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Morningstar runs the numbers

Lex Hall  |  07 Dec 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 4 December.

31 per cent

Just under one-third of SMSF assets (31 per cent) are currently invested in direct shares, according to the 2020 Vanguard/Investment Trends SMSF Report. Direct property accounts for 16 per cent of SMSF assets, while 27 per cent of assets are currently held in cash and cash products. By comparison, just 19 per cent of SMSF assets are held in managed investments (11 per cent listed, 8 per cent unlisted). “The bias towards direct ownership is understandable given the stated desire of SMSF trustees to have more control over their investments,” says David Macri, chief investment officer of Australian Ethical Investment. “But there are some areas where it makes sense for SMSFs to outsource to external managers.” These include global equities; small and microcaps; and ESG investing.

$100bn

It has been an incredible year for flows into Australian exchange traded products despite the COVID-19 pandemic and market volatility, writes Van Eck's Arian Neiron. "The market could surge to over $100 billion in size in 2021 as more money flows into the sector away from unlisted managed funds as investors realise the potential liquidity and trading benefits ETPs offer. Over the 12 months to 30 November 2020, the Australian ETP industry jumped in size by 29 per cent to a record $73.61 billion."

27.7 per cent

That's the one-year posted by China, in stark contrast to the negative returns of most countries. Despite having been the epicenter of the highly infectious coronavirus, China has also experienced the most significant rebound. Emerging Asia, where it all started, posted the highest one-year return, driven mainly by China's recovery. The UK fared the worst among developed markets in terms of trailing one-year returns. The Brexit transition period ends this year, and companies have been struggling to adapt to a life outside of the European Union. Despite a weak dollar, which usually benefits emerging-markets assets, Latin America and Eastern Europe were the only two regions to record negative third-quarter returns. Interest rates remained near historic lows in the third quarter, with accomodative Federal Reserve policy likely to persist for the next couple of years.

5-10 per cent

That's the predicted compound annual growth rate for the coffee market, writes Vikram Barhat. "A burgeoning market bears out coffee’s growing popularity, fuelled by the increased appetite for the steaming cuppa in emerging markets," Barhat writes. "The numbers support the cheery outlook for the drink’s future revenue opportunity. The worldwide coffee market is forecast to reach US$134 billion in 2024, growing at a CAGR of 5.32 per cent between 2020 and 2024. A more optimistic report puts the global coffee’s current market size at US$362 billion, projected to grow 10.6 per cent annually through 2025." Names to watch include McDonald's and Starbucks and Restaurant Brands International.

13 per cent

That's how much Tesla stock jumped on news it would be included in the S&P 500. "The addition of Tesla will increase the S&P 500’s concentration," writes Morningstar's John Rekenthaler, "which is saying a great deal, because it is already more top-heavy than at any other time during the past 25 years. Usually, the S&P 500’s top 10 holdings make up about 20 per cent of the index’s total assets but that figure has expanded sharply over the past 18 months, reaching 28 per cent in June. Since then, the top 10 holdings have surged even further and counting Tesla’s addition, now account for 34 per cent of the index."

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is senior editor for Morningstar Australia

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