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Archive for Investment Planning

Global Infrastructure Platform from AMP Capital Garners $1 Billion USD in New Commitments

If you are interested in investment planning help here in the Perth area, you may be interested in some recent developments from our parent company, AMP Capital. The AMP Capital global infrastructure platform recently added more than $1 billion USD, bringing it closer to its final close of $2 million USD.*

Investment Planning Firm Announces Global Infrastructure Platform

For its second and third closes, the Global Infrastructure Fund raised close to $400 million USD cumulatively. When the investor commitments are combined with an existing portfolio containing a diversified selection of European infrastructure equity assets, the platform has amassed more than 75% of its target.*

According to Boe Pahari, who is the Managing Partner of the AMP Capital Global Infrastructure Fund, “Investors….understand the many benefits that infrastructure provides to a portfolio.” These include: inflation and GDP linkage, high yield, low volatility, as well as low correlation with equities. Mr Pahari is encouraged because of the “increasing demand” for the platform.*

According to Anthony Fasso, CEO International of AMP Capital, the AMP Capital global infrastructure platform has drawn interest from investors in the US, Canada, Switzerland, Spain, Finland, Denmark, Japan and the Middle East.*

AMP Capital launched the global infrastructure platform in October 2014. Their open-ended Strategic Infrastructure Trust of Europe was converted into a closed-ended European fund. Subsequently, the Global Infrastructure Fund was launched.*

The platform is mandated to focus on “mature, brownfield assets” that hold long-term contracted revenues or monopolies in sectors which have proven to offer the best relative value. These include: energy, transport, utilities and communication.*

Currently, AMP Capital employs an experienced team of more than 60 professionals who specialise in infrastructure. They are located in New York, Sydney, New Delhi and London.*

Do You Require Investment Planning and Financial Services in Perth?

To learn more about us or about the AMP Capital Global Infrastructure Fund, call Approved Financial Planners in Perth today: 1300 787 274.

*AMP Capital, 24 February 2016. “AMP Capital’s global infrastructure platform surpasses US $1 billion in new commitments.”

Is Climate Change a Factor in Investments?

Investment planning in Perth and beyond has been introduced to a relatively new factor in potential investment performance: climate change. More specifically, greenhouse gas emissions are an important factor in evaluating Australian and global equity portfolios.*

Ian Woods is the Head of Environmental, Social and Governance Investment Research for our parent company, AMP Capital. Recently, Mr Woods published an insight paper on the AMP Capital blog called “Greenhouse gas emissions: risks and challenges for portfolios.” We would like to share some of his thoughts on the subject with you.*

Investment Planning Firm on Climate Change

Mr Woods used the Paris Climate Change Agreement as an example of a global commitment to acknowledge climate change. He feels that both companies and investors need to assess, communicate and manage risks posed to them by climate change.*

Assessing Greenhouse Gas Emissions

Greenhouse gas emissions are split into three categories. Scope 1 is from company operations, such as the burning of fossil fuel. Scope 2 is the emissions from the process of supplying electricity for operations generated by the combustion of fossil fuels. Scope 3 may include transportation of raw materials and provision of services.*

Entire funds are measured, company by company, for greenhouse gas exposure to assess the risk. Mr Woods thinks that either governments will enact a “carbon tax” or the market will exact a “carbon price” regarding greenhouse gas emissions. This and other factors will be used to assess the effects of greenhouse gas exposure on a fund’s performance.*

Assessing Climate Change Risk in Portfolios

Mr Woods describes the process used by AMP Capital to assess risk in various portfolios. It involves a lot of mathematics and metrics that we don’t have the time to describe for you here. Suffice to say that AMP Capital has been assessing the climate change exposure of the AMP Capital Sustainable Australian Equity Fund and the ASX 200 for more than six years.*

Call One of Our Investment Planning Advisers in Perth Today

To learn more, call us today: 1300 787 274.

*AMP Capital, 23 February 2016. Ian Woods: “Greenhouse gas emissions: risks and challenges for portfolios.”

Outlook for Investing in Australian Banks

We have been providing investment planning services to clients in the Perth area since 2005 and have more than 80 years’ combined experience in the financial industry. We are now affiliated with AMP Capital, who provide us with even more resources to help us help you.

Recently, on the AMP Capital blog, Investment Director Jeff Brunton, Head of Credit Research Sonia Baillie and Portfolio Manager and Analyst Tom Young, all of AMP Capital, discussed the outlook for investing in banks from their respective perspectives. We would like to provide you with a “short version” of the information.*

Investment Planning in Investing in Australian Banks

Equity Perspective

In the last 12 months, the major banks have been under some pressure. For some of the banks, share valuation levels are similar to those during the Global Financial Crisis (GFC). During the same period, dividend yields of major banks have seen a rise of 2%. Share prices could become more volatile in the near future, as lower commodity prices and a housing market slowdown could exert a “drag” on earnings growth.*

Credit Perspective

Since the beginning of February, major bank credit spreads have undergone a sharp widening. On some securities, spreads are approaching their widest levels over a period of three years. There are three “drivers” for this widening.

