MDA Newsletter - End of March 2019

May 2, 2019

Last news letter I wrote that the end of 2018 with its fall in equity markets was either a sign of things to come or a buying opportunity. It would seem the later was the case, with the fist 3 months of 2019 being a rather impressive quarter.

 

Equity markets had one of their best quarters in many years. The US was up 13%, The Australian market up 11% and the Chinese market up over 20%!. Our portfolios had the best quarter since 2013, so this will be reflected when you quarterly reports are generated in North.

 

The losses in markets in late 2018 have been reversed and the majority of 12 months returns for our portfolios are back in line with longer term averages.

 

We took the opportunity early in the quarter to sell out of a number of specialist funds and move to lower cost index funds. In rising markets index funds are a great way to capture the general momentum of the market without being exposed to any strategies that can underperform. They also help reduce overall fees to the portfolios.

 

Our general outlook for the rest of the years remains positive, albeit with political risk becoming more acute each year. Here we have an election, which depending on the winner can set the theme for the remainder of the year. Our housing market is also sitting at a real cross road, which way it heads from here is unknown. If credit growth and wage growth don't improve, then further weakness is likely. 

 

Interestingly, the inflation rate for the quarter was flat, so wage growth spurred by price increases looks unlikely in the near term. The banks are still suffering reputational damage and seem reluctant to lend - However a possible rate cut by the RBA could help. 2019 could be an interesting year for housing in Australia.

 

In our next newsletter I hope to concentrate on some of the variables that affect the housing market and what to look out for.

 

 

 

 

 

 

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