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Why Australian shares let you down this year (and what to do about it) · The Money Puzzle

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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
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Speaker 1: James Kirby. Welcome aboard everybody. Well, here we are. It's
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Speaker 1: the first week of the new financial year, which means
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Speaker 1: a lot of things to a lot of investors. But
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Speaker 1: the first thing I think is that many people will
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Speaker 1: start to have a look at how they fared in
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Speaker 1: the financial year the twelve months to June thirty this week,
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Speaker 1: and I expect a lot of listeners might be a
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Speaker 1: bit disappointed actually in how they have fared for the
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Speaker 1: simple reason. Unless you're in a big superfund and you're
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Speaker 1: in one of those big super funds that has a
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Speaker 1: big allocation up to fifty percent perhaps on offshore markets,
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Speaker 1: then you may not have done very well. Certainly you
0:53
Speaker 1: will have underperformed in relative terms compared to those big funds,
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Speaker 1: because I think the median figure for super funds, large
1:01
Speaker 1: super funds is nine percent, which is okay, But then
1:06
Speaker 1: if you look at the top funds, if you look
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Speaker 1: at say Colonial or UNI super host plus, they're coming
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Speaker 1: in a twelve percent plus because they had such exposure
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Speaker 1: to overseas markets. For the active investor in Australia, particularly
1:22
Speaker 1: those with SMSFS. They've probably got most of their exposure
1:25
Speaker 1: on the ASX, which barely got across the line this
1:29
Speaker 1: year in terms of its returns. And then if you
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Speaker 1: have property, which might be the great counterbalance perhaps on shairs,
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Speaker 1: well that's not doing very well either. I think what
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Speaker 1: we will do today is take a look at, first
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Speaker 1: of all, what happened and earlier this year, at the
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Speaker 1: very start of the year in January, I had Mark
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Speaker 1: Jokum on the show, who is the investment strategist at
1:53
Speaker 1: Global X. He said a couple of things. I just
1:55
Speaker 1: listened back to the show this morning and he said
1:58
Speaker 1: the US is going to do better than the He
2:01
Speaker 1: said on the ASEX, the miners will do better and
2:05
Speaker 1: he got that pretty right. So I think it would
2:08
Speaker 1: be ideal to bring him back and test him once more,
2:10
Speaker 1: put him in the hot seat for the year, the
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Speaker 1: financial year ahead. How are you, Mark.
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Speaker 2: Gring to be back, James, bigger pressure and choose to
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Speaker 2: feel but it's always a pleasure to talk to you.
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Speaker 1: Big. It's bigger pressure. You like the guy in the
2:22
Speaker 1: World Cup who scored three goals in the last game
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Speaker 1: and you're rolling out and everyone saying, well he scored
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Speaker 1: three goals the last time. See how he goes today.
2:30
Speaker 1: We don't want to be that severe on you, but
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Speaker 1: I think you are in an ideal position with your
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Speaker 1: job as an investment strategist at an ETF house, which
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Speaker 1: is which doesn't you know so much concentrate on individual shares,
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Speaker 1: but concentrates on allocations and themes across the market. To
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Speaker 1: bring us up to speed, briefly, tell us how the
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Speaker 1: big markets went this year? Hear, did the AX go?
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Speaker 1: How does it compare to everything else?
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Speaker 3: Yeah, it's a great intro, James.
2:57
Speaker 2: And to give people some context, the Australian market over
3:00
Speaker 2: the financial year of twenty twenty six was up around
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Speaker 2: three percent in terms of price returns. Once you include
3:05
Speaker 2: some dividends you get up to around seven percent. So
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Speaker 2: dividends did a lot of the heavy lifting, contributing for
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Speaker 2: over fifty percent of the total returns. But it was
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Speaker 2: actually our worst financial year in terms of performance in
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Speaker 2: four years, and it's now been four consecutive years James,
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Speaker 2: where Australian shares have underperformed global equities. So to your
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Speaker 2: point around people who are looking at their self managed
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Speaker 2: superfund or their portfolio, if they were under allocated to
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Speaker 2: global shares, they would have underperformed so far this year.
3:30
Speaker 2: In terms of what really led the market or what
3:33
Speaker 2: pretty much kept the Australian market above water, it really
3:36
Speaker 2: was the material stock, so BHPN Rio were both up
3:40
Speaker 2: seventy percent over the financial year. We obviously had beneficiaries
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Speaker 2: in energy companies from the conflict in the Middle East
3:46
Speaker 2: and the closure of the Straight of horm moves, and
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Speaker 2: we actually had some consumer defensive businesses like Coals and
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Speaker 2: Woolli's which actually did quite well. And I think at
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Speaker 2: the start of the year I was talking about how
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Speaker 2: this AI theme isn't going to change, and what we
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Speaker 2: saw in Australia is that, you know, companies like Rio
4:02
Speaker 2: and BHP are both indirect beneficiaries of this AI boom,
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Speaker 2: given the demand expectations for things like copper, which is
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Speaker 2: a real essential metal for this electricity infrastructure.
4:13
Speaker 1: And the fact that laren Or held up at a
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Speaker 1: hundred bucks a ton went also.
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Speaker 2: We saw divert fight miners like lithium miners also recover
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Speaker 2: quite nicely with rising demand for electric vehicles and broader
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Speaker 2: energy storage systems. But then we had some shockers in
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Speaker 2: Australia with healthcare and technology down as well.
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Speaker 3: Banks held up.
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Speaker 2: Okay, not great, they had a good February reporting season,
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Speaker 2: but you did have a few winners that did quite well.
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Speaker 2: And then, really, James, it was about global markets leading.
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Speaker 2: So I mentioned the Australian market did three percent price
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Speaker 2: returns and seven percent total returns. But you had the
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Speaker 2: likes of emerging markets up forty to fifty percent. Japan
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Speaker 2: was our forty percent, in Korea was up a staggering
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Speaker 2: one hundred and eighty percent over the past year. And
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Speaker 2: the US markets were up around twenty to thirty percent.
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Speaker 1: And that's the one that matters, right the US, I
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Speaker 1: mean twenty percent on the US twenty percent, the S
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Speaker 1: and P five hundred and thirty percent on the Nasdaq,
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Speaker 1: you said, and you're right, of course, that most investors
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Speaker 1: and most listeners on the show have been under allocated
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Speaker 1: to offshow on markets. The Tax Office figures suggest it's
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Speaker 1: only three percent. That's way too low, okay, because as
5:16
Speaker 1: I understand, they only show direct shares. Talking to a
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Speaker 1: lot of people yesterday, the numbers are closer to something
5:23
Speaker 1: like fifteen percent, and taking smsfs as a proxy for
5:27
Speaker 1: the everyday investor something like fifteen to twenty percent is
5:31
Speaker 1: offshore if you include absolutely everything, including ETFs like people
5:35
Speaker 1: like you and Beta shares and State Street et cetera.
5:38
Speaker 1: Sell and are a gateway from many investors into overseas markets.