Led by the commodity and energy sectors, there has been a global widening of credit spreads. The credit quality of European banks has caused concern among investors. In addition, new regulatory requirements are forcing banks to build their capital buffers.*

Opportunity or Risk?

The AMP Capital officers agree that the level of opportunity for shares of any bank are dependent upon the macro environment. In the credit market sector, Australian banks are receiving more attractive valuations, due to the widening of credit spreads, as medium term investments. However, the AMP Capital officers warn that “risk aversion is likely to remain elevated in the near term.”

Get Investment Planning Help from our Perth Office

To learn more, call Approved Financial Planners today: 1300 787 274.

* AMP Capital. 11 February 2016. “Australian banks: equity and credit perspectives on market movement.”

Nine Tips for Long Term Investors

We would like to tell you about nine investment planning tips for investors in Perth and across Australia. The tips are courtesy of Dr Shane Oliver, who is the Head of Investment Strategy and Economics and Chief Economist for our parent company, AMP Capital.

Investment Planning Tips to Long Term Investors

On the AMP Capital company blog, Dr Oliver recently provided a massive document containing his investment outlook for 2016. He covered numerous topics, the most important of which we have covered here on this blog. The article was called, “2016 – a list of lists regarding the macro investment outlook.” Here are nine tips Dr Oliver feels that investors “should remember.”*

    1. “The power of compound returns.” Those who save in “growth assets” often see substantial returns in the long term. For example, if an investment returns 8% per annum, the asset’s value doubles in nine years.*
    2. Long term investors are well-served to allow for cyclical losses in the short term and stay the course.*
    3. It is important to diversify one’s portfolio to protect against falls. It could be wise to consider active asset allocation.*
    4. “Turn down the noise.” Investors have instant access to market information and overreaction can cause bad investment decisions.*
    5. Buy low and sell high. Starting point valuations are important. Those who sell after a major fall are just locking their losses in.*
    6. The sharemarket can be volatile, but a well-diversified portfolio consistently generates higher long-term returns than interest from bank deposits.*
    7. Don’t follow the crowd in extreme actions because they are “invariably wrong.”*
    8. It is wise to seek investments that provide “decent” and sustainable cash flows.*
    9. Accept the current reality: investing is a “low return world.” In a world where inflation is only 2.5%, an investment that returns 8% is a good long-term investment.*

Call the Investment Planning Advisers at Approved Financial Planners

Remember that these are general tips as provided on the AMP Capital company blog. If you want individual financial advice, you need to call our office and talk to a financial planner. Call 08 6462 0888 today.

*AMP Capital, Dr Shane Oliver. “2016 – a list of lists regarding the macro investment outlook.” 21 January 2016.

Investment Planning: What a “Back to Basics” Investment Strategy Could Mean for You

Debbie Alliston is the Head of Multi-Asset Portfolio Management for our parent company, AMP Capital. Her leadership is one of the many investment planning resources provided to us by AMP Capital.

In December 2015, Ms Alliston contributed an article to the AMP Capital blog called “Is it time to go back to basics?” We would like to provide you with some of the information from that article.*

Cash interest rates are low, not only in Australia but around the world. US rates are rising but the projected growth is slow. Consequently, investors may wonder how to make money in the financial markets. Bond yields are low, as are the yields in other asset classes.*

When the numbers for 2015 come in, it is expected that the equity markets will show positive performance for four consecutive years. However, the low-growth environment in financial markets has many investors unsure of future growth in the equity markets. Australian equities have produced negative earnings growth for the last three years. Ms Alliston doesn’t see it turning around until at least 2017.*

Ms Alliston is of the opinion that a “back to basics” approach may be appropriate.*

Back To Baiscs Investment Planning Strategy

Equity Risk Premium (ERP)

According to Ms Alliston, investing in equities provides a premium over investing in bonds and cash. Since 1900, what she calls the “realised ERP” has provided an average of close to 6.0% for Australia and 4.5% for the US. For the present, she predicts a 3.5-4.0% ERP in Australia and between 4.5-5.0% ERP in Asia and emerging markets.*

She sees the US market as “fully valued” while Japan, Europe and Asia “offer attractive value.” While the yields from cash rates and bonds are projected to remain low, she sees the equities market as one that will reward investors for their risk, making equities “an asset of choice.”*

However, she cautions that the valuation buffer has gone down while risk in the equities market has risen. Before the Global Financial Crisis (GFC), Australian equity shares had outperformed global shares. For the last five years, though, global markets have outperformed Australian markets.*

