In the increasingly intense strategic and economic competition between Washington and Beijing, it's naive to think Australia can just sit on the sidelines.
Hindsight has taught us the importance of active core bond funds as an insurance policy and now is the time to consider expanding your investable universe as the secular need for income intensifies.
Few clients have the 20-year horizon required for today’s strategically-oriented models to become consistent with suggested outcomes, such as CPI+4%. This builds in a structural mismatch.
On the positive side - still - is the US consumer, the household sector. On the negative side is synchronised global industrial deceleration, and markets underestimating the negative trajectory of the US/China relationship. Investors need to avoid chasing momentum in equity markets and yield and duration in fixed income markets.
An antidote for a low-rate environment is investing in companies enjoying the benefits of mega-trends, global shifts that are likely to boost demand for the products of a firm over the long term.
Although influenced by logical factors, changes in investment markets are often irrational and illogical. A whole-brain approach to seeking alpha is necessary to win in the investment game.