Gold is on the move and the rally is turning heads, and not least because it’s happening contrary to the traditional drivers of strength for the yellow metal. The recent breakout has occurred alongside a rise in US real yields, the broad US dollar is hardly in a bear market, and gold ETFs globally have been experiencing steady outflows in aggregate. So, what’s going on? Physical demand There are all manner of possible technical explanations, but let’s start with the other side of ETF sales: physical buying. Such buyers of gold are a diverse group, ranging from individual collectors of coins an ..read more

The Core portfolio within each asset class is intended to do the heavy lifting when it comes to implementing your asset allocation, hence it is critical to have a robust portfolio construction process. This analysis focuses on the Australian equities portion and how one could implement a Core portfolio and a framework using satellite exposures to express one’s views throughout the economic cycle. We can think of the Core portfolio as having two elements: A relatively cheap benchmark exposure such as A200 Australia 200 ETF . This is the anchor for the portfolio and can be used to dial up and d ..read more

The strong performance of the Nasdaq-100 Index underlines an important lesson. The technology companies can produce big winners. In fact, the tech sector has produced some of the biggest wealth-creating stocks of the past century. In 2023, Arizona State University business professor Hendrik Bessembinder updated his famous 2017 study, which found only a handful of stocks explained much of the wealth created by the US stock market. His expanded study covered the performance of US stocks between 1926 and 2022. He found that just 72 stocks accounted for half of the net wealth creation since 19261 ..read more

The anticipation has begun, with less than a week to the next bitcoin halving, but that did not prevent bitcoin from trading lower along with the broader crypto market. Both equity and crypto markets fell as geopolitical tensions rose due to possible conflict between Israel and Iran affecting the Middle East. Bitcoin was down -7.05%, while ethereum fell -8.94% over the last 7 days. Bitcoin’s market capitalisation is US$1.27 trillion, with the total crypto market cap at US$2.34 trillion and bitcoin’s market dominance rising to 54.4%. Price High Low Change from previous week BTC (in US ..read more

Global markets – week in review Rising Middle East tensions, a higher-than-expected US CPI report, and a soft start to the US earnings reporting season conspired to push US equities down for the second week in a row. Bond yields and the $US rose as US rate cut expectations were pushed back further. The market now expects no more than two US rate cuts later this year. Prior to Friday’s reports that Iran was planning an attack on Israel, the major global highlight last week was the slightly hotter-than-expected March US CPI report. Both headline and core inflation rose 0.4% in the month, compar ..read more

International equities products drive the industry towards $200B The Australian ETF industry hit a new all-time high in assets under management in March, ending just shy of the $200B milestone, with industry growth driven by a combination of asset value appreciation and investor net inflows. March saw assets grow 3.9% month-on-month, for a total monthly market cap increase of $7.3B, with the industry reaching a new all-time high of $196.7B. Net inflows for the month were $1.8B, representing ~25% of the industry’s growth in March. Trading value declined marginally, dropping 9% month on month i ..read more

In recent years, the financial world has been swept up in an acronym frenzy. From the latest ‘Magnificent 7’, comprising powerhouses including Microsoft, Apple, Alphabet, Meta, Tesla, Amazon, and Nvidia, to variations like FAANG (the ‘N’ represents Netflix), MAGMA, and MAMAA, these acronyms represent market darlings in moments of time. Even in Australia, we’ve had our own version with the ‘WAAAX’ – WiseTech, Altium, Afterpay, Appen, and Xero. But the media’s love affair with their meteoric rise can mask a hidden risk: what goes up, doesn’t always stay up. Even within these seemingly invincible ..read more

Traditional equity benchmark indexes, like those that track the largest 200 companies on the ASX, allocate weight using a single metric – market capitalisation. The larger a company is and grows, keeping all else constant, the more weight it will receive in your portfolio. This approach does have advantages, it benefits as winners run and grow bigger, and is a reflection of the stock market’s views of value. However, in doing so it is also vulnerable to distortions to market efficiency, such as fads and overcrowded trades. Could there be a better method? QOZ FTSE RAFI Australia 200 ETF takes a ..read more

Global markets – week in review It was largely a case of good news is bad news again on Wall Street last week, with a series of stronger-than-expected activity reports pushing back rate cut expectations further – pushing up bond yields and pushing down equity prices in the process. Equity prices have withstood the moderate rebound in bond yields so far this year, but with valuations stretched – both in outright PE and relative equity-risk price premium terms – they could be nearing a breaking point where a deeper correction develops. Also not helping is the rebound in oil prices on simmering ..read more

Bitcoin rebounded back above $70K last week and finished higher, along with the broader crypto market. Bitcoin was up 8.68%, while Ethereum was up 5.04% over the last 7 days. Bitcoin’s market capitalisation rose to US$1.37 trillion, with the total crypto market cap at US$2.63 trillion and bitcoin’s market dominance sitting at 52%. Price High Low Change from previous week BTC (in US$) $69,828 $71,647 $64,762 8.68% ETH (in US$) $3,515 $3,674 $3,341 5.04% Source: CoinMarketCap. As at 31 March 2024. Past performance is not indicative of future performance. Performance is shown in US dol ..read more