Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 243

Cuffelinks Newsletter Edition 243

  •   9 March 2018
  •      
  •   

Dividend imputation is a major attraction of investing in Australian shares, but there is widespread misunderstanding of the system. Many argue the proposed lower corporate tax rate will reduce franking credits and therefore lower after-tax returns, but the company tax rate is irrelevant. My first financial adviser from 30 years ago was an actuary, Graham Horrocks, and he explains the numbers. This is the first in a series Graham will write for Cuffelinks on common tax and superannuation misunderstandings.

Faced with uncertainty caused by rising US rates, Hamish Douglass is protecting capital and he reveals a cocktail of potentially explosive events has pushed him to hold more cash. The chart below shows how 10 year US Treasury bond yields have risen since September 2017.



Source: Bloomberg, US Treasury 10 year bond yields in 12 months to 7 March 2018.

How does anyone know if an active manager is doing a good job? Raewyn Williams says performance attribution can uncover whether a manager is worthwhile in a portfolio.

There is no one-rule-fits-all for retirement planning, and Melanie Dunn shares some SMSF data and describes a framework to decide whether Growing, Protecting or Spending (GPS) is appropriate. Still looking inside SMSFs, two new reports on investment patterns and contributions are analysed by Vinay Kolhatkar, and it's worth all trustees benchmarking their SMSFs against these summaries and recent ATO data.  

In last week's lively debate (50+ comments!) on Peter Thornhill's article, there were suggestions to put corporate bonds into a portfolio. They have a place but Cameron Dawson warns about default rates which seem to hit the sector every decade or so.

Finally, some context on Donald Trump's crazy proposal to give guns to teachers in schools. We look at what happened when guns were common in bank branches, and while many of the stories are humorous, there's a serious message and a warning.

(As an aside, while we were collecting these stories, someone recalled a classic, previously unreported Paul Keating line. Keating was Treasurer during the early phase of the privatisation of CBA, and he was invited to meet the Board. A member asked Keating if he was confident Cabinet would approve the deal, to which he responded, "They'll piss in whatever direction I tell them to."  He always had the perfect phrase to disarm and enforce). 

Continuing the theme of asset manager selection, this week's White Paper from MFS International argues there is a serious mismatch between investment time horizons, with investors failing to consider the benefits of manager skill over a full market cycle.   

Graham Hand, Managing Editor

 

Edition 243 | 9 Mar 2018 | Editorial | Newsletter

 


 

Leave a Comment:

banner

Most viewed in recent weeks

Australian stocks will crush housing over the next decade, one year on

Last year, I wrote an article suggesting returns from ASX stocks would trample those from housing over the next decade. One year later, this is an update on how that forecast is going and what's changed since.

Australia’s shameful super gap

ASFA provides a key guide for how much you will need to live on in retirement. Unfortunately it has many deficiencies, and the averages don't tell the full story of the growing gender superannuation gap.

9 lessons from 2024

Key lessons include expensive stocks can always get more expensive, Bitcoin is our tulip mania, follow the smart money, the young are coming with pitchforks on housing, and the importance of staying invested.

2025: Another bullish year ahead for equities?

2024 was a banner year for equities, with a run-up in US tech stocks broadening into a global market rally, and the big question now is whether the good times can continue? History suggests optimism is warranted.

The 20 most popular articles of 2024

Check out the most-read Firstlinks articles from 2024. From '16 ASX stocks to buy and hold forever', to 'The best strategy to build income for life', and 'Where baby boomer wealth will end up', there's something for all.

Time to announce the X-factor for 2024

What is the X-factor - the largely unexpected influence that wasn’t thought about when the year began but came from left field to have powerful effects on investment returns - for 2024? It's time to select the winner.

Latest Updates

Shares

Howard Marks warns of market froth

The renowned investor has penned his first investor letter for 2025 and it’s a ripper. He runs through what bubbles are, which ones he’s experienced, and whether today’s markets qualify as the third major bubble of this century.

Property

What to expect from the Australian property market in 2025

The housing market was subdued in 2024, and pessimism abounds as we start the new year. 2025 is likely to be a tale of two halves, with interest rate cuts fuelling a resurgence in buyer demand in the second half of the year.

Superannuation

How to fix the Commonwealth Superannuation Scheme

The scheme has not been updated since it was established and is no longer fit for purpose. Members now find themselves disadvantaged in several important ways versus those in other superannuation funds.

Investment strategies

5 key investment themes for the next decade

AI has helped markets to new highs and rightly dominated news headlines. Yet there are other themes, including niche ones such as gene editing, which are also expected to drive investment returns over the next decade.

Shares

New avenues of growth make 2025 exciting for investors

Investors need to be more discerning this year as headline valuations are high and the economic cycle turns. Dig a little deeper, though, and there are big opportunities in overlooked shares with strong tailwinds.

Investment strategies

The pros and cons of debt recycling strategies

Debt recycling is a powerful strategy for those juggling the seemingly competing goals of debt reduction and building an investment portfolio. Yet it's often misunderstood because it isn't just a single strategy.

Investment strategies

Australia is out of step on nuclear power

Globally, nuclear power is gathering momentum as a differentiated power source in the energy transition to zero carbon emissions. Yet in Australia, a nuclear ban remains, making us an outlier among our Western Allies.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.