This month we discuss the August rate cut and what is happening with risk based assets as the dilemma for investors is where to invest for yield.
We believe there is currently little alternative but equities and as such equities risk “melting up”, a term one fund manager used with us.
This worries us as we believe that valuations rule and come from the approach of “protect and grow”.
What is perplexing is that valuations of equity markets in Australia and globally are as high as we have seen in 20 years on a 1 year forward Price Earnings Ratio (PER) basis.
We also discuss the Superannuation changes and try to clarify the benefits post the proposed changes that still exist for superannuation, which are being missed because of the emotion around this debate.