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Morningstar runs the numbers

Lex Hall  |  02 Mar 2020Text size  Decrease  Increase  |  
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We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 28 February.

6

The number of days it took for the US's broadbased S&P500 to post its quickest plunge in history. "While it remains very difficult to predict the impact that the coronavirus will ultimately have, it is worth highlighting that share and bond markets, in general, are overvalued," said Morningstar Investment Management. "This means that the risk of losing money is elevated and markets remain vulnerable to any bad news, whatever the cause. In this regard, our portfolios remain defensively positioned, holding more cash than we otherwise might."

20 per cent

That’s the amount of global manufacturing activity China accounts for. Global supply chains are deeply interwoven into the Chinese culture and labour force and they’re reliant on the growing middle class for customers, says Morningstar’s head of equity research Peter Warnes. As the world’s largest single manufacturer, China has few if any rivals that can match it in terms of infrastructure, labour force, scale and productivity - and therein lies the problem. “Making meaningful changes to supply chains is easier said than done and very expensive. A wholesale move out of China would be almost impossible and potentially a financial disaster,” Warnes says.

$86,268

The average annual salary, according to the Australian Bureau of Statistics. The average weekly ordinary time earnings for full-time adults in Australia rose to $1659 in November 2019, up 3.2 per cent from a year earlier, ABS figures reveal. The more accurate reading of wages growth, the seasonally adjusted Wage Price Index, rose 2.2 per cent through the year to 31 December. Private and public sector wages rose by the same rate – their lowest growth levels since the start of the index in December quarter 1997. Labour underutilisation – too many people getting fewer working hours than they want or need – was the main factor suppressing wages growth, writes Nicki Bourlioufas.

17,000

That’s the number of self-managed super fund trustees the tax office wrote to last August, warning stiff penalties apply for those who misuse their SMSF. You're free to hold your choice of assets in your SMSF – provided it's permitted by super laws and your fund's trust deed, the ATO said in its updated explainer last week. "Super assets must also pass the sole-purpose test, which stipulates they must be solely dedicated to building a retirement nest-egg," writes Morningstar’s Glenn Freeman. "You're not prevented from investing your entire SMSF portfolio in a sole asset – a business property is a popular choice – or a single sector. But your documentation must make it clear that you understand the risks associated with this lack of diversification."

3

That’s the number of ETFs Morningstar has ceased coverage of. Key among them is BetaShares' "yield maximiser" passive exchange-traded fund (ASX: YMAX), which Morningstar deemed was performing poorly and carrying high fees. Since its inception in late November 2012, YMAX has delivered 6.61 per cent a year, whereas the Australia 20 index has delivered 10.12 per cent, BetaShares says on the fund prospectus. Morningstar analyst Donna Lopata says: "Given YMAX’s multifaceted approach, it is relevant to compare the fund with a variety of yardsticks; however, our previous reports observed that no matter what comparison we made, YMAX’s total returns were unimpressive."

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is content editor for Morningstar Australia

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