With markets at all-time highs and term deposits paying 5 per cent, the focus needs to shift away from relative returns and back towards positioning for “consistent, absolute” returns that accommodate present market risks.
Australia’s sovereign wealth fund’s prediction of a tough year for investors didn’t come to pass, but they’re not the only well-resourced manager that missed the mark. For investors, this period is a reminder that investment patterns may exist, but markets certainly aren’t beholden to them.
The benefits of alternative investments are clear, but rapid growth in the product set has made the optimal use of alternatives in portfolios unclear. As markets reach all-time highs, it may be time to re-think how we treat the asset class.
The traditional method of protecting client portfolios from drift remains entirely valid. It’s ostensibly cheaper to run portfolios without managed accounts, but it does take more time to do so and probably takes on more risk.
The solutions to practice inefficiency might be completely foreign, but the challenges of service delivery have a habit of changing, so the methods employed to meet those challenges need to evolve in tandem.
Lazy portfolios can be overconcentrated, overdiversified, full of yesterday’s winners, devoid of structured asset allocation, full of misallocated positions or agnostic to markets and client expectations. All of this is happening more than it should.
It seems that while the older generations may be tilting towards simplification, the younger generations are looking for control and engagement. For financial advisers, this is a trend worth noting.
Clients have a right to know how advisers justify a fee of $15,000 per year when the investment income on a $1.5 million portfolio is only $75,000, says Drew Meredith. Maybe they should also have a hand in deciding how the fee is calculated.
The Australian sharemarket posted a positive finish to the week, gaining 0.4 per cent, but with the S&P/ASX200 still managing to lose 0.2 per cent across the five days. The technology sector was buoyed by NVIDIA’s massive result overnight, with data centre operator Next DC (ASX:NXT) adding 1.9 per cent and hitting another all-time high…
Australia may not have the Magnificent Seven tech stocks, but a heavy top end on the ASX means concentration risk is just as present, Atchison’s says. According to Australian Ethical, that puts the domestic small companies sector right in frame for investors.
