14 October 19
Market up but early optimism fades (IPH, STO, FPH)
14 October 19
Market up but early optimism fades (IPH, STO, FPH)
14 October 19
Subscribers questions (FLT, IFM, PHB, CV1, GDX, JMS, PLS, FMG, NBI, MXT)
13 October 19
Market Matters Weekend Report Sunday 13th October 2019
11 October 19
ASX ends a choppy week on the right foot (PLS, FMG, PPT)
11 October 19
Are any ASX sectors showing their hand? (ORA, PNV, CUV)
10 October 19
All calm on the surface but plenty of action underneath – market closes unchanged (ORA, BSL)
10 October 19
Is it time to reconsider the embattled the lithium sector? (FLT, WEB, EEM US, LIT US, ORE, GXY, PLS)
09 October 19
Selling resumes following US trade escalation (FLT, CUV, CWY)
09 October 19
Income Report: Answering subscriber questions on Listed Investment Companies (LICs) + a new hybrid from CBA
09 October 19
Overseas Wednesday – International Equities & ETF Portfolios (NCM, GLEN LN, VALE US, FCX US, TTD US, DTYS US)
The local market is embracing the sell-off in overseas stocks that played out overnight with the ASX 200 currently off by -94pts / -1.4% at 6648. A decent move lower although easy to comprehend given we also experienced a +50pt rate cut induced rally yesterday afternoon that wasn’t enjoyed in other markets.
Banks are feeling the heat today, from both the Federal Treasurer and from the market itself, NAB down ~3% the worst on the announcement of further remediation costs while ANZ is off by -1.50%, the best relatively speaking. While rate cuts are designed to support the economy which is important for banks, lower rates also put pressure on bank margins which is a negative for earnings – a double edged sword. When banks are weak, the market will struggle.
Overall, the ASX 200 is currently trading down -94pts or -1.40% to 6648.
ASX 200 Chart
The Income Portfolio was up +0.28% in the week with NBI & MXT trading ex-distribution while Stockland (SGP) was the only real positive mover in terms of equity holdings, up +3.14% on the week. The portfolio is now up +3.54% financial year to date, versus its absolute return benchmark of +1.26%. Since inception the portfolio is up +20.77% vs the benchmark of +12.18%
For those interested in investing for income in a low rate environment, Market Matters manages the investments for the Market Matters Active Income portfolio offered under Praemium SMA. The portfolio is based on the MM Income Portfolio. The SMA has now passed its first anniversary and performance has remained sound, the August update can be viewed – Here. September another strong month adding +2.90% overall, with the monthly report due later in the week.
1 A good move by ALF + a new defensive addition planned for the Income Portfolio
We’ve had a number of questions in the last couple of days about the Australian Leaders Fund (ALF), a position we held previously in the MM Income Portfolio. We added ALF, which is a listed investment company (LIC) to the portfolio in December of 2017 on the expectation that poor performance would improve and that would in term allow them to re-start dividends and trade up closer to the net tangible asset (NTA) value of their underlying portfolio. That didn’t really happen and we cut the position having bought at $1.06, we sold at $1.02 plus we also received 2cps dividend + franking – we booked a loss of 1.43%, however that’s not the point we’re getting at today. On Friday they launched a buy-back, however the structure is different and good (for holders) and its worth discussing today.
More broadly, we get a lot of questions about listed investment companies so to address these in one forum, next week’s Income Note will focus on the sector with a video answering specific subscriber questions on LIC’s. Please send in questions specific to Listed Investment Companies (LICs) and I will answer them in a video next Wednesday. Email [email protected] using LIC Question in the subject line.
Circling back to ALF, today they’re trading at 97c and have just launched an innovative off market buy-back program (subject to shareholder approval) which I view as a very positive / unselfish move by the manager. Essentially, the deal allows holders of ALF to tender up to 20% of their existing holding and be paid the equivalent of NTA for them.
