Investor Insights

If you aren’t already aware I am optimistic about the prospect for small caps in 2024. Provided we have a combination of positive economic growth (even a short technical recession won’t upset my thesis) and a continuation of the disinflation that has informed the path of consumer prices over the last year, innovative small cap growth companies have the opportunity to catch up to mega-caps that dominated the investment landscape in 2023.

As the first of the baby boomers approach the celebration of their 80th birthdays in the next few years, a distinct change is being felt in financial services, with serious implications for financial markets.

In this week’s video insight, I delve into the discussions surrounding the Reserve Bank of New Zealand’s proactive approach to inflation, the nuanced shifts in major economies, and the potential impacts of tightening monetary policies.

The standard deviation, or measure of the amount of variation, of the S&P/ASX 300 Accumulation Index over the period between 1 August 2017 and 31 October 2023 was 15. 2 per cent. One standard deviation (or plus or minus 15.

In this week’s video insight I wanted to discuss the contrasting predictions from Australia’s major banks regarding interest rates, painting a nuanced picture of the economic landscape. Shayne Elliott from ANZ anticipates sustained rate hikes amid escalating growth pressures. In contrast, NAB’s Ross McEwan suggests rates might have peaked, while CBA hints at a possible rate cut. These varied perspectives hold significant implications for households with mortgages and investors.

Since late October, financial markets have witnessed a significant shift, adjusting to a softer labour market and persistent disinflation. As an aside, the latter – disinflation – was a condition we wrote about a year ago, suggesting it should support the share prices of innovative growth companies, especially those with pricing power.

In a world where the interest rate tide has been rising, savvy investors are sailing towards more stable horizons. The Aura High Yield SME Fund, designed for wholesale investors, has emerged as a beacon of consistent returns, offering a compelling case for investors looking to diversify their portfolios away from volatile seas.

The latest monthly consumer price index (CPI) read released last week, came in unexpectedly lower than anticipated, at 4. 9 per cent in the 12 months to October. This follows the previous read of 5. 6 per cent in September. With the 8.

In this week’s video insight, David Buckland and I discuss Seven Group Holdings (ASX: SVW), an Australian operating and investment group in the media, mining and construction industry in which the Montgomery Small Companies Fund holds a substantial stake. We spotlight the remarkable alignment between the Stokes family’s leadership and investors’ interests, emphasizing Seven Group’s astute counter-cyclical investment strategy. Additionally, we explore their recent strategic acquisition of Boral (ASX: BLD), shedding light on their concerted efforts to enhance operational efficiencies and bolster margins. Catch the full discussion here.

As we monitor the behavior of the Australian consumer, it’s crucial to acknowledge that consumption constitutes approximately 50 per cent of Australia’s GDP, significantly influencing decisions related to interest rates. The robust trading update presented during the annual general meeting (AGM) by Temple & Webster Group (ASX: TPW), an online retailer specialising in furniture and homewares, prompts thoughtful consideration.

As China reflated its economy in 2015, we saw a massive five-to-six-year tailwind assisting the property boom. Speculation and strong property prices led to over-supply, and the eventual carnage experienced by most highly levered Chinese property developers over the past two years.

Unsurprisingly, consumer spending dominates all other categories and contributors to economic growth in a consumption-based economy such as Australia’s. Australia’s private consumption accounted for 49. 8 per cent of nominal gross domestic product (GDP) in the June 2023 quarter.