What did the 2012 federal budget mean for fixed income investors?
It seems the government has lost interest in encouraging Australians to save and inadvertently done nothing to reduce the country’s reliance on sourcing debt capital from offshore.
In the previous budget, the government had taken positive first steps to level the investment playing field for the taxation of interest income versus taxation of capital gains. Consistent with capital gains being eligible for a 50% reduction in tax (for investments held for over 1 year), the government had previously committed to a 50% tax reduction on the first $1,000 of interest income from 1 July 2012.
Ironically, in a bid to save over $900m in the 2012 budget, the government has scrapped this measure, reducing the incentive for individuals to save. For investors this will mean income generated from interest on deposits and fixed income investments will continue to receive the least favourable tax treatment.
For Australia this perpetuates our banks’ reliance on offshore borrowing to fund their lending books. Disappointingly, this may raise the cost of debt capital for borrowers in a post GFC environment where:
- global banking regulations encourage banks to hold higher levels of deposit funding; and
- ratings agencies continue to express their concern over the high degree of reliance our banks have on offshore funding.
Vivek Prabhu
Senior Portfolio Manager - Strategy & Risk
Vivek has been Portfolio Manager/Credit Analyst since joining Perpetual Investments in August 2004 and is responsible for credit analysis, portfolio construction and trading.
Vivek has over 15 years industry experience and prior to joining Perpetual worked for eight years at Macquarie Bank as an Analyst, Compliance Manager, Assistant Portfolio Manager (Fixed Interest & Currency) and Credit Analyst. Prior to that he spent four years as an accountant/auditor at Coopers & Lybrand (PwC).
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Tue, 29 May 2012
It was a very choppy session in European sharemarkets over the weekend, but a rock solid win by Collingwood. The sharemarkets opened strongly on the back of value-hunting, with the German Dax up 1.2% at its peak. Then the periphery came in to spoil the party with a three trick play. More »
By Vince Pezzullo | Portfolio Manager / Senior Analyst
Vince is the Portfolio Manager for 30% of the Industrial Share strategy and Senior Analyst covering mainly large cap industrial companies, in particular banks, property trusts and telecommunications.
He joined Perpetual in July 2007 as an Analyst and since that time has covered the chemicals, diversified financials, banking, telecommunications, building materials and REITS sectors.
Prior to joining Perpetual, Vince was a senior portfolio manager / analyst in the large cap Australian equities team at Deutsche Asset Management and led the top 100 equities team. In addition, he had stock research responsibilities across a large number of sectors. He also worked in corporate finance and foreign currency for Monte Paschi Australia Limited.
Vince has a Bachelor of Commerce with a major in Economics and Finance.
Mon, 28 May 2012
Many commentators are expecting the sharemarket to be volatile over the next couple of months, so Charlie Lanchester and I have positioned the Perpetual Industrial Share Fund to find yield and take advantage of any market upturn. More »
By Nathan Parkin | Portfolio Manager
Nathan is the Portfolio Manager for the Ethical SRI strategy and an Analyst, covering mainly small cap industrial companies across a range of sectors.
Nathan rejoined Perpetual in October 2010 as an Analyst, having previously spent six years with the company from 1997 to 2003 in relationship management and business development roles. In July 2011 he took on portfolio management responsibilities.
Nathan has 11 years experience outside of Perpetual, which most recently included a seven-year period with 452 Capital from 2003 to 2010. At 452 Capital he began as a Dealer, and after two years, moved into an Analyst role where he covered industrials, financials and small caps over the next five years. Nathan’s career in financial markets began in 1994 at the Australian Stock Exchange, where he was an Index Analyst.
Nathan has a Bachelor of Economics from Macquarie University, a Graduate Diploma of Applied Finance from FINSIA and is a Fellow of FINSIA.
Fri, 25 May 2012
Recently I spent some time in the US, visiting companies and meeting with their management. I did this to gain first-hand knowledge of how some of my favourite Australian companies are competing and succeeding over there, and to gain further understanding of the strength of the US consumer. More »
By Stuart Corradini | Product Manager Income and Multi Sector
Stuart has been at Perpetual since July 2010 and works in the role of Product Manager, Diversified Strategies. He is responsible for product management and development of the Perpetual diversified funds and works closely with the portfolio management team providing operational and commercial support. Stuart has a Bachelor of Commerce from the University of Adelaide and a Graduate Certificate in Financial Planning. He is also a candidate in the CFA program.
Thu, 24 May 2012
High volatility in an investor’s portfolio can not only make for a more stressful life and sometimes lead to irrational decision making, it can actually cause real damage to an investor’s investment balance. More »
By Michael Korber | Head of Credit
Michael has been Head of Credit since joining Perpetual in August 2004. He is responsible for the ongoing strategic review and development of process, reviewing the weekly credit process and reviewing the analysis of all new credit securities.