She believes Australian shares will continue to lag behind global markets due to subpar growth, pressure on banks to improve the strength of their balance sheets and the commodities sector still seeing slow growth.*

Diversification

Diversification is a technique designed to mitigate equity risk. In most portfolios, equities represent the largest risk. Diversification means finding strategies and assets that are not associated with equity risk.*

Ms Alliston sees investing in Government bonds as “the most obvious diversifier.” When the economy fails to grow, cash rates are typically lowered. This increases capital value and lowers bond yields. Bonds become more sensitive to changes in their yields as the duration or maturity of those bonds becomes longer.*

While current yields are low, Ms Alliston feels that if there is a significant market correction, bonds will outperform equities, which can provide offset and mitigate a portion of one’s losses. Currency can also play a role because the Australian dollar can often underperform when equity markets are falling.*

Infrastructure and property have a connection to economic growth factors but they are also tied into factors such as supply and demand, cash rates and inflation. This can give them different performance dynamics than equities.*

Private equity provides diversity because while economic factors affect them, management can make a great difference in performance.*

What it All Means

Ms Alliston believes that investors should examine their portfolios closely to evaluate their level of diversification. She cites portfolio construction as a skill that is specialised and can help maximise returns for investors. In the quarter ending September 2015, diversified funds only suffered between 25-33% of the drawdown in equities markets.*

There are numerous multi-asset vehicles on the market for investors which are professionally managed to provide varying degrees of risk/reward. Ms Alliston sees a “professionally managed solution” as an investment that “makes sense.”

If you would like to learn more or would like an obligation-free consult, call Approved Financial Planners today: 08 6462 0888.

*AMP Capital, Debbie Alliston. “Is it time to go back to basics?” 09 December 2015.

Does Your Investment Planning Suffer from Too Much Internet?

At Approved Financial Planners, we have more than 80 years combined experience in providing investment planning help to clients in the Perth area. Now that we are working with AMP Capital, we also have their wealth of knowledge backing us in our efforts to help you maximise your investments.

Too Much Internet For Investment Planning

Recently the AMP Capital Chief Economist and Head of Investment Strategy and Economics, Dr Shane Oliver, wrote about investment planning in the Internet age in his column, “Oliver’s Insights.” According to Dr Oliver, the more exposure consumers receive to information about the performance of their investments, the greater the risk of disappointment. This disappointment can cause consumers to make what Dr Oliver refers to as “poor short term investment decisions.” *

According to Dr Oliver, this risk is being “accentuated” by greater access to information about how investments are performing short term. This access often involves what Dr Oliver refers to as a “worry list…via traditional media” and apps that bring this information straight into our phones. *

Dr Oliver is now convinced that investors need to “try and turn down the noise” regarding their investments. According to Dr Oliver, consumers are exposed to the aforementioned “worry list” on a regular basis. Dr Oliver believes this “worry list” is filled with ideas that could lead consumers to believe another financial crisis is coming. *

This list includes items such as Russia, China, the Middle East, deflation, hyperinflation, debt, budget deficits, emerging markets, “the Fed” and the Australian property market. Dr Oliver says that he finds it “hard to believe” that things nowadays are any worse than they were 100 years ago, but that the information and concerns are now “regularly in our face.”

Call the Investment Planning Advisers

If you would like professional investment planning advice, call the professionals at Approved Financial Planners: 08 6462 0888.

*AMP Capital. Oliver’s Insights. The perils of investors of too much information in the app age. 12 November 2015.

Financial Planning in Perth: Our View of Real Estate as a Long Term Investment

We offer a full slate of financial planning services in our Perth area office. Real estate is one of many investment platforms for which we can offer assistance. Since we are affiliated with AMP Capital, we can now lean on their resources to provide you with the best in service and advice. While we can’t provide any individual advice without an individual consult, we would like to forward some information here.

Recently, on the AMP Capital blog, AMP Capital Head of Property Investment Strategy and Research Michael Kingcott wrote a piece on real estate as a long term investment. We would like to provide you with some of the highlights.

Real Estate as a Long Term Investment

Real Estate May Outperform Equities and Bonds

According to Mr Kingcott, volatility in the capital market and “lukewarm economic momentum” is causing a “low growth environment” for equities and bonds. He feels that real estate represents a “good value compared to” equities and bonds. *

Office Space Needed

Mr Kingcott sees increasing demand for office space due to a number of factors. These include increasingly flexible workforces, shifting demographics, evolving technology, globalisation, competition from Asian financial hubs and ongoing business market pressures. According to Mr Kingcott, the increase in demand for office space may offer opportunities to investors.

Retail Trends

According to the data Mr Kingcott has read, consumers will trend towards shopping in areas of convenience, such as markets, the CBD or major shopping centres.

