Firstlinks Edition 487
Global recession coming? Shrinking bond fund distributions; The Socceroos; Retirement risks; Aged care tips; SMSF trustee legalities; The case for EM.
The Commonwealth Bank's Chief Economist, Stephen Halmarick, suggests that the world's major central banks will continue to address 'today's problem' of high inflation for another 3-6 months. Then they'll have to pivot to deal with 'tomorrow's problem' of global growth and unemployment. Stephen suggests this year's aggressive interest rate hikes are likely to lead to a global recession in 2023.
A strange thing has happened in the world of Australian bond funds: shrinking income distributions. Most of us would assume that bond managers have been able to reinvest at progressively higher yields given recent rate increases, and that they'd have the capacity to distribute more income. But as Tim Wong of Morningstar notes, that's not the case. The problem is that coupon income has been offset by sizable capital losses.
Peta Tilse of Cromwell Funds Management notes that more than 20% of Australians believe they won’t achieve their desired retirement standard of living, and half of those who are currently working admit they are unsure how much they will have, or need, when they retire. Peta outlines some of the risks facing Australians who are nearing, or who are in, retirement as well as several ways to mitigate these risks.
Meanwhile, some call it the silly season, others call it the festive season, but Rachel Lane calls this time of year ‘aged care season’. It’s a time when families come together, maybe for the first time since last Christmas, and notice that Mum or Dad or both need some (or a lot) of care. Rachel offers 12 tips on how to best handle 'aged care season'. And lawyer Elizabeth Wang runs through a hypothetical case of an aging couple who question their ability to run their SMSF and look for ways to manage the next step. She suggests there are potential solutions using NSW Trustee and Guardian.
Firstlinks' Graham Hand is on a short sabbatical and he's timed it perfectly to coincide with his beloved soccer world cup. Graham made the early morning trek to Darling Harbour to watch the Socceroos play Argentina and he was amazed by the number of newly-converted soccer supporters. The big question for him is whether this new-found enthusiasm for soccer translates to greater support for the local A-league competition.
James Johnstone of Redwheel thinks that after a decade of underperformance, emerging market stocks are at their most attractive point since the early 2000s. A commodity super-cycle and low valuations could make for a juicy turnaround story in his eyes.
Our White Paper of the week is from Capital Group where four of Capital's investment professionals share their thoughts on the global economy and how they are investing in a world in transition.