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Speaker 1: So you have that, but that is still less than
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Speaker 1: half of what those big funds have allocated to overseas.
5:49
Speaker 1: You said they're underallocated what would be an optimum allocation.
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Speaker 2: So there's lots of studies, James, in terms of getting that,
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Speaker 2: like from a technical perspective, getting your maximum risk adjusted returns.
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Speaker 2: And I think one of the most important thing people
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Speaker 2: have to realize is that the Australian market is quite
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Speaker 2: a domestic focus business. We do have a lot of
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Speaker 2: businesses that generate their revenue from offshore. But you're talking
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Speaker 2: about a market that accounts for two percent of the
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Speaker 2: total global share market. So if you're just allocating, you know,
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Speaker 2: call it fifty percent to Australian shares, you're way over
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Speaker 2: allocating to a local market relative to its global footprint.
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Speaker 1: But mark three percent. Let's say the Australian share market
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Speaker 1: is two percent to global market, So that doesn't mean
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Speaker 1: we should have ninety eight percent. And obviously shares.
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Speaker 2: Does is absolutely not, because we need to match up
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Speaker 2: our domestic liabilities with our assets. And also a lot
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Speaker 2: of Australians tend to want to come to the Australian
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Speaker 2: market for their dividend growth given a lot of Australians
6:42
Speaker 2: invest from a retiree perspective. But if you're looking to
6:45
Speaker 2: balance it out with capital growth, if you've seen some
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Speaker 2: of the returns elsewhere, We've got companies in the US
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Speaker 2: that have low payout ratios that really try and reinvest
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Speaker 2: for growth, so it's good to balance that. We see
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Speaker 2: a lot of people allocate around about forty to sixty
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Speaker 2: percent in global equities and the in Australian shares, but
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Speaker 2: it's really about matching up to your risk profile. If
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Speaker 2: you want to take on more risk, maybe it makes
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Speaker 2: more sense to have more global equities.
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Speaker 1: Forty is sixty on overseas shares for the Australian investor,
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Speaker 1: but in reality that would most people wouldn't be at
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Speaker 1: that level yet were they correct.
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Speaker 2: It really depends on your risk profile. But from a
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Speaker 2: total share market perspective, in terms of your equity allocation,
7:20
Speaker 2: we tend to see people hovering around that forty to
7:23
Speaker 2: sixty percent in terms of their allocation. But it does
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Speaker 2: depend if your income focus, you don't want to be
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Speaker 2: invested in these high growth markets.
7:29
Speaker 3: But if your capital growth focus.
7:30
Speaker 2: And you're a little bit younger, maybe that's where you
7:32
Speaker 2: do want to allocate towards. And then you can choose
7:34
Speaker 2: if you want to unhedge or hedge your currency depending
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Speaker 2: on that risk profile as well.
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Speaker 1: I have two questions for you, try and keep them
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Speaker 1: both in mind, and I forget the second one. The
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Speaker 1: first one is that on the dividends, yes, okay, so
7:47
Speaker 1: let's say we did three percent, and let's say the
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Speaker 1: did in the years three and a half, So okay,
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Speaker 1: we had six and a half to seven percent. That's
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Speaker 1: all fine. And let's see if it was franked, it
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Speaker 1: might even bring you up more. But it's that much compensation.
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Speaker 1: It's still miles after twenty percent that the US did.
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Speaker 1: Are twenty one if they thrown their little teeny dividend yield?
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Speaker 3: Is this?
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Speaker 1: Are we stuck in this rot? I mean it's year
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Speaker 1: after year. I mean it's actually decades. Do we take
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Speaker 1: it as the norm?
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Speaker 2: I think that if you look at historically speaking, dividends
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Speaker 2: has done the heavy lifting here in Australia, it accounts for,
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Speaker 2: like I said, majority of the overall return. And right now, James,
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Speaker 2: what an interesting predicament where the Australian divid in yields
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Speaker 2: is actually at the lowest it's been in multiple decades
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Speaker 2: outside of the COVID pandemic. So for people who are
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Speaker 2: relying on returns to the Aussie market and right now
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Speaker 2: the divid in yield is one of the lowest, you
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Speaker 2: have to think where's the return going to come from.
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Speaker 2: Is it going to come from earnings growth? And yes,
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Speaker 2: we did have some decent earnings growth here in Australia,
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Speaker 2: one of the first times that we actually got into
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Speaker 2: the teams in terms of year on year growth. So
8:46
Speaker 2: I think August is going to be a really key
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Speaker 2: thing for investors to monitor where the companies can do
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Speaker 2: what they did in February. But also you've got banks
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Speaker 2: and the material sector, which is literally half of the market.
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Speaker 2: So if there's any weakness around the domestic sector, weakness
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Speaker 2: around lending. We've obviously seen some declines in house prices.
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Speaker 2: That's going to impact the banks even in a higher
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Speaker 2: interest rate environment, and the materials are diversifying their way
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Speaker 2: away from iron ore into the new electrification, but really
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Speaker 2: you're relying on two sectors. So I think investors need
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Speaker 2: to take a good hard look at their portfolios and
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Speaker 2: really start thinking about global share investing. Yes, some of
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Speaker 2: the areas might be frothy, and people are talking about
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Speaker 2: whether the AI is in a bubble, but you almost
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Speaker 2: can't be under allocated to it because then you will
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Speaker 2: likely and you have seen over the last year, have
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Speaker 2: underperformed if you didn't own semiconductor stocks, if you didn't
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Speaker 2: own some of those memory stocks. And it's funny, it's
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Speaker 2: not the magnificent seven stocks that everyone's talking about. It's
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Speaker 2: the rest, this broadening trade that I think I spoke
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Speaker 2: about at the start of the year that is materializing.
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Speaker 3: So investors do have to take a close look at that.
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Speaker 1: A broad earnings resurgence across US listed equities. Tell me
9:52
Speaker 1: one of your key points when we talked last was
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Speaker 1: that the ASEX was very expensive. The arenas have improved, right,
9:59
Speaker 1: is it? It's still terribly expensive.
10:01
Speaker 2: The banks are still expensive. I mean, valuations have come
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Speaker 2: down on some of the banks like CBA, which had
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Speaker 2: very lofty expectations, but you're still looking at some of
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Speaker 2: the most expensive banks in the world based on a
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Speaker 2: price to book ratio, especially compared to some of the
10:15
Speaker 2: US listed banks as well, and they're dividing yields also
10:18
Speaker 2: quite low. So for equity the risks you're investing in
10:21
Speaker 2: some of these banks, where you can get a pretty
10:22
Speaker 2: decent yield on some of the banking bonds, which I
10:25
Speaker 2: think I spoke about, or investing in the dead side
10:27
Speaker 2: of these banking stocks is actually quite attractive. So valuations
10:31
Speaker 2: have improved marginally on the banks, but they still look
10:33
Speaker 2: very expensive.
10:34
Speaker 3: James.
