1970, 1974, 1980, 1990, and 2008. Indeed, the US economy recorded two consecutive quarters of negative GDP growth in Q1 and Q2 of 2022, technically qualifying as a recession, before recording a growth of 3.2% in Q3, 2.4% in Q4, and 1.3% in Q1, 2023. Covid aside, the last recession in Australia was in 1990/91. With the median age in Australia currently just over 38, a large proportion of the population has never experienced a recession, which is maybe why the threat of an impending one is not yet biting into consumer spending. While the media is currently full of anecdotal evidence of economic hardship and mortgage/rental stress, this is unevenly spread across the population. A report from PEXA released this week shows that over 25% of all property purchases in Australia's eastern states were funded without a mortgage in 2022. Inflation is real, but the RBA's efforts to curb it are only changing the spending habits of a minority, and generally those with less or limited discretionary spending capacity. Mortgage rates are only high by historical standards, magnified by the size of loans taken out to afford sharply higher property prices. In 2021, 35% of households had a mortgage, while 32% did not, and 28.4% were renters from private or other landlords. All the focus is on mortgage repayments and mortgage stress, and only more recently rental stress, resulting in interest rates (and to a degree inflation) not impacting a significant portion of the population. For the RBA this creates an issue, as the "enemy" - inflation - comes from all and many quarters, only some of which are homegrown or under domestic control. If Philip Lowe's rate increases to date have had limited effect on consumer spending and demand, then there's no doubt that "some further tightening of monetary policy may be required" along with an increased risk of recession. However with multiple inputs, and only interest rates as a tool, the RBA's "narrow path" is looking narrower - and decidedly slippery. |
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News & Insights Meta Platforms - AI Winner | Insync Fund Managers ESG Policy: The real-world impacts | Magellan Asset Management April 2023 Performance News Glenmore Australian Equities Fund |
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