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Vector Insights29 April 2022
Bonds are not forever
Russel Chesler, Director, Investments & Portfolio Strategy
The performance of developed market bond funds over the first three months of 2022 were among the worst quarterly returns on record. For decades, investors have relied on this asset class for their portfolios to help smooth stock market volatility. They have also been a useful tool to generate income, meeting retirement goals.
Now, bond funds are behaving like equity funds. Their prices are falling. Bond returns in 2022 are in line with risky assets, such as equities but with limited potential for capital growth.
With a view that interest rates will continue to rise in developed markets, bonds face headwinds.
Where in the world do bond investors go? The developed world is not enough.
Sustainability27 April 2022
Read This NowThe global equity falls have highlighted the risk in ESG investing with the market disproportionally punishing shares in high growth companies, particularly IT. Many sustainable international equity funds and ETFs that are hyper-concentrated to ‘growth’ sectors such as IT have fallen hard, but not all.
Sustainability21 April 2022
Read This NowESG (Environmental, Social, and Governance) investing is receiving an increasing amount of attention from investors. The problem for ASX investors is that it is difficult to know how ‘green’ their investment is. You may have heard the term “greenwashing”, which was coined in the 1980s to describe outrageous corporate claims. Four decades later the phrase is having a renaissance, now used to describe mislabelled managed funds. Here we provide some insightful analysis of our popular of VanEck MSCI International Sustainable Equity ETF (ESGI) which tracks an innovative index that, in addition to screening out companies, also targets the leading ESG performers in each sector.
Vector Insights14 April 2022
The Quality Wizard of Oz
by Cameron McCormack, Portfolio Manager
Read This NowBuying ‘quality’ companies seems an intuitively straightforward path to investment success. However, definitions of quality vary. As such, so do the outcomes of various quality strategies. What is agreed however is that quality investing aims to identify those companies with durable business models and sustainable competitive advantages. Why? Those companies best weather downturns and outperform in low growth environments. An analysis of the quality factor in Australia illustrates, like when Dorothy’s dog Toto pulled away the curtain to reveal the Wizard, you may not get the quality you expect.
International11 April 2022
Quality companies shine amid gloom of war
by Cameron McCormack, Portfolio Manager
Read This NowThere are signs that the US economy may not be able to sustain its current momentum. Along with the huge geopolitical and economic uncertainty that Russia’s aggressive war against Ukraine has created across economies, this could push international quality stocks to outperform.
Gold11 April 2022
Gold holds with risks abound
by Joe Foster, Portfolio Manager and Strategist
Read This NowGlobal geopolitical developments and accompanying risks to the global economy are supportive of gold prices. Gold approached its all-time high in March.
Income Investing08 April 2022
Bonds: Attractive yields (if you know where to look)
by Russel Chesler, Director, Investments & Portfolio Strategy
Read This NowAs expectations for the Reserve Bank of Australia to increase the cash rate have accelerated and credit spreads have widened, the yields on subordinated bonds have increased to potentially attractive levels.