fbpx

INSIGHTS WITH EVALESCO

Investment year in review 2020
by Kate Ferraro | 9 December 2020

TOPICS DISCUSSED

The financial impacts of COVID-19
Sharemarket update
Australian property market update

Arguably, the COVID-19 year has been similar to living through a global conflict and for many under 45, it was definitely a new experience. As with all such experiences, it can be confronting, and challenging in terms of our health and well-being, and it remains to be seen as to whether there will be far reaching financial impacts. This was certainly true of COVID-19, and uncertainty was all around. When markets started to move in February, it felt that we were being pressed on all sides.

I would like to digress for a moment, and ask you to consider the words of Rocky Balboa from the film Rocky Balboa (2006);

“The world ain’t all sunshine and rainbows…you, me, or nobody is gonna hit as hard as life. But it ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward. How much you can take and keep moving forward. That’s how winning is done!”

This is a reminder that when the unexpected happens, there are times when investors might feel as though there is no way out. Towards the end of February, when the sharemarket was a sea of red, rest assured, those of us at team Evalesco and the members of the Investment Committee were very focused on protecting what you have accumulated over a lifetime of investing. With that in mind, I wanted to share some of the actions undertaken that our internal attribution analysis has demonstrated were particularly impactful over the last twelve months. Our role with the support and guidance of the Investment Committee, is to ensure that if and when you do get hit, you keep moving forward. These are some of the actions that we believe have led to some very positive outcomes in 2020;

  • Adhering to our philosophy of reweighting AAN models back to their strategic benchmarks each quarter.
  • Rotating out of several managers and funds over the course of the year with a view to reducing risk or portfolio costs.
  • Hedging half of the currency exposure in the AAN Core and AAN Growth Models in the March reweight when the AUD was trading at a little over 55 cents.

From an Australian viewpoint:

  • Domestic borders are down (hopefully SA reopens soon) and our most populous states are now on the move.
  • 450,000 fewer businesses and almost 2 million fewer employees were on Jobkeeper in October than in September.
  • We have 56 active cases in the whole of Australia and 90%+ of those are in hotel quarantine as returning travellers. Weirdly enough Qld and WA have more active cases than NSW and Victoria. (1)
  • Australians are travelling domestically again and tourist destinations are seeing high demand.
  • Our economy is well out of recession. The September recovery was very healthy after the June figures and arguably better than most expected given the issues in Victoria.
  • Dire predictions about unemployment have not materialised and is some cases, specifically rural areas, there are shortages.
  • The property slump was short and sharp but is now recovering and advancing quickly. (2)

Year to date numbers (as at 29 Nov 2020) for the capitals: Sydney +3.9%, Melbourne -0.6%, Brisbane/Gold Coast +4.1%, Adelaide +4.7%, Perth 0.8%.

Real estate brokers we are talking to, talk about properties selling well above reserves and the rental market being very tight.

The Australian ASX 200 to 2nd Dec 2020 over the twelve months was slightly down (1.5%) despite the 35% drop in February.
The US S&P500 is up 18% for the year to Dec 2nd 2020, UK FTSE was down 9.7%, German Dax was up 1.3%, S&P Europe 350 was down 2.8%.
The massive amount of government stimulus has seen household net income rise through the year.
We are also seeing very positive news on the vaccine front.

There are some headwinds though.

Trade uncertainty with China, our biggest trading partner.
This pandemic is far from over and international borders are likely to remain firmly shut for some period to come.  Daily death rates continue to climb, though thankfully at a lower rate relative to number of cases.
Even with several vaccines, it will take time to work through society and care and health workers as well as the elderly need to be at the front of the queue.
Fiscal debt around the world looks alarming with over $69 trillion of public debt accumulated. This may not seem to have an immediate impact but reduces what countries can do into the future and leaves us very exposed if we were to be confronted with another unexpected issue. (3)
Potential conflict in the South China Sea.
Disruption of supply chains.

