Analysis

Whether there’s an ETF bubble brewing or not is moot, and the debate only obfuscates the real risks. When markets do recalibrate, how will a new generation of fervent ETF believers react?

Pushing bank AT1s into extinction well before APRA’s 2032 cut-off is of natural concern to many fixed income investors. Roy Keenan, Yarra Capital’s co-head of fixed income, looks at the implications and opportunities.

The super funds’ collective willingness to pay inflated prices for bank shares is starting to make them look like outliers. With about 30 per cent collective ownership of the banks, APRA sees “stability risk” as a salient concern for all stakeholders that can’t be ignored.

It’s been an astonishing two years for US equities, but the same can’t be said for global asset markets. 2025 could be a year to explore out of favour markets, according to Ruffer’s Jasmine Yeo.

Investors may have settled into an Anything But China mantra, and they may have good reason, but for calculated risk takers there may be a different case to make according to Ruffer’s Duncan MacInnes.

The move from Viridian and CFS to provide personal advice in a scaled manner highlights a growing willingness within the industry to fix its own problems in lieu of waiting for the government.

With traditional equity managers losing the fight against passive product providers, diversification into more specialist classes of asset management may provide a more sustainable path. But that’s a pricey endeavour, and easier said than done.

The benchmarks that are supposed to measure performance and create alignment with end investors are working against asset managers, and the industry must find new ways to demonstrate value before it’s too late, according to MFS.

A slowing economy has prompted S&P/ASX 200 companies to keep a lion’s share of their earnings by tightening shareholder distributions, with fund manager Martin Currie identifying the resources sector as a real cause for concern regarding future income.

While APRA’s proposed hybrid phase out is designed to improve the resilience of the financial system, it will inevitably impact investors and the strategic plans that some advisers have laid out. Navigating the transition will require forethought.

True diversification means owning assets that are truly uncorrelated. But that fact hasn’t stopped big investors from piling into the private markets while pretending that the Fed Put can protect their public portfolios.

Pessimists are still trying to shoehorn the “bubble” narrative into the private capital story, but an EY report highlights not only the rise of this burgeoning ‘alternative’ sector, but the reasons it’s likely to keep growing.