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An Investor's Guide to Inflation
June 18, 2018--In an era of central-bank inflation targeting,what matters most is arguably not inflation,but inflationary pressures. If actual core inflation is contained through tighter monetary policy (as the US Federal Reserve is attempting to do now in the US),it means higher real policy rates and also higher real discount rates for all asset
Introduction
As we know, inflation, or the general rise in the price of goods and services over time, erodes the purchasing power of a fixed dollar amount over time. This can have a significant impact on the real returns we can expect over our investing lives: just like nominal returns and interest, inflation also has a compounding effect. This was evident during the 70s and 80s, where global shocks propelled the consumer price index (CPI) growth over 15 per cent year-on-year in this country and other developed economies.
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Source: BetaShares
InvestSMART active ETF debuts on ASX
June 18, 2018--InvestSMART's first active exchange-traded fund (ETF) has debuted on the Australian Securities Exchange (ASX).
The InvestSMART Australian Equity Income Fund (INIF), which managed to exceed its target and closed at more than $30 million of fund under management (FUM), commenced trading on the ASX at a unit price of $2.50.
It would mirror the group's existing unlisted Intelligent Investor Equity Income Portfolio, which has returned 11.5 per cent per annum since inception.
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Source: investmentcentre.moneymanagement.com.au
SET to launch "SETTHSI Index" and "SETCLMV Index" on July 2
June 15, 2018--The Stock Exchange of Thailand (SET) today announced
the upcoming launch of the two new indices named "SET THSI Index (SETTHSI)"
consisting of stocks, highly perform on environmental, social and governance
(ESG) perspective; and "SET CLMV Exposure Index (SETCLMV)" which comprises of
Thai stocks, generating revenues from Cambodia, Laos, Myanmar and Vietnam
(CLMV), allows investors to get benefit from these growing economies.
SET Senior Executive Vice President Rinjai Chakornpipat said "the launching of
these two new indices will support investors to get benefit from the CLMV
economies and sustainable stocks.
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Source: Stock Exchange of Thailand (SET)
China's retreating A-shares raise trading suspension fears
June 15, 2018--The recent retreat in Shanghai share prices, coupled with evidence of a slowdown in China's economic growth, are raising a pressing question for fund managers.
How can international investors insulate themselves against the tendency of A-share companies to suspend their shares when the going gets tough?
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Source: FT.com
Vietnam's economic prospects improve further, with GDP projected to expand by 6.8 percent in 2018
Recent growth uptick driven by favorable domestic and external conditions may gradually moderate.
June 14, 2018--Vietnam's economic growth momentum remains robust and is accompanied by broad macroeconomic stability.
Recent growth uptick driven by favorable domestic and external conditions may gradually moderate.
According to Taking Stock, the World Bank's latest economic update for Vietnam, recent growth was driven by a cyclical increase in global demand as well as a recovery in investment from FDI and private sector, and an ongoing shift of labor away from agriculture into more productive manufacturing and service sectors.
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Source: World Bank
World's largest pension fund overhauls fees for asset managers
June 14, 2018--Japan's $1.5tn state pension fund no longer wants to pay 'considerable sums regardless of investment performance'
The world's largest investor, Japan's sprawling Government Pension Investment Fund, has set out the details of its radical new fee structure for external fund managers-after concluding their performance "leaves much to be desired".
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Source: fnlondon.com
China's economy cools in May as Beijing's efforts to reduce debt levels start to bite
June 14, 2018--Fixed-asset investment in first five months grows at slowest rate since records began in 1998; monthly retail sales growth slowest in 15 years
China's US$12 trillion economy suffered a downturn in May as retail sales expanded by their slowest rate in 15 years and fixed-asset investment growth in the first five months was the slowest on record, according to official figures released on Thursday.
Retail sales, a key measure of consumer spending, rose by just 8.5 per cent year on year in May, its slowest rate since June 2003. Car sales in the month fell by 1 per cent from a year earlier, while industrial production, another pillar of growth, also lost steam, the National Bureau of Statistics said.
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Source: scmp.com
BetaShares Australian ETF Review-May 2018
June 13, 2018--Industry crosses $38B mark
The Australian ETF industry continued to grow last month, reaching a record high of $38.4B. The Industry grew 1.4% in the month ($534m), the vast majority (˜90%) of which came from new inflows, rather than asset appreciation.
Read on for details of the month in ETFs.
Market cap
ASX Exchange Traded Funds Market Cap: $$38.4B-New Record High
Market cap growth for month: +1.4%, $534m
Market cap growth for the last 12 months: 32%, +$9.4B
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Source: BetaShares
CRED: How to have your diversification and income too!
June 13, 2018--Investors fearful of major equity market declines often decide to include in their portfolios relatively "safe" assets such as cash and bonds so as to limit their downside. The problem with this approach is that seeking safety can be costly in terms of forgone returns, especially given today's generally low level of interest rates.
Investing in long-dated, investment grade corporate bonds offers a potentially attractive way for investors to obtain both decent regular income returns while also seeking to limit losses in major "risk-off" periods.
Fixed-Rates Bonds-diversification, but at a cost
Fixed-rate bonds can often provide a handy source of diversification within portfolios with heavy exposure to equities. As evident in the chart below, this reflects the fact that both interest rates and equity market performance tends to follow the economic cycle. When economic conditions are weak, equities returns tend to decline due to reduced prospects for corporate earnings.
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Source: BetaShares
IMF Working Papers-Pushed Past the Limit? How Japanese Banks Reacted to Negative Interest Rates
June 13, 2018--Summary:
In this paper, we investigate how negative interest rate policy (NIRP) introduced in January 2016 by the Bank of Japan (BoJ) affected Japanese banks' lending and risk taking behavior. The BoJ's announcement was an unexpected surprise to the market and was followed by a sharp drop in equity prices of Japanese financial firms.
We exploit the cross-sectional variation in the change of share prices on the day of the announcement to measure banks' differential exposure to NIRP. We show that more exposed banks increased their credit and took on more risk compared to banks that were less exposed to negative rates.
view the IMF Working Papers-Pushed Past the Limit? How Japanese Banks Reacted to Negative Interest Rates
Source: IMF
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