For Financial Planning in Perth, call the Professionals

At Approved Financial Planners, we offer a wide range of financial planning services for our Perth area clientele. Our financial planners offer more than 80 years of combined financial industry experience to help you with your financial needs. We can help you sift through current trends and data to formulate solid financial plan that is right for you.

To learn more or for an obligation free personal consult, call us today: 08 6462 0888.

*Michael Kingcott, AMP Capital. Australian real estate: our view for the long term. 06 November 2015.

Investment Planning: Equity Markets Perform Stronger in Fourth Quarter

Now that we are affiliated with AMP Capital, we have access to their resources to help us provide investment planning services from our Perth area office. One of those resources is Shane Oliver, who is AMP Capital’s Chief Economist and Head of Investment Strategy. In a recent blog post and video, Mr Oliver addressed the performance of the equities market in the fourth quarter. We would like to share some of his points with you here.

Perth Investment Planning - Equity Market

Consumers Benefit from Low Oil Prices

According to Mr Oliver, oil prices have decreased approximately 50% since the middle of 2014. For countries who import more oil than they export, Mr Oliver sees this as good news because the prices for petrol are lower. *

Inflation Figures Low for September

Mr Oliver feels that low inflation figures in the September report, combined with the recent tightening of financial standards for property investors and owner-occupiers by the “big four” banks, may result in yet another lowering of the RBA cash interest rate for 2016. *

Gains in Equity Market

According to Mr Oliver, October can be a “turning point” in which equity markets turn from “weakness” to strength. Mr Oliver was satisfied with the performance for October and predicts what he calls a “further rally in markets” to continue into 2016 as part of the ongoing “cyclical bull market in shares.” He mentioned that a “short term pause” during November was possible, but that “year end seasonal strength” would prevail.

Call an Investment Planning Adviser at Approved Financial Planners

Remember that we can’t give any individual advice without an individual consult due to ASIC regulations. However, we would like to remind you that we offer a full service solution to all of your investment planning needs in our Perth area office. We will be happy to provide you with an obligation-free, personal consult. Call Approved Financial Planners today: 08 6462 0888.

*Shane Oliver, AMP Capital. Equity markets rally in the final quarter. 06 November 2015.

Investment Planning: the Ins and Outs of Global Listed Infrastructure

The investment planning advisers in our Perth office would like to present you with information from our parent company, AMP Capital. We handle a variety of investments and we are proud to have the resources of AMP Capital to help us help you with your finances. While we can’t provide individual financial advice in a blog, we would like to pass on some recommendations from Tim Humphreys, AMP Capital Head of Global Listed Infrastructure.

Global Listed Infrastructure Investment Planning

Due to a low correlation between the equities market as a whole and the segment of global listed infrastructure, allocating assets into global listed infrastructure can help diversify one’s investment portfolio. (2)

According to Bloomberg, global listed infrastructure has provided returns of 11.7% per annum over ten years and 14.9% over five years. (1)

Mr Humphreys feels that globally listed infrastructure, which has only been an asset class for approximately ten years, offers what he calls a “significant opportunity for investors” due to what he sees as “relative inefficiency.” (2)

According to Mr Humphreys, dedicated global listed income managers with an eye towards long term investment hold less than 3% of global listed infrastructure stocks. The remaining 97% are held by generalist managers or index funds who use short term forecasts when making investment decisions. Mr Humphreys feels that the short term is not the correct way to value these assets. (2)

According to Mr Humphreys, the inefficiency of the 97% in using short term forecasts provides ample opportunities for those who specialise in infrastructure investment to provide value to the investor. He feels that the nature of long-term contracts and regulation of global traded infrastructure make them a stable and predictable investment. (2)

Call the Advisers at Approved Financial Planners in Perth Today

To learn more or for an individual consultation, call Approved Financial Planners in Perth today: 08 6462 0888.

(1) Bloomberg. Total Return in USD of Dow Jones Brookfield Global Listed Infrastructure Index as of 31 December 2014.
(2) AMP Capital. How does global listed infrastructure fit into your equity portfolio. 06 November 2015.

Planning an Education for Your Children

One of the many services our financial planners provide to our clientele in the Perth area is planning an education for their children. We know that everyone wants to provide for their children and an education is at the top of the list for a lot of parents. According to the Financial Planning Association of Australia (FPA), though, some families may be better off not trying to put the money aside because it could make them become a burden to their children later in life.*

Education Plan For Kids With Financial Planners

The FPA strongly suggests getting your own finances and lifestyle in order before deciding whether or not to put money away for your children’s education. If you can, though, here are some options suggested by the FPA that can help you save for your children’s education.*

Pay Down Your Mortgage Faster

The FPA suggests that you would be well-served to focus on paying down your mortgage as soon as you possibly can. One strategy includes finding the lowest rates and using a redraw facility to pay for college expenses.*

Investment Portfolio

For those who are younger, creating a diversified investment portfolio with exchange traded funds can be