It is quite likely that 2021 will be a little unsettled, and it is our expectation that we will still continue to find everything a little bit harder than it used to be. The economy that is currently awash with cash will find that extra cash has dried up, retail spending will decline, and as the stimulus is rolled back we may well see some companies facing insolvency.

The Chinese trade conflicts are unlikely to be resolved in the short term so our exporters will need to find alternative markets, whilst on the upside for those of you that are wine drinkers, Penfold’s may get cheaper.

As always, should you have any questions about this content, or your own portfolio, please do reach out to your adviser, or drop me an email care of marshall@evalesco.com.au.

Sources:

(1) https://wwwcovid19data.com.au

(2) https://propertyupdate.com.au/australian-property-market 

(3) https://mandrillapp.com/track/click/30048563/www.atlanticcouncil.org?

SHARE OUR INSIGHTS

Share on Facebook

Share on Email

Share on Linkedin

NEWSLETTER

Sign up to get the latest insights with our newsletter delivered straight to your inbox

Slide
“How will I measure the value or success of receiving financial advice?”

We believe the true value of financial advice isn’t found in dollars and cents (although this is important too!) but in the peace of mind a financial plan can provide. It’s knowing where you want to go and how to get there, with a dedicated team behind you every step of the way.

Slide
“How do I know Evalesco is the right fit for me?”

We know the impact of good holistic financial advice can make and we have the life experience, technical capability and quality support team that can make that difference for you. We’ve empowered over 1000 families through the delivery of great financial advice, to be healthy, wealthy and happy.

Slide
“How do I know how much money I will need to retire?”

The amount of super you’ll need when you retire depends on your big costs in retirement and the lifestyle you want. The Associate of Superannuation Funds of Australia (ASFA) estimates for a single $44,224 a year and for couples $62,562 a year is how much you may need. This is only an indicator and our advisers assess everyone’s individual circumstances.

Slide
“Why should I pay for financial advice?”

The fees we charge for financial advice is only a fraction of the value we derive for our clients, meaning our clients are always better off after seeing us. Rarely do we encounter a new client invested appropriately for their needs, with adequate risk protection, structuring and estate planning provisions in place. Even small tweaks to a financial plan over a long period of time can result in drastically better outcomes for our clients which eclipses the fees of the financial advice. Additionally, you can opt-out of an ongoing fee arrangement at any time.

Slide
“How do you charge for your services?”

In our discovery meeting with you our advisers discuss the initial advice fee and the ongoing fees associated with our services.

Slide
“What is the process for getting our own personal financial plan?”

After our initial phone call to discuss why you are seeking a financial adviser, we arrange a discovery meeting that outlines what is important to you, your current position, our areas of advice, our approach. We then present a Statement of Advice (SoA) to discuss your goals and our recommendations and go through the steps of how to proceed to the implementation stage. After signing the SoA, we discuss your questions, get you to sign the authority to proceed and complete any application forms before implementing the recommendations detailed in the SoA.

Slide
“Should I pay more off my mortgage or put more money into super?”

One thing to consider is the interest rate on your home loan in comparison to the rate of return on your super fund. Before making a decision, it’s also important to weigh up your stage in life, particularly your age and your appetite for risk. Whatever strategy you choose you’ll need to regularly review your options if you’re making regular voluntary super contributions or extra mortgage repayments. As bank interest rates move and markets fluctuate, the strategy you choose today may be different from the one that is right for you in the future

previous arrow
next arrow

Evalesco Financial Services Level 17, 20 Bond Street Sydney NSW 2000
Phone: (02) 9232 6800

The information provided on and made available through this website does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Evalesco Financial Services do not warrant the accuracy, completeness or currency of the information provided on and made available through this website. Past performance of any product discussed on this website is not indicative of future performance. Copyright © 2019 Evalesco Financial Services. All rights reserved

Evalesco Financial Services Pty Ltd is a Corporate Authorised Representative (325313) of Australian Advice Network Pty Ltd.

ABN: 13 602 917 297 AFSL: 472901