Michael has over 24 years industry experience and prior to joining Perpetual worked as the first Head of Credit at Macquarie Funds Management, spending six years developing its credit investment processes and building the business from inception to over $7 billion in funds under management. Prior to this, he spent seven years as Divisional Director in Corporate Banking and four years as second in charge to the Head of Macquarie Bank Credit. Earlier, he had spent five years as a Credit Analyst with Westpac Corporate Banking.
Wed, 23 May 2012
There’s been a lot of comment lately about the appropriate allocation to bonds in superannuation and retirement pension portfolios.
However, even those commentators who have suggested that investors need to increase their strategic weighting to bonds over the long term have expressed concern that now might not be such a great time to do it. But what many clients don’t understand is that there are bonds and there are bonds, carrying very different kinds of risk – credit risk and duration (interest rate) risk. More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Mon, 21 May 2012
European troubles have resurfaced and the question now is whether Greece will leave the Euro or be kicked out. Matt Sherwood, Perpetual’s Head of Investment Market Research proposes a solution. More »
By Charlie Lanchester | Deputy Head of Equities
Charlie is Deputy Head of Equities and Portfolio Manager for 70% of the Industrial Share strategy and 100% of the Australian Sustainability strategy. He also analyses a small number of stocks in the healthcare and gaming sectors.
Charlie joined Perpetual Investments in May 1999 as an Analyst covering a broad range of sectors, and assumed portfolio management responsibilities from 2002.
Charlie began his career as a Graduate Trainee at Schroder Investment Management in London. After five years he relocated to Australia and joined Platinum Asset Management as an Analyst focusing on global telecommunication companies.
Charlie studied modern history at New College, Oxford and has a Bachelor of Arts (Honours). He is also an Associate of the Society of Investment Professional (part of the CFA).
Tue, 22 May 2012
ResMed is an industrial stock which is a global leader in the development of medical products for the diagnosis, treatment and management of respiratory disorders, most notably sleep apnea. More »
By Paul Skamvougeras | Portfolio Manager
Paul is the Portfolio Manager for the SHARE-PLUS Long-Short strategy, the Pure Equity Alpha strategy and the Concentrated Equity strategy.
Paul rejoined Perpetual Investments in February 2010 as a Portfolio Manager, having previously spent seven years with Perpetual. He began his career with Perpetual in 1994 in a back office role, moving into a dealing role after three years, working his way up to the Head Dealer role.
Between stints at Perpetual, Paul spent seven years working at CPH/Ellerston Capital, where he had portfolio management responsibilities for an Australian long/short strategy for the first four years and a global long/short strategy for the last three years.
Paul has a Bachelor of Economics from Macquarie University and is a Member of the Institute of Chartered Accountants.
Fri, 18 May 2012
Oil Search is an oil and gas exploration and development company that operates all of Papua New Guinea’s (PNG’s) productive oil and gas fields. There are a number of reasons why I like the stock. More »
By Jack Collopy | Portfolio Manager
Jack is the Portfolio Manager of the Smaller Companies strategy and an Analyst covering small cap companies across a range of sectors.
Jack joined Perpetual in November 2001 as an Investment Administrator and Equity Dealer. After four years, he moved into an Analyst role focusing on small cap industrial companies. Jack took on portfolio management responsibilities in June 2010.
Prior to joining Perpetual, Jack gained two years industry experience working in London as an Equities Dealer and Investment Administrator at both Salomon Smith Barney and Goldman Sachs Asset Management.
Jack has a Bachelor of Economics from the University of Sydney.
Wed, 16 May 2012
G8 Education Limited is the only child care centre operator listed in Australia (ASX code: GEM) and there are a number of reasons why I like the stock. More »
By Theo Sofios | Portfolio Manager, Multi Manager Funds
Theo joined Perpetual in June 2003 and is portfolio manager for Perpetual’s Select multi-manager funds. As portfolio manager, he is part of the team responsible for the Perpetual multi-manager investment process, including areas such as manager research and selection, portfolio construction and researching new opportunities across various asset classes. Prior to joining Perpetual, Theo was a portfolio manager for Optimix Investment Management multi-manager group. At Optimix he was responsible for Australian equity manager research and selection, portfolio construction and tactical asset allocation. Theo received a Bachelor of Business degree from the University of Technology Sydney in 1999 and completed his Masters in Applied Finance with Macquarie University in 2006.
