Exchange Traded Funds
During George Washington’s presidency, a battle of words captivated the public as a series of back and forth essays (way longer than 140 characters) appeared in the press about executive power, debt and the central bank. The ‘trolling’ included personal barbs between Thomas Jefferson and Alexander Hamilton, Washington’s Secretary of the Treasury. Jefferson, when he became President, took on the press who he claimed had injured his reputation. The Supreme Court decision was split 2-2, which was a victory for Jefferson. The US economy flourished despite a quarrelsome executive and uncertainty about its powers. Over 200 years later, the war of words continues and markets are reacting emotionally. Remaining invested through turbulence is important and investors are better equipped today than they were 200 years ago.
Australian investors have long had an affinity for domestic equities. According to IMF’s Coordinated Portfolio Investment Survey, only the US has a more significant home country bias. Australia’s propensity was reflected in 2016’s ASX ETP flows. The other notable data in the 2016 exchange traded product flows is that smart beta ETFs are gaining popularity among Australian investors.
Both trends are likely to continue as a number of Australian equity smart beta ETFs outperformed in 2016 and are well positioned for 2017.
This year has played out much like an intense episode of Games of Thrones – the downfall of political dynasties, old-age alliances broken (Brexit), claims of currency manipulation and corruption. Not surprisingly markets have panicked this year and investors have been left pondering whether "Winter is Coming"
In Chinese philosophy, Yin and Yang describe how seemingly opposite or contrary forces may actually be complementary, interconnected and interdependent. Optimal utility is at the point of equilibrium where Yin and Yang find themselves in complete balance. The Australian equity market is an example of imbalance. Most Australian equity portfolios are not in equilibrium but you don’t need to be a Taoist to remedy this.
Two markets operate within the Australian equity market:
'Tis the season for Quality
The Cat is right – you only need one trick
When you play the game of thrones …
A spoonful of Quality
Your portfolio needs more than a great quarterback
How the Tortoise invested and won
Outperformance made easy
A case of mistaken identity