Client questions answered
Clients have been asking where to invest on the Australian share market.
We cover the short term trading companies on the ASX in Talking Stock.
Below are the investment themes that we’re investigating further:
Property renovation
Notably not development, but improving existing dwellings.
We’re looking at the benefits of low interest rates without the headwinds of APRA narrowing residential property speculation via restricted lending criteria.
This might be CSR and a few other much smaller companies where direct investment is not preferred.
We’ll seek an index or active manager who can provide this exposure;
Value large, mid-caps and large-caps with consistent yield
The dominant banks and grocers are in strife and not a viable home for direct investment.
Splitting these troubled companies out is not an index-play, so we’ll look for an active manager.
Plato (PL8) is ideal for this focus and possibly CIE;
Commodities
Resources and commodities have received a tailwind.
The USD has been falling against the basket, but that has turned after a reasonable flat line for months.
Over the long term commodities are not a desired super investment, but active trading the volatile markets can provide a desired return.
We’re looking into a suitable investment if possible (we have identified a few that have $500k minimum investments).
It’s worth noting that:
High growth companies (A2 Milk, Domino’s, etc) have been the leaders of the market. We noted this in 2015 and it has played out well, however now we are late in the cycle and at this stage it poses too much risk for our liking;
We have actively avoided Banks since 2015, while the yields are suitable, the next few years ahead are filled with regulatory changes and large asset movements/ divesting. IPOs of spin-offs might be of interest, but direct investment in banks now is still not desired;
Retail still has structural changes in the works
Building seems positive with low interest rates, but identifying construction companies not linked to residential property and mining are difficult
