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Morningstar runs the numbers

Lewis Jackson  |  27 Sep 2021Text size  Decrease  Increase  |  
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8%

Energy generator AGL emits around 8% of Australia’s total greenhouse gas emissions and shareholders have had enough, voting last Wednesday for the company to align itself to the Paris climate accords, I write: “More than half of AGL's shareholders (55%) voted for a three-part motion, proposed by the Australasian Centre for Corporate Responsibility (ACCR), asking the company to set Paris-aligned targets for emissions reductions and detail how capital expenditure and remuneration will align with the targets. The Paris Agreement is an international treaty on climate change signed in 2015 to limit global warming to below 2 degrees. AGL (ASX: AGL) emits roughly 8% of Australia’s greenhouse gas emissions, according to data compiled by ACCR.”

US$115

Zero-commission trading is shaking up a world where some brokers charge up to US$115 to execute foreign trades, writes Emma Rapaport in the Editor’s note: “In finance, the free lunch is called zero-commission trading. In an industry notorious for hiding fees in complex product disclosure statements, the promise of 'don't pay anything' holds obvious attraction. A phenomenon started in the US has made its way down under, and investors being gouged by up to US$115 to place a trade have jumped at it. '$0 brokerage' has been limited to international stock trading, but ASX brokers have been forced to respond to the new investor expectations. Online broker Stake threw down $3 ASX trading last week, undercutting its nearest competitor Superhero by 40%.”

11.5%

Evergrande guaranteed investors in its wealth management products as much as 11.5% annually. Beware of too much of a good thing, writes John Rekenthaler: “According to the daughter of one of Evergrande’s investors, the product that her father bought guaranteed him an 11.5% annual gain. Some guarantee! Chinese bond yields are above Treasury levels, with Chinese government 10-year bonds currently paying 2.87%, but they are nowhere near high enough to support casually promising an 11.5% return. When I encounter such offers, I back away slowly, with a tight grip on my wallet.”

50%

Equity investors need to gird themselves for the possibility that share markets halve every few decades, writes Graham Hand: “On average, the Australian stock market falls about one year in every four or five years. It has delivered a 10% fall at some stage every couple of years since 1950, including three falls over 50%: between 1 November 2007 and 6 March 2009, down 55%, between 4 March 1974 and 30 September 1974, down 52%, and between 21 September 1987 and 11 November 1987, down 50%. The ASX200 index fell over 30% at the start of COVID in March 2020. Will such falls happen again? Certainly.”

7416

Investors buying into the Vanguard Diversified High Growth ETF are getting access to around 7,416 companies globally, I write in my review of the popular multi-asset vehicle: “An investor buying one unit of VDHG—$60.79 as of writing—is actually buying one fund, that invests in seven other Vanguard funds, five equity, two bond: Vanguard Australian Shares tracks the biggest 300 companies on the ASX by market capitalisation. Vanguard International Shares gives exposure to large, companies in the developed world—with a large component in the US market. Vanguard International Small Companies adds smaller global firms and its emerging market fund includes companies ranging from China to Latin America. Morningstar counted 7,416 companies across the five equity funds.”

Charts from last week

What's in one of Australia's most popular multi-asset exchange traded funds? (here)

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The name on everyone's lips: Evergrande (here)

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is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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