Apr 02, 2020
The current COVID-19 concerns have rattled markets, with advisers fielding calls from concerned clients. In some cases, advisers may choose to add tilts or hedges for their clients’ investments, while for others, it will be better to stay the course. There are a range of ways to manage market volatility in a portfolio, some universally valuable, others dependent on the individual clients. In this paper, we’ve highlighted some of the most common. Download now In your discussions with clients, these principles can be a helpful starting point in reinforcing your approach and providing comfort in uncertain times. 1. Diversification Reinforcing the value of diversification with your clients can be as simple as the analogy of not having all your eggs in one basket. The current environment has reinforced the importance of diversification within asset classes and sectors, with some companies able to benefit (ie supermarkets) and others needing to close down (i.e. travel and tourism companies). 2. Incorporating more stable, less cyclical investments Holding companies which are able to consistently operate regardless of market conditions, such as essential services infrastructure, can assist in buffering portfolios against falling markets. 3. Alternative investments Investments which are designed to perform differently to equity and bond markets can range in complexity. Gold is a simple asset with a low or even negative correlation with other asset classes which has acted as a safe-haven investment across a number of market events over time. 4. Strategic tilts For some investors, incorporating short-term tilts alongside the long-term core strategy can assist in managing market volatility. Depending on the strategy, this could mean adding a tilt to high growth (and therefore ‘riskier’ assets) or adding more defensive position. ETFs can be an effective tool for managing volatility for your clients. Beyond characteristics including liquidity and cost-efficiency, the wide range available, broad exposures and instant diversification mean they can be suitable across investor types. For more information on our range of ETFs and using them in your clients’ portfolios, please contact us on: Sales Trading Phone +61 2 8311 3488 Email: firstname.lastname@example.org Phone +61 2 8311 3483 Email: email@example.com
Feb 11, 2020
To access the 'No retirement for investments' white paper, please click the download now button above. Important notice: a previous version of this whitepaper incorrectly stated the ASFA comfortable retirement standards for a couple as $43,787/year and superannuation balance of $545,000. These figures relate to the comfortable retirement standards of a single not a couple. The standards for a couple are $61,786/year and $640,000 in superannuation balance. Managing a retirement portfolio for income and growth Retirement portfolios offer a particular challenge in advice, given their more complex needs. They need to generate a stable income, preserve capital and still offer some level of growth to allow investors to manage inflation and longevity risks, along with a reasonable standard of lifestyle. In the paper No retirement for investments, ETF Securities considers how assets, portfolio construction and product selection can be used to manage retirement in the current market environment. You can download the full paper above, or read the summary following. Part of the solution comes down to diversification of the assets used for income. Retired investors have traditionally relied on domestic fixed income to support their yield needs but are now forced to consider other options. Fixed income can still play a role, for example, diversifying to international sources such as US fixed income which currently offers a higher interest rate may be part of the answer. Commonly, investors are being forced into riskier income approaches, such as through dividend streams. High yield equities may work for some retired investors, pending their risk tolerance along with overall portfolio construction. For example, they may consider how to offset the higher risks of high yield shares in other parts of their portfolio. Using alternatives in the form of commodities like gold may assist with offering stability and diversification to manage the volatility which could occur in high yield shares. Alternatively, looking to investments in more stable, less cyclical industries may be more suitable. Infrastructure is one option. It includes many essential services areas like utilities, telecommunications, industrials and transport which tend to be less vulnerable to market movements and cycles. Finally, product choice can be part of the solution to market conditions. Flexibility is important in this environment, but retired investors also need to be conscious of costs, risks and quality. Bearing these in mind, ETFs may be a suitable option due to characteristics such as low costs, ease of use, liquidity and a wide range to assist in meeting specific portfolio needs or gaps. For more information on the solutions ETF Securities offers, please contact us on: Sales Trading Phone +61 2 8311 3488 Email: infoAU@etfsecurities.com.au Phone +61 2 8311 3483 Email: firstname.lastname@example.org
Nov 13, 2019
Published: 13th November 2019 The global economy is showing signs of strain and expectations from investors around growth and income is decreasing. Can global infrastructure assets provide a solution? Infrastructure has long been a favourite equity asset class for investors as it offers the following characteristics: Access to long term stable cash flows, given people continue to pay for infrastructure in their day-to-day lives, e.g. toll roads, airports and utilities Upfront capital - investment is high for large infrastructure projects and generally the cash flows from investment are realised for long periods into the future High barriers to entry, reducing competition Infrastructure assets have the ability to produce stable income with low volatility and should therefore be a staple in investor portfolios. With the global uncertainty experienced so far during 2019, investors may look to infrastructure as a source of stable capital and yield. ETFS Global Core Infrastructure ETF CORE offers a low cost way to gain exposure to quality global infrastructure companies which have exhibited the least volatility in the last 6 months. CORE has been resilient during 2019’s market volatility and has returned 19% in the last 12 months with a yield of 4% (31 October 2019). Please see below some further information on CORE, outlining why you should consider this ETF for your infrastructure exposure. Attractive Income CORE has a 12 month yield of 4.11% to the 31 October 2019 Stable Growth Since CORE’s launch in 2017 it has returned over 13.5% p.a. Since its inception CORE has delivered risk adjusted returns (refer to sharpe ratio table) above both the S&P Global Infrastructure Index and the MSCI World Index Low Volatility CORE selects the 75 least volatile global infrastructure companies and weights them by their inverse volatility You can see the effect of CORE’s low volatility screen in the performance table below Period Total Return (p.a.) 3M 6M 1Y 2Y from 19 Sep 17 ETFS Global Core Infrastructure ETF (AUD, NAV, TR) 3.16% 8.19% 18.89% 11.70% 13.66% S&P Global Infrastructure Index (AUD, TR) 4.03% 8.75% 24.39% 11.61% 12.69% MSCI World Index (AUD, TR) 2.48% 6.00% 15.70% 12.61% 15.40% Annualised Volatility 3M 6M 1Y 2Y from 19 Sep 17 ETFS Global Core Infrastructure ETF (AUD, NAV, TR) 6.95% 6.97% 7.38% 8.04% 8.04% S&P Global Infrastructure Index (AUD, TR) 8.57% 8.37% 8.70% 8.95% 8.84% MSCI World Index (AUD, TR) 11.26% 10.74% 10.86% 10.67% 10.53% Sharpe Ratio 3M 6M 1Y 2Y from 19 Sep 17 ETFS Global Core Infrastructure ETF (AUD, NAV, TR) 0.31 1.00 2.35 1.25 1.49 S&P Global Infrastructure Index (AU, TR) 0.35 0.90 2.63 1.11 1.24 MSCI World Index (AUD, TR) 0.13 0.45 1.30 1.02 1.30 Source: Bloomberg as at 31 October 2019. Returns in AUD. Past performance is not an indication of future performance. Global Diversification Due to CORE’s rules based approach it does not have a significant concentration in any single company and instead offers a diversified infrastructure exposure As at 31st October 2019 the top 10 stocks in CORE accounted for just 18.80% of the portfolio The US and Canada make up the largest portion of CORE’s portfolio, followed by Asia and Europe. Australia has a very small exposure in the index, with QUBE Holdings as the only Australian stock currently in the portfolio Source: Bloomberg as at 31 October 2019. Returns in AUD. Past performance is not an indication of future performance.
Oct 07, 2018
Key Takeaways: • Infrastructure assets are considered by many advisers as ideal for retirees • CORE gives a cost effective, diversified and international exposure to this sector • CORE has outperformed many active funds over the past year, debunking the myth that active is always best in this sector