10:34
Speaker 2: The Australian market as a whole looks okay, but I
10:37
Speaker 2: think the US market and some of the other markets
10:40
Speaker 2: like in Asia, even though there's been a huge run up,
10:42
Speaker 2: they are delivering earnings growth, which is why the from
10:44
Speaker 2: a price to earnings ratio, the US is trading at
10:47
Speaker 2: around about twenty times earnings, which isn't if you look
10:49
Speaker 2: at the Ford earnings, which isn't too expensive if you
10:52
Speaker 2: know what I mean. Valuations have come down a little
10:54
Speaker 2: bit since the Middle East conflict, but so far we
10:57
Speaker 2: still believe having that global posture is the way to
10:59
Speaker 2: go leading into the next financial year.
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Speaker 1: And we're trading on if they're on twenty, what are
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Speaker 1: we on?
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Speaker 2: So we range anywhere in the high teens, whether it's
11:07
Speaker 2: anywhere from seventeen to eighteen times. Some of the banks
11:10
Speaker 2: again look at it from a price to book ratio.
11:13
Speaker 2: But things are still relatively okay here in Australia. But
11:16
Speaker 2: still valuations are in that top percentile, so valiation is
11:19
Speaker 2: still to look a little bit stretched. We still normally
11:21
Speaker 2: trade in the mid teen side of things.
11:24
Speaker 1: But we're getting three percent and they're getting twenty.
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Speaker 3: Exactly.
11:27
Speaker 1: That's the problem, folks. Okay, the question which is still
11:30
Speaker 1: hanging their mark was about the returns and the hedged
11:35
Speaker 1: and unhedged. The vast majority of people who would buy
11:39
Speaker 1: ETFs would buy on hedged dtfs. Is that right?
11:42
Speaker 2: Yes, So, in terms of the flows that we see
11:44
Speaker 2: around about seventy to eighty percent of the flows go
11:47
Speaker 2: into unhedged ETFs and about twenty percent go into hedged.
11:51
Speaker 1: And which did better this year the hedge to the unhedged.
11:55
Speaker 2: So hedged ETFs actually did better over the past year.
11:58
Speaker 2: But more recently we've actually seen some weakness in the
12:01
Speaker 2: Aussie dollar, which is actually bought unhedged ETFs back into fashion,
12:05
Speaker 2: but over the last year, hedge gtfs have outperformed, and
12:07
Speaker 2: it was one thing that we did flag in our
12:10
Speaker 2: outlook for the year ahead that there would be some
12:12
Speaker 2: pressure on the US dollar. So for people who do
12:15
Speaker 2: want to be a bit more tactical with their currency hedging,
12:17
Speaker 2: they can. But as we've seen now in a risk
12:19
Speaker 2: of environment, that's where the Aussie dollar does for and
12:22
Speaker 2: adds a bit of a cushion to your return by
12:24
Speaker 2: having that unhedged exposure. So for our perspective long term holding,
12:27
Speaker 2: it's still most people going to unhedged, but just from
12:30
Speaker 2: a short term tactical till that's where we see people
12:32
Speaker 2: going into currency hedging.
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Speaker 1: Right. Still, having said that, you just said that the
12:38
Speaker 1: unhedged have been a bit better off in the very
12:41
Speaker 1: recent times.
12:42
Speaker 3: Very recent because you've seen some Aussie dollar weakness.
12:44
Speaker 1: That's correct, Yeah, okay, okay, So folks, that's just worth
12:47
Speaker 1: remembering that when you see, say that the SMP has
12:53
Speaker 1: done twenty percent, you may not get twenty percent if
12:55
Speaker 1: you have a convention unhedged, which is the most popular
12:59
Speaker 1: form of you. Okay, So we've talked about why the
13:02
Speaker 1: AX underperformed, and it did underperform substantially. I mean, the
13:08
Speaker 1: numbers are worse, aren't they against other markets just and
13:11
Speaker 1: not everybody will ever go near emerging markets, and emerging
13:14
Speaker 1: markets did nothing for many years. However last year they
13:19
Speaker 1: did fifty percent on the MSCI Emerging Markets Index, which
13:24
Speaker 1: I checked last night. So I know this is very
13:28
Speaker 1: difficult for you, But looking into your crystal ball, if
13:33
Speaker 1: you were to change or modify or amend some of
13:37
Speaker 1: the main points you made when you talk to us
13:40
Speaker 1: in January, what would they be.
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Speaker 2: So I don't think my forecast in terms of the
13:45
Speaker 2: year ahead jants had changed too much, but I do
13:47
Speaker 2: think they we're going to start to see the next
13:50
Speaker 2: layer of beneficiaries really lead the market, and you've start
13:53
Speaker 2: to see things like the equal weight s and P
13:55
Speaker 2: five hundred start to do a lot better than the
13:57
Speaker 2: market cup weighted one. So I don't think that the
14:00
Speaker 2: market is going to be led by the big tech names.
14:03
Speaker 2: And that's why you've seen some of the smaller names,
14:04
Speaker 2: like the memory names like sand Disc, which is a
14:07
Speaker 2: small memory name that really was a small cap stock.
14:10
Speaker 2: A lot of them are doing a lot of the
14:11
Speaker 2: heavy lifting, and even in Australia, like one of the
14:14
Speaker 2: best performing stocks in Australia was a company called forty Medical.
14:18
Speaker 2: They were a super small cap when they started and
14:20
Speaker 2: now they're up to a three billion dollar business. So
14:23
Speaker 2: for me, I think we're going to see and I
14:24
Speaker 2: spoke about it before, a bit more broadening, and I
14:26
Speaker 2: really think it's going to be these next layers of
14:29
Speaker 2: AI in terms of everyone's worried about all this amount
14:31
Speaker 2: of spending that these big companies are doing, think about
14:34
Speaker 2: who are going to benefit from that.
14:36
Speaker 3: I think it's going to be spending it on exactly.
14:38
Speaker 2: And I think we're going to return to period James
14:40
Speaker 2: where we saw this in the early two thousands, where
14:43
Speaker 2: there was this focus on hard assets and energy security
14:46
Speaker 2: and almost boring asset heavy businesses, which is not what's
14:50
Speaker 2: done well over the last five to ten years. And
14:52
Speaker 2: that's why I think whether it's looking at US construction,
14:55
Speaker 2: whether it's looking at infrastructure plays, energy plays, whether it's copper,
14:58
Speaker 2: whether it's things like URATE, I think that this is
15:01
Speaker 2: going to be doing the next leg up. Everyone's been
15:03
Speaker 2: talking about semiconductors, memory stocks, all these high tech flyers.
15:07
Speaker 2: I think people need to look a little bit deeper
15:09
Speaker 2: down into what's going to be the next order beneficiary.
15:12
Speaker 2: So I still believe that emerging markets are still a
15:14
Speaker 2: good place to be. China still looks really attractive, Japan
15:17
Speaker 2: still looks really good. They're doing a lot of shareholder
15:19
Speaker 2: and corporate reform over there, and the US still looks good.