At the end of August the underlying portfolio NTA is $1.17 after tax, and the proposed deal would mean that holders can at least realise appropriate value on a 5th of their shares – ultimately being paid somewhere around $1.17 (depending on market fluctuations before the payment is made, tax on holdings and expenses to the offer). This is a positive move by Justin Braitling and Watermark Funds and more funds should do it, although they probably won’t.
My understanding is that buying back stock at NTA the manager is essentially reducing the funds they manage by 20% and because of that, they’ll be paid less. In this case, they’ll buy back up to $45m worth of the LIC and liquidate the equivalent amount of stock in the portfolio to fund it. They then pay back shareholders who have participated the value of the liquidated positions.
It’s a way of trying to get the fund to trade closer to the value of their assets and it’s a more aggressive approach than some LIC’s are rolling out at the moment. Some managers are buying stock in their own name to try and entice others to do the same while others have launched on market buy backs through the LIC itself. The move by ALF is akin to the one wood versus the token pitching wedge being used by a lot of managers – and looks appropriate given the distance ALF is from the green.
While we won’t be buying ALF because we simply believe we’re better stock pickers, MM is very positive on the approach they have taken
Australian Leaders Fund (ALF) Chart
2 ActiveX Ardea Bond Fund $26.47
We are looking to add a new defensive position into the MM Income Portfolio that needs some explanation. We had the managers of the ActiveX Ardea Real Outcome Bond Fund in to Shaw last week and they’ve got an interesting strategy which is available through a listed vehicle on the ASX under code XARO.
If you’re looking for returns of +5% or more then probably stop reading, however for those looking for a defensive, alternative style strategy where not losing capital is king while still producing reasonable returns (nearer 4% over time) no matter what interest rates do, then this is one to investigate.
They use a relative valuation strategy targeting high quality government bonds with 70+% exposure in Australia. They actively manage exposures through buying relatively cheap bonds and selling relatively expensive bonds, therefore eliminating risks around interest rate duration which is obviously a major consideration when investing in bonds at this low point for global interest rates.
The managers have a strong track record over the past 10 years, they manage around $13b across fixed income markets and many well-known Australian Institutions invest with them.
Below is the fund overview although we would add the ASX listed version with code XARO
While performance over the past 12 months has been very strong at +7.5% over cash, that level of returns should not be expected over time. A more realistic return expectation is nearer 4% after fees, with distributions paid quarterly.
At Market Matters we’re about active management and looking at returns on a risk adjusted basis, the team at Ardea have a similar approach, although clearly this is a lower risk, lower return offering.
We plan to add the XARO into the MM Income Portfolio with a 7.5% weighting, with the intention of reducing our equities exposure to fund it.
NB: When we penned this note the market had rallied +50pts yesterday, however given the US weakness overnight, and subsequent sell off today we are holding fire on this switch in the very short term.
Ardea Active X Bond (XARO) Chart
The structure of the ALF deal is a positive one for long suffering shareholders, and more LIC’s that are trading at steeps discounts could / should do this
Please send through specific questions on LIC’s for coverage in a video next week.
We will add XARO to the portfolio by trimming at equity position.
Watch for alerts
Have a great day
James & the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
All figures contained from sources believed to be accurate. All prices stated are based on the last close price at the time of writing unless otherwise noted. Market Matters does not make any representation of warranty as to the accuracy of the figures or prices and disclaims any liability resulting from any inaccuracy.
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The Market Matters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 23rd April 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you may initially subscribe through the complimentary trial which provides you full access to all services for the trial period. You are limited to two trials after which you must subscribe to one or more membership categories available on the website or direct with Market Matters before you can trial the service again, three months after the expiry of your second trial.
To subscribe to Market Matters services and access to the website you may go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction) or contact the team directly at Market Matters by phone or email. You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]
All cancellations of month-by-month subscriptions will be cancelled and not billed again the following month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as, but not limited to; iPads, Fitbit watches, Apple watches, Google Homes, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2018 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US and/or EU persons and by accepting these terms you confirm that you are not a US and/or EU person.