Tue, 15 May 2012
During March 2012 members of Perpetual’s Multi Manager Investment Team travelled through China. The focus was on private market investments. In Hong Kong and Mainland China we visited a broad spectrum of private market fund managers, visited the outposts of our developed market private equity managers, toured commercial and residential property developments and, visited local subsidiaries of some western owned and listed companies. More »
By Vivek Prabhu | Senior Portfolio Manager - Strategy & Risk
Vivek has been Portfolio Manager/Credit Analyst since joining Perpetual Investments in August 2004 and is responsible for credit analysis, portfolio construction and trading.
Vivek has over 15 years industry experience and prior to joining Perpetual worked for eight years at Macquarie Bank as an Analyst, Compliance Manager, Assistant Portfolio Manager (Fixed Interest & Currency) and Credit Analyst. Prior to that he spent four years as an accountant/auditor at Coopers & Lybrand (PwC).
Mon, 14 May 2012
What did the 2012 federal budget mean for fixed income investors? More »
By Pablo Berrutti | Head of Responsible Investment
Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.
Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.
Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.
Fri, 11 May 2012
Perpetual today released its second annual Responsible Investment Report on Progress. Find out how we're tracking. More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Mon, 07 May 2012
Economic data and election results over the weekend have sparked a new round of concerns for global investors. More »
By Matt Williams | Head of Equities
Matt is Head of Equities and responsible for the strategic direction of the equities business and oversight of all investment strategies. He also provides support and mentoring to the analysts and portfolio managers in the team. Matt is the Portfolio Manager for the Australian Share strategy, the Pure Value Share strategy and the Global Resources strategy. In the past he has managed the Smaller Companies strategy and 50% of the Industrial Shares strategy.
Matt joined Perpetual Investments in August 1993 as an Equities Dealer, before becoming an Analyst in 1997 and Portfolio Manager in 1998.
Prior to joining Perpetual, he worked as a Board Broker on the Australian Option Market and as a Cash/Bills Dealer at Lumley Corporation.
Matt has a Bachelor of Economics from the University of New England.
Fri, 04 May 2012
Recently there’s been a lot of bad press about News Corp and the phone-hacking scandal that’s embroiled its UK newspapers. However despite this, we continue to favour the stock as the UK newspapers represent only a fraction of its overall business. More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Tue, 01 May 2012
The Reserve Bank of Australia (RBA) lowered its target cash rate by 0.5% to 3.75% today, which represented its first reduction in four meetings and the third reduction in its current easing cycle (which began in November 2011). More »
By Nathan Parkin | Portfolio Manager
Nathan is the Portfolio Manager for the Ethical SRI strategy and an Analyst, covering mainly small cap industrial companies across a range of sectors.
Nathan rejoined Perpetual in October 2010 as an Analyst, having previously spent six years with the company from 1997 to 2003 in relationship management and business development roles. In July 2011 he took on portfolio management responsibilities.
Nathan has 11 years experience outside of Perpetual, which most recently included a seven-year period with 452 Capital from 2003 to 2010. At 452 Capital he began as a Dealer, and after two years, moved into an Analyst role where he covered industrials, financials and small caps over the next five years. Nathan’s career in financial markets began in 1994 at the Australian Stock Exchange, where he was an Index Analyst.
Nathan has a Bachelor of Economics from Macquarie University, a Graduate Diploma of Applied Finance from FINSIA and is a Fellow of FINSIA.
Fri, 27 Apr 2012
Royal Wolf is a provider of portable container solutions to the resources, construction and manufacturing industries in Australia and New Zealand. It came to our attention in May last year when General Finance Corporation floated just under half the company on the Australian Securities Exchange. More »
By Greg Stock | Senior Portfolio Manager
Greg has been Portfolio Manager/Credit Analyst since joining Perpetual in August 2004. He is responsible for running the weekly credit process, researching non-structured issues (eg corporates, banks, infrastructure) and trades fixed rate securities.
Greg has over 14 years industry experience and prior to joining Perpetual worked at Macquarie Bank in financial operations, debt markets research and fixed income investment management. Prior to that he worked as an accountant at PriceWaterhouseCoopers.
Thu, 26 Apr 2012
Standard & Poor’s recently released their 2011 Annual Global Default Study and Ratings Transitions Report. Find out what we think the results suggest for investors. More »
By Vivek Prabhu | Senior Portfolio Manager - Strategy & Risk
Vivek has been Portfolio Manager/Credit Analyst since joining Perpetual Investments in August 2004 and is responsible for credit analysis, portfolio construction and trading.
Vivek has over 15 years industry experience and prior to joining Perpetual worked for eight years at Macquarie Bank as an Analyst, Compliance Manager, Assistant Portfolio Manager (Fixed Interest & Currency) and Credit Analyst. Prior to that he spent four years as an accountant/auditor at Coopers & Lybrand (PwC).
Wed, 18 Apr 2012
In the current investment environment, Australian investors are seeking high levels of consistent income. This pursuit for return on capital is evident from investors taking up almost $5 billion worth of corporate bonds and hybrid securities in the first quarter of the year. More »
By Anthony Cay | Portfolio Manager, Property Securities
Anthony is the Portfolio Manager for the Property Securities strategy and Property Income strategy, as well as the Analyst covering Australian and Asian listed and unlisted property trusts.
Anthony joined Perpetual in December 1996 as a Trust Officer in the Private Clients business. From 2003 to 2006, Anthony worked as a Quantitative Analyst, running the Passive Property Fund.
In 2006, Anthony transferred into the Equities team as an Analyst, where he covered property trusts, and the healthcare, information technology, consumer discretionary, industrials and financials sectors. In 2008, Anthony became dedicated solely to property, taking on portfolio management responsibilities.
Anthony has a Bachelor of Economics from Macquarie University and is a Certified Financial Analyst.
Tue, 17 Apr 2012
There is a lot of debate within the property investment community about whether the party is over for retail property. Anecdotal evidence of the number of empty shops on your local shopping strip will definitely support this view. More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Wed, 11 Apr 2012
Global investor sentiment improved significantly in the new year as closure of the European Greek solution, combined with a massive liquidity injection from the European Central Bank (ECB) and signs of improvement in the US economy, prompted an extended period of ‘risk on’ in markets.
However, more recently the continued disappointing European economic data combined with an end to the ECB’s liquidity injections (and the US Federal Reserve’s announcement that its often cited QEIII program had been suspended) saw the market’s four month rally peter-out fairly quickly. More »
By Jack Collopy | Portfolio Manager
Jack is the Portfolio Manager of the Smaller Companies strategy and an Analyst covering small cap companies across a range of sectors.
Jack joined Perpetual in November 2001 as an Investment Administrator and Equity Dealer. After four years, he moved into an Analyst role focusing on small cap industrial companies. Jack took on portfolio management responsibilities in June 2010.
Prior to joining Perpetual, Jack gained two years industry experience working in London as an Equities Dealer and Investment Administrator at both Salomon Smith Barney and Goldman Sachs Asset Management.
Jack has a Bachelor of Economics from the University of Sydney.
Thu, 05 Apr 2012
The share price of small electrical goods supplier, Breville, has made a stellar climb since the start of the year, especially since it issued an earnings update at the end of January. In February, it reported a strong H1 FY2011 net-profit-after-tax increase of 41%. More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Fri, 16 Mar 2012
There was quite a sharp market reaction to Chinese trade data this week. On Monday, China recorded its first trade deficit in 22 years. While this is a significant development, it is not so bad that it signals a major slowing underway in China. More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Thu, 15 Mar 2012
Should there be some political pressure applied to the RBA to lower interest rates and reduce pressure on the Australian dollar? More »
By Thomas Choi | Assistant Portfolio Manager / Credit Analyst
Thomas joined Perpetual in March 2008 and joined the credit team in May 2010.
Thomas’ focus is on cash dealing and management of liquidity within portfolios. He also supports Perpetual’s TAA process which includes quantitative analysis and sector rotation, as well as analytical support for our Credit Scoring process.
Thomas’ most recent role was within Perpetual’s Research and Analytics Team. In this role he was dedicated to supporting the Credit Team, provision of investment analytics such as attribution and portfolio analysis, and the active asset allocation process for Perpetual’s balanced funds.
Thomas comes from an investment management background having previously worked in a number of investment roles, including time at the hedge fund manager Prodigal as an Investment Analyst, and CMC Markets where he was a dealer on the trading desk.
Fri, 09 Mar 2012
Could this really be the beginning of the end for the Greek debt problem that has plagued financial markets for the past three years? More »
By Matthew Sherwood | Head of Investment Market Research
Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.
Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.
Mon, 05 Mar 2012
This week's economic data in Australia has confirmed what Australia's company reporting season has been telling us; there is only modest growth momentum in both the economy and earnings at present. More »
By Pablo Berrutti | Head of Responsible Investment
Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.
Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.
Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.
Tue, 08 Nov 2011
Some interesting climate news over the weekend, with US Department of Energy estimating that global CO2 emissions for 2010 increased by a massive 6% over 2009 making it a record year both in the pace of the increase and total emissions. We have also seen a number of studies recently which use statistical analysis to explore links between some weather events and climate change including the 2010 Russian heat wave, increased risk of extreme rainfall in the northern hemisphere and English floods in 2000. More »