15:22
Speaker 2: I just think people have to be a bit more
15:24
Speaker 2: selected with how they play it.
15:26
Speaker 1: I have to ask you nerves, apprehension, bills, and though
15:31
Speaker 1: in the broadward numbers the US can justify perhaps on earnings,
15:36
Speaker 1: some of the pricing. There is a theory and it's
15:40
Speaker 1: a strong theory, and it's a theory I say that
15:43
Speaker 1: I would have time for. I'm not beholding to it.
15:47
Speaker 1: But if you were around for previous crashes at the
15:50
Speaker 1: dot com being this classic example when you have a
15:54
Speaker 1: very overheated hot sector which is AI, and the pricing
16:00
Speaker 1: inside that sector is just out the window. Okay, we
16:04
Speaker 1: think SpaceX and Nvidia, Micron, et cetera. Actually Micron is
16:08
Speaker 1: only on a pe of ten. Bad example.
16:10
Speaker 3: All right, let's text.
16:13
Speaker 1: Which is on a hundred times revenue or what at times.
16:16
Speaker 1: But my core point is people will say, yes, the
16:19
Speaker 1: AI part is widely overpriced, but that's okay, And maybe
16:23
Speaker 1: some of the heat will come off that history would suggest,
16:27
Speaker 1: like say, for instance, with the dot com boom, that
16:30
Speaker 1: it doesn't work like that. If they fall, they bring
16:33
Speaker 1: everyone with them, and you or I can't know what's
16:37
Speaker 1: going to happen, whether there'll be a severe correction or
16:41
Speaker 1: a pullback or a crash, because they are linked with sentiment,
16:44
Speaker 1: and the numbers that we're talking about today are ignored
16:47
Speaker 1: in a crash. Do you feel or have you any
16:51
Speaker 1: sense our apprehension that a severe pullback is more likely
16:55
Speaker 1: now than it was when I talk to you in January.
16:58
Speaker 3: I don't think so, James.
16:59
Speaker 2: I think the me One of the things to monitor
17:01
Speaker 2: is certain areas of concentration. So I mentioned things like semiconductors.
17:05
Speaker 2: They made up probably when we spoke earlier, probably three
17:07
Speaker 2: or four percent of the S and P five hundred.
17:09
Speaker 2: Now they are up to twenty percent of the index.
17:12
Speaker 2: So people just need to think about any certain sector
17:14
Speaker 2: concentration that they may be taking. But people use the
17:17
Speaker 2: analogy of the dot com crash, but I think people
17:20
Speaker 2: need to remember that was a consumer led technology. This
17:23
Speaker 2: is an enterprise level driven technology, and people are worried
17:28
Speaker 2: about how much these big companies are spending in terms
17:30
Speaker 2: of the hundreds of billions of dollars. I actually don't
17:32
Speaker 2: think they spending enough. If you normalize it based on
17:35
Speaker 2: the GDP output for the world economy, we're actually spending
17:38
Speaker 2: less than we are during the dot com boom. Now
17:41
Speaker 2: time will come, James to see, well is there going
17:44
Speaker 2: to be a return on investment? And I think that's
17:45
Speaker 2: what people are focusing on over the next year.
17:48
Speaker 1: Yeah, that's what I was going to say to you.
17:50
Speaker 1: The issue with the Internet and duck coom boom, was
17:53
Speaker 1: it all came to pass? It was, it all came
17:56
Speaker 1: to pass, but it kept to pass about fifteen years
17:58
Speaker 1: later than the crash of March two thousand and With AI,
18:04
Speaker 1: there is a big question mark, isn't there over the
18:05
Speaker 1: returnal on investment? Basically, does this stuff make money for
18:09
Speaker 1: the companies who are asking investors to put up enormous
18:12
Speaker 1: amounts inconceivable amounts to bankrule them?
18:15
Speaker 2: Exactly right, James, And at the moment, companies are delivering
18:18
Speaker 2: on them. If you look at the first quarter earnings,
18:20
Speaker 2: eighty five percent of companies beat their expectations. And that's
18:23
Speaker 2: the best result we've seen since twenty twenty one. But
18:25
Speaker 2: now expectations are really high in terms of quarter two,
18:28
Speaker 2: which we're about to see, earnings are expected to grow
18:30
Speaker 2: an north of twenty percent, So we'll have to see
18:33
Speaker 2: whether people can whether the companies can actually deliver on
18:35
Speaker 2: that and if they can, and that's where we believe
18:37
Speaker 2: AI is helping the bottom line, that's where people are
18:40
Speaker 2: going to be. Like this story remains, but I do
18:42
Speaker 2: think people need to look bigger than just the people
18:44
Speaker 2: who are spending all the money and have a look
18:46
Speaker 2: at where that money is going to. That's going to
18:48
Speaker 2: be the next bottleneck that I think is going to
18:49
Speaker 2: generate pretty solid returns.
18:52
Speaker 1: So you sound like you are a convert to the
18:55
Speaker 1: notion that it will ultimately improve productivity, which will ultimately
18:59
Speaker 1: drive the economy, ultimately justify the whole thing.
19:02
Speaker 3: I do.
19:02
Speaker 2: And I also think people think that AI was going
19:04
Speaker 2: to be deflationary. I actually argue the opposite. I think
19:07
Speaker 2: it's going to be inflationary. So I think we're going
19:09
Speaker 2: to be in a high inflationary environment because even the
19:12
Speaker 2: memory stocks that have driven up so much, Apple came
19:15
Speaker 2: out and so that they increasing the price of their
19:16
Speaker 2: iPhones by twenty percent.
19:18
Speaker 1: Twenty percent and the iPads twenty percent in this.
19:21
Speaker 2: It's almost analogous James, And it's not a life for
19:23
Speaker 2: light comparison to the oil crisis that we had in
19:25
Speaker 2: the seventies and eighties. So everyone wants to get their
19:27
Speaker 2: hands on this commodity. The good thing about this is,
19:30
Speaker 2: you know, memories and chips can be created a lot
19:32
Speaker 2: quicker than an oil than actually getting the reserves for oil.
19:36
Speaker 2: But I do think that we're going to be in
19:37
Speaker 2: a high inflationary environment. Interest rates might stay a little
19:40
Speaker 2: bit higher, even more of a reason to think about
19:42
Speaker 2: your real instead of your nominal return, you're after tax return.
19:45
Speaker 2: And some of these companies in terms of investing in
19:48
Speaker 2: shares can be an inflation hedge. So again, think about
19:51
Speaker 2: those hard assets, think about those next order beneficiaries when
19:54
Speaker 2: it relates to AI, because I think this is a
19:56
Speaker 2: theme that's going to stay here at least over the
19:57
Speaker 2: short to medium term.
20:00
Speaker 1: Okay, we will hold it right there. It's going at
20:02
Speaker 1: quite a speed, isn't it, folks. We'll take a break.
20:04
Speaker 1: We'll be back in a moment. Hello, Welcome back to
20:13
Speaker 1: The Australian's Money Puzzle podcast. James Kirby here with Mark Jokum,
20:17
Speaker 1: the investment strategist at global x ETFs, one of the
20:21
Speaker 1: big ETF houses in Australia. Now, Mark, that was very
20:26
Speaker 1: interesting is the first segment where we just talked about
20:29
Speaker 1: what's happened around the world. And I don't want to
20:31
Speaker 1: simplify it, folks, but really this year, that is the
20:35
Speaker 1: last finance of the year, the year to June, how
20:37
Speaker 1: your investments performed hinged very heavily on the extent to
20:45
Speaker 1: which you had investments outside of the AX, especially on
20:49
Speaker 1: Wall Street, and if you were lucky enough to have
20:52
Speaker 1: someone emerging markets as well, fifty percent you want an
20:56
Speaker 1: ETF on emerging markets? Is it fifty percent in a year?
21:00
Speaker 1: Keep in mind that they did nothing for a long time.
21:02
Speaker 1: But that's diversification. That's how it works. Like last year,
21:05
Speaker 1: if you had gold, you're a big winner. This year,
21:07
Speaker 1: forget about it. In the year just gone the financially
21:10
Speaker 1: you're just gone. Emerging markets. There's always something that shoots
21:13
Speaker 1: the lights out, very hard to pick it in advance,
21:15
Speaker 1: but if you're fully diversified, you should get a taste
21:19
Speaker 1: of it at least into your returns. Mark, what tell
21:23
Speaker 1: us now, I'm assuming investors Australian investors are using ETFs
21:28
Speaker 1: as a sort of gateway to global markets. But tell
21:31
Speaker 1: me about what you see happening at your morning meetings
21:35
Speaker 1: and the trends like, for instance, our people getting more granular.
21:39
Speaker 1: Are they trying to buy you telling me, I don't
21:41
Speaker 1: want to guess.
21:43
Speaker 2: Yeah, you hit the nail on the head, James. The
21:45
Speaker 2: ETF rapper is becoming a staple for Australian investors. There's
21:49
Speaker 2: now a couple million of Australian investors that are using ETFs,
21:52
Speaker 2: and I believe penetration is still going to continue to grow,
21:55
Speaker 2: probably on the back of these you know, proposed CGT changes,
21:58
Speaker 2: even more of a reason to use ETFs.
22:00
Speaker 1: Just to clarify and tell me if I'm wrong what
22:02
Speaker 1: you were saying there was the CGT changes. The way
22:06
Speaker 1: the tax works, it has been said by many, especially
22:11
Speaker 1: in the ETF space. But fair enough if you look
22:13
Speaker 1: at how it works, folks, because you could be penalized
22:17
Speaker 1: if you had a basket of shares and you had
22:20
Speaker 1: a couple of big winners, but you had a bunch
22:22
Speaker 1: of losers. The way the CGT works, that situation is
22:26
Speaker 1: tax more heavily than it used to be but ETF
22:29
Speaker 1: smoothed that out. Is that what you're saying, Marks, Okay, okay,
22:32
Speaker 1: we'll put that, I mean fair enough, But tell me
22:34
Speaker 1: what you're seeing in terms of what Australian investors are
22:38
Speaker 1: doing in ETF land.
22:39
Speaker 2: So there's there's two layers, James. You're still seeing a
22:42
Speaker 2: lot of investors gravitating towards your broad based vanilla ETFs.
22:45
Speaker 2: So so far this year we've had around twenty six
22:48
Speaker 2: billion dollars going into ETFs.
22:49
Speaker 3: We're on track for the best year in history.
22:51
Speaker 1: This is the sector or you.
22:53
Speaker 3: No, this is the sector.
22:54
Speaker 2: This is the entire ETF ptory global X as well,
22:56
Speaker 2: we've had a record year so far. But more broadly,
22:59
Speaker 2: we're speaking about over forty percent of the flows are
23:02
Speaker 2: going into your broad based global strategies that think S
23:05
Speaker 2: and P five hundred, Nasdaq and also local equities as well. However,
23:09
Speaker 2: to your point, where we're seeing more granularity is in
23:11
Speaker 2: how people are structuring their investments around certain strategies and
23:15
Speaker 2: certain thematics strategies. For one, as an example, Australian high
23:19
Speaker 2: dividend ETFs are now coming back into fashion. People are
23:22
Speaker 2: focusing and we spoke earlier around how even though the
23:24
Speaker 2: dividend yields lower again in this tax environment, dividends are
23:28
Speaker 2: going to be doing a lot more of the after
23:29
Speaker 2: tax heavy lifting. So we've seen about a billion dollars
23:32
Speaker 2: come into Aussie high dividend strategies. And then in the
23:35
Speaker 2: thematic side, which I find really interesting because a lot
23:39
Speaker 2: of people don't really invest in these big themes, whether
23:41
Speaker 2: it be around tech, AI, semi conductors, etc. They only
23:44
Speaker 2: account for a very small percent of the market, around
23:47
Speaker 2: about three percent of the market, but they make up
23:49
Speaker 2: so far this year around about seven to eight percent
23:52
Speaker 2: of the total flows. And you're just starting to see
23:54
Speaker 2: Australians become more granular because they know they can't get
23:57
Speaker 2: exposure to things like AI, to things like semi conductors,
24:00
Speaker 2: like copper miners in the local market, which is why
24:03
Speaker 2: like for example, global As has seen huge interest in
24:05
Speaker 2: our y ETF which is around copper miners, AR infrastructure,
24:08
Speaker 2: AI inf and that's where we're seeing investors become a
24:11
Speaker 2: bit more granular. Not just that, James, It's not just
24:14
Speaker 2: large cap that people are gravitating towards. At the moments,
24:17
Speaker 2: small companies are off to their best start in terms
24:20
Speaker 2: of outperformance over large companies since two thousand and three,
24:24
Speaker 2: and of the last few weeks we've seen more money
24:26
Speaker 2: going to small and mid cap ETFs.
24:28
Speaker 3: So that's the.
24:29
Speaker 2: Whole broadening trade that I've been talking about. Right the
24:32
Speaker 2: asx two hundred, asx three hundred, they're still going to
24:34
Speaker 2: get the bulk of the flows, but you asked SUN
24:36
Speaker 2: to see more investors kind of tilt their portfolios towards
24:40
Speaker 2: capturing these themes, capturing these strategies through the use of ETFs.
24:44
Speaker 1: Okay, and just I mean, obviously to clarified folks, I
24:47
Speaker 1: mean in the Russia in the rush of a live
24:49
Speaker 1: recording to be fair to market. But you can, of
24:52
Speaker 1: course by Copper on the A six and it is
24:55
Speaker 1: partially experience is seventy percent to be so on real
24:58
Speaker 1: and BHP, which is an excit. When you have an
25:01
Speaker 1: individual share, it can really do well if you pick
25:03
Speaker 1: the right one, and they are major shares. Of course,
25:06
Speaker 1: many people who would have even a small share portfolio
25:08
Speaker 1: would have one of the two of them. Okay, So
25:11
Speaker 1: that's an example of the small cap move you're talking about,
25:17
Speaker 1: in particular that trying to pick up on the broadening
25:20
Speaker 1: of the perceived broadening of earning's growth, which would be
25:23
Speaker 1: reflected also and equally weighted. You mentioned equal weighted, folks,
25:27
Speaker 1: Just if you don't know about equal weighted maybe market
25:30
Speaker 1: you just explained if I buy an equally weighted ETF
25:33
Speaker 1: on say the ASX are on sm P five hundred,
25:36
Speaker 1: what's it mean? What's the difference with the conventional one?
25:38
Speaker 2: So most ETFs are tracking using market cap weighted or
25:42
Speaker 2: in essence, however big or larger company is that will
25:45
Speaker 2: give a bigger weight in the underlying ETF. But let's
25:47
Speaker 2: say you want to make a certain tilt towards going
25:50
Speaker 2: into small companies or have a higher weighting towards them.
25:53
Speaker 2: What that'll do is essentially something like the SX two
25:55
Speaker 2: hundred or S and P five hundred. It will have
25:58
Speaker 2: equal weights of the waitings for them for each of
26:01
Speaker 2: the underlying companies, so that they still all sum up
26:04
Speaker 2: to one hundred. But instead of in video being able
26:06
Speaker 2: to say call it, you know, six or seven percent
26:08
Speaker 2: of the index, it might be at point two of
26:09
Speaker 2: the index, and you kind of equalize that out across
26:12
Speaker 2: all the different companies. That's where people can make a
26:14
Speaker 2: bit more strategic bets around whether they want to be
26:17
Speaker 2: market cap weighted or equal weighted, and that helps reduce
26:20
Speaker 2: that concentration bet around companies and around sectors.
26:23
Speaker 1: So in Australia, if you had the six two hundred
26:28
Speaker 1: equally raised ETF, it would have less emphasis on the
26:31
Speaker 1: banks and the miners exactly, more emphasis on everybody else.
26:34
Speaker 1: Is there any evidence historically that they do better than
26:37
Speaker 1: convention and ETPs.
26:39
Speaker 2: So this is the thing people need to remember, is
26:40
Speaker 2: there are periods or rolling periods where they can outperform
26:43
Speaker 2: over broader ones. But it's similar to a pendulum James.
26:46
Speaker 2: They go through different periods of performance and outperformance. So
26:49
Speaker 2: right now, if you were in large cap you would
26:51
Speaker 2: have outperformed over the last few years. Now small caps
26:53
Speaker 2: are having their time in the sun. But again people
26:55
Speaker 2: also have to be conscious that when you're doing an
26:58
Speaker 2: equal weight ETF, you're almost putting a cap on your
27:00
Speaker 2: winners running too hard and at each rebalance. So when
27:04
Speaker 2: an ETF actually goes through its changes, which it can
27:06
Speaker 2: be done quarterly, semi annually, or annually, you're actually trimming
27:09
Speaker 2: some of that back to get it back to its
27:11
Speaker 2: equal weight, which then could trigger some capital gains which
27:14
Speaker 2: then gets delivered to you as a distribution.
27:16
Speaker 3: So just remember that.
27:17
Speaker 2: When you're making a bet on equal weighting ETFs is,
27:19
Speaker 2: they do have to rebalance, and therefore you cap when
27:22
Speaker 2: your winner is run. And over the last few years,
27:25
Speaker 2: letting your winners run has been the better trade.
27:27
Speaker 1: Yeah, okay, thank you, fair answer on that one. All right.
27:31
Speaker 1: Two quick questions about ETF land. One is bonds. Bonds
27:35
Speaker 1: have disappointed people again and again. People wonder why we
27:39
Speaker 1: don't cover bonds more. Well, I don't regret it because
27:43
Speaker 1: it hasn't been particularly lucrative for some time. And bond ETFs.
27:47
Speaker 1: I just want to put one thing to you. We
27:49
Speaker 1: had some people on the show who put forward the
27:52
Speaker 1: very core notion that bonds are not suitable inside an ETF,
27:57
Speaker 1: that you will be much better off having bonds individually,
28:01
Speaker 1: That the ETF as an instrument in itself is not proof,
28:05
Speaker 1: is not perfect, it's not ideal for it help your
28:08
Speaker 1: bond etfstune across the board. And what about that point.
28:13
Speaker 2: So on that point, James, I would disagree to be honest. Well,
28:16
Speaker 2: of course you would tell us why, and of course
28:18
Speaker 2: I would do that because I'm in work for an Etflet's.
28:21
Speaker 1: Explain what the argument against it is. Do you think
28:23
Speaker 1: it's wrong.
28:23
Speaker 3: I've got a few reasons why.
28:24
Speaker 2: Number one is the bond market was once reserved for
28:27
Speaker 2: big institutional investors, so to actually buy a singular bond,
28:30
Speaker 2: and there are some bonds that did use to trade
28:32
Speaker 2: on a single bond perspective, but you have to buy
28:34
Speaker 2: them in big minimum lots. It's normally the hundreds of
28:37
Speaker 2: thousands of dollars to actually buy one.
28:39
Speaker 1: Every day investor caunt, you want to be rich to
28:41
Speaker 1: get a fully ladder layered bond, exactly right, Okay.
28:45
Speaker 2: Point to that's that's the first thing is around the
28:46
Speaker 2: minimum amounts. The second is when these bonds end up maturing,
28:49
Speaker 2: because companies or governments will issue bonds on certain terms
28:52
Speaker 2: like one year, three or five years, ten years. What
28:55
Speaker 2: are you going to do when that matures? Are you
28:56
Speaker 2: going to roll it into a new bond? Are you
28:58
Speaker 2: going to then have to find a new company? So
29:00
Speaker 2: the bond ETF actually just handles that rebalancing process for
29:03
Speaker 2: you that you don't have to worry about it, and
29:05
Speaker 2: you still get your coupon, whether it's on a monthly
29:07
Speaker 2: basis or quarterly basis. And then there's the diversification piece, James.
29:10
Speaker 2: You don't want to be concentrated in one single company.
29:13
Speaker 2: Let's say there's an idiosyncratic or a company specific risk
29:16
Speaker 2: and the debtholders get wiped out. I wouldn't want that.
29:19
Speaker 2: So I want to be diverse across a range of
29:21
Speaker 2: different companies, a range of different credit qualities, and a
29:23
Speaker 2: range of different sectors as well. So for me, investing
29:26
Speaker 2: in bonds is pretty much synonymous with ETFs.
29:29
Speaker 1: What bond We know that active managers, the number of
29:34
Speaker 1: marketing managers who outperformed the index very disappointing. Obviously it's
29:37
Speaker 1: the reason for the success of ETFs. But the number
29:40
Speaker 1: of active managers in bonds who formed the index, it's higher,
29:44
Speaker 1: it's higher, they do better, so we've got a better chance.
29:47
Speaker 1: That's one thing there have been. How have they formed
29:50
Speaker 1: this year?
29:51
Speaker 3: Mark?
29:51
Speaker 1: They dragged down performance? Didn't they have to big super
29:53
Speaker 1: funds at least?
29:54
Speaker 3: Are you talking about active bond managers, James, or whatever?
29:57
Speaker 1: Bonds as a portfolio allocation this year?
30:00
Speaker 2: Yes, bonds, majority of bonds haven't done as well, and
30:02
Speaker 2: that's because we've been in a rising interest rate environment
30:05
Speaker 2: and for a lot of your listeners who don't know
30:07
Speaker 2: that when rising, when rates rise, there's almost an inverse
30:09
Speaker 2: relationship where the price of the bond actually falls and
30:12
Speaker 2: bond markets can go through pretty long bear markets overall,
30:15
Speaker 2: sometimes even longer than share markets. So because we've had
30:18
Speaker 2: rising interest rates, it has been at the detriment of
30:21
Speaker 2: fixed rate bonds. However, when you ask me the point
30:23
Speaker 2: of which bond ETFs have done really well in terms
30:26
Speaker 2: of performance but also seen flows, we've seen floating rate
30:29
Speaker 2: bonds do really well. So these are bond ETFs where
30:32
Speaker 2: they're interest rate is variable to what's happening with the
30:35
Speaker 2: broad based interest rate like the RBA cash rate and
30:37
Speaker 2: our bank ETF for example, what you've seen is the
30:40
Speaker 2: coupon has been rising every time the RBA increases rates.
30:44
Speaker 2: So when you're getting six percent yield on an annual
30:47
Speaker 2: basis for not taking share like risk, that's really attractive.
30:50
Speaker 2: And we've seen a lot of ETFs in the space
30:52
Speaker 2: around subordinated debt floating rate nodes, even as hybrids mature off.
30:56
Speaker 2: These are the ETFs that are getting a lot of
30:58
Speaker 2: the flows where we haven't seen in things like US treasuries,
31:01
Speaker 2: which typically have high interest rate risk. We don't know
31:04
Speaker 2: what's happening in the US from a death perspective, but
31:07
Speaker 2: also a rising great perspective over there with the new
31:09
Speaker 2: FED share So there's still a big focus in Australian
31:13
Speaker 2: fixed income and specifically around Australian credit, so borrowing or
31:16
Speaker 2: lending money to some of these big banks or some
31:19
Speaker 2: of these big corporations to get potentially a better yield
31:22
Speaker 2: than you would investing in the equity side.
31:25
Speaker 1: Right, Ironic, isn't it that the risk is in the
31:28
Speaker 1: US the times we're in. Okay, we're going to take
31:33
Speaker 1: a break and we're going to have some questions which
31:35
Speaker 1: I have curated from Mark. I know that these will
31:39
Speaker 1: test you because by definition people tend to ask particular
31:43
Speaker 1: specific questions. But let's have a girl. We'll be back
31:45
Speaker 1: in a moment. Hello, Welcome back to the Australian's Money
31:53
Speaker 1: Puzzled podcast. James Kirby here with Mark jocom of the
31:57
Speaker 1: Global x ETF Group. Now we've been talking about the
32:02
Speaker 1: share market. I have a couple of questions for you, Mark.
32:04
Speaker 1: They are by nature on specific stocks, but in a
32:08
Speaker 1: way they also perhaps are a proxy for broader issues.
32:12
Speaker 1: As one on CSL, which perhaps I suppose to reflects
32:15
Speaker 1: on healthcare, which you would look at as a sector.
32:17
Speaker 1: There's another one on Megaport, which would reflect I suppose
32:22
Speaker 1: small caps. If they are still small, they're certainly they're entrepreneurial,
32:25
Speaker 1: so let's have a look at them. Sarah, I had
32:29
Speaker 1: CSL stock at two hundred and fifty dollars and it
32:32
Speaker 1: fell below one hundred. I can't believe this happened. I
32:35
Speaker 1: see it has recovered to one hundred and fourteen dollars,
32:38
Speaker 1: but is there something seriously wrong with the company? Pots? Okay,
32:43
Speaker 1: by the way, folks, information only. None of this is advice.
32:46
Speaker 1: You mentioned healthcare dragging things down, Mark, that would have
32:49
Speaker 1: been CSL, right. I presume CSL would have waited. They
32:52
Speaker 1: would have taken the whole sector with it.
32:54
Speaker 2: Yeah, so healthcare was one of the worst performing sectors
32:57
Speaker 2: as well as tech was down I think thirty six
32:59
Speaker 2: percent over the financial year. And this is the risk
33:02
Speaker 2: you play when you're investing in single stocks within a
33:05
Speaker 2: sector like healthcare. Because CSL almost had a perfect cocktail
33:09
Speaker 2: of disasters that really impacted the share price where you
33:12
Speaker 2: saw I think your listeners said in terms of that
33:14
Speaker 2: four of about a fifty to sixty percent peak to
33:17
Speaker 2: trough four that wiped off over sixty to seventy billion
33:20
Speaker 2: dollars of shareholder value, which is just a crazy amount
33:23
Speaker 2: of destruction. And it's a combination of earnings downgrade, it's
33:27
Speaker 2: a combination operational setbacks.
33:29
Speaker 3: There was also the.
33:30
Speaker 2: Removal of the mandatory flu from the US military personnel.
33:34
Speaker 2: So what was once a market darling just shows you
33:36
Speaker 2: that there could be a rerating of stocks that were
33:38
Speaker 2: blue chip stocks and really from an operational risk perspective,
33:42
Speaker 2: can actually impact things. Whereas on the other end of healthcare,
33:45
Speaker 2: you're seeing things like biotech actually especially the US do
33:48
Speaker 2: quite well, so there's almost this tug of war between
33:51
Speaker 2: companies with insectors. And then on the technology side, you
33:54
Speaker 2: did see companies like you know, Wise Tech, which had
33:57
Speaker 2: some broader governance issues. A lot of people got caught
33:59
Speaker 2: up in the SaaS apocalypse around how AI would actually
34:02
Speaker 2: disrupt some of these tech stocks. But in terms of megaport,
34:05
Speaker 2: you know, they were almost like a they've moved from
34:08
Speaker 2: being focused on the cloud to more around connectivity.
34:11
Speaker 1: Let me just come back on that one. If I
34:12
Speaker 1: could just to finish on healthcare, I suppose also Mark,
34:16
Speaker 1: but a sector too can fall through the floor. Counted
34:18
Speaker 1: we had Cock Clear down fifty percent, CSL down. I
34:23
Speaker 1: don't know what the number is. I mean it went
34:24
Speaker 1: from three hundred bucks to under one hundred and no
34:27
Speaker 1: wonder that pulled the whole sector down. So there is
34:29
Speaker 1: there are times where if you buy a sector and
34:32
Speaker 1: you might have a healthcare retf and I doubt it.
34:34
Speaker 1: I doubt I presume it went backwards. You can find
34:37
Speaker 1: that the whole sector goes off at times and can
34:39
Speaker 1: fall through the floor. So, Sarah, I hope that answers
34:41
Speaker 1: your question. Specifically on CSL. They're also hunting for a
34:45
Speaker 1: new CEO at the moment. There are many explanations for this,
34:49
Speaker 1: but I have to say, on my side of things,
34:54
Speaker 1: this was the biggest company on the stock exchange at
34:57
Speaker 1: some period, regularly fighting against CBA to be the biggest
35:00
Speaker 1: company in Australia, and it has dropped from two hundred
35:05
Speaker 1: and fifty two one hundred dollars and I am not happy,
35:08
Speaker 1: I have to say with the explanations, and Mark's explanation
35:11
Speaker 1: is a perfectly good explanation, but it doesn't I don't
35:14
Speaker 1: think it probably explains just how far it's fallen, and
35:16
Speaker 1: I would really like to know what the hell happened there,
35:19
Speaker 1: and I'm sure lots of our listeners would like to
35:21
Speaker 1: know that too. And I'm just waiting really for an
35:23
Speaker 1: activist investor or a legal activist to appear on the
35:28
Speaker 1: scene and really interrogate that company. All right, So the
35:32
Speaker 1: question about Megaport was from Danny Love your podcast. My
35:36
Speaker 1: question is regarding ASX rights issuance recently. I had noticed
35:40
Speaker 1: there was a rights issuance for Megaport, and I had
35:43
Speaker 1: only noticed it on the last day to decide, and
35:46
Speaker 1: I was lucky to spot it in time. He says
35:48
Speaker 1: he's lucky because he went in on the rights issue
35:51
Speaker 1: and they've been going really well of late. They've been
35:54
Speaker 1: going really well for a long time, on a trend actually.
35:57
Speaker 1: But Danny's point is there are rights issues for companies.
36:01
Speaker 1: He didn't see them. He only found out somehow. He
36:04
Speaker 1: wants to know. Is there any other way apart from
36:06
Speaker 1: reading every boring announcement. Is there an easy hack to
36:10
Speaker 1: find out about rights issues so I don't miss any
36:12
Speaker 1: in the future. Great question, Danny, Well, I used to
36:18
Speaker 1: get it in the pulse. I used to get a
36:19
Speaker 1: letter in the pulse thing. Hey, you're entitled to it
36:22
Speaker 1: two for five rights issue or whatever. I suppose. Now
36:24
Speaker 1: it's digital for most people, so they might miss the email.
36:27
Speaker 1: Do you know anything about that, Mark.
36:29
Speaker 2: Yeah, So with something like this, corporate auctions are always
36:32
Speaker 2: a tricky one to manage because there's so many different ties,
36:34
Speaker 2: whether it be buybacks, right issues, dividends. My advice for
36:38
Speaker 2: something like this is number one. This is where you
36:40
Speaker 2: can actually sign up to some of the live notifications
36:43
Speaker 2: from your broker who anytime there is a market sensitive announcement,
36:46
Speaker 2: it is a requirement that these companies post this as
36:49
Speaker 2: an announcement to you. Now, you might be a bit
36:51
Speaker 2: inundated with all these types of requests. You can refine
36:54
Speaker 2: what requests you can get, whether it's market sensitive or
36:57
Speaker 2: whether it's not. But the other side to that, James,
36:59
Speaker 2: and this is where I think an ETF makes a
37:01
Speaker 2: lot of sense, is the ETF handles the core production
37:03
Speaker 2: for you, whether it's a right issue or whether it's
37:06
Speaker 2: a buyback. So again, if you want to minimize that
37:09
Speaker 2: single stock management from an admins perspective, and ETF can
37:11
Speaker 2: make sense. But speak to your broker around the notifications
37:14
Speaker 2: because that way you can stay up to date with
37:15
Speaker 2: all the right issues and all the types of core productions.
37:18
Speaker 1: Okay, very good, very good. Thank you for that. So
37:21
Speaker 1: thank you for that answer, and for having the wider
37:25
Speaker 1: lens to be able to look out at individual stockholders too. Okay,
37:29
Speaker 1: thank you, Mark, very good. Great to have you on
37:31
Speaker 1: the show.
37:32
Speaker 3: My pleasure. James, thanks again.
37:34
Speaker 1: It was a very good helicopter view of the markets.
37:37
Speaker 1: You're more optimistic than some people have been talking to.
37:40
Speaker 1: I just mentioned this because you're entitled to your optimism
37:42
Speaker 1: and it's very well founded numbers.
37:44
Speaker 2: You have to invest a like an optimist, James. You
37:46
Speaker 2: can save like a pessimist, but you have to invest
37:48
Speaker 2: like an optimist.
37:49
Speaker 1: I certainly agree that you're If you're not in, you
37:51
Speaker 1: can't win, right. You've got to be there. You've got
37:52
Speaker 1: to be in the market. It doesn't matter all through.
37:55
Speaker 2: Especially here in Australia. If you want to stay ahead
37:57
Speaker 2: of inflation, sitting in cash isn't going to get you there.
37:59
Speaker 2: So that they believe in investing and having that long
38:01
Speaker 2: term around.
38:02
Speaker 1: I'm completely with you on that, but like many investors,
38:05
Speaker 1: I am a little apprehensive, and I mentioned this because
38:08
Speaker 1: on our next show will be Liam Short who is
38:12
Speaker 1: an advisor and SMSF specialist. But we are going to
38:16
Speaker 1: talk about if there's a crash, are you prepared? That's
38:20
Speaker 1: all I'm not saying that will be I'm saying, if
38:22
Speaker 1: there's a crash, are you prepared? And it's a time counterintuity.
38:26
Speaker 1: If this is when you should be thinking about that
38:28
Speaker 1: sort of thing. You don't worry about a crash. If
38:30
Speaker 1: the market's fall and thirty percent, you don't have to
38:32
Speaker 1: worry about okay. But if the market, if the US
38:35
Speaker 1: market's up twenty percent in a year, if it's just
38:38
Speaker 1: had its best quarter in six years, if it drives
38:41
Speaker 1: the whole world, then it's time. It's a good time
38:44
Speaker 1: to review, all right, Mark Joacom, thank you very much,
38:47
Speaker 1: have you on the show again. Lovely to talk to you.
38:50
Speaker 3: Thanks again, James.
38:51
Speaker 1: That was Mark Joacom, Jocum, investment strategist at global x ETFs.
38:57
Speaker 1: Keep the emails coming. There are coming in great flows
39:02
Speaker 1: at the moment and I do my very best to
39:05
Speaker 1: cover every single question. I get the Money Puzzle at
39:08
Speaker 1: the Australian dot com dot AU. Today's show was produced
39:12
Speaker 1: by Leah Samon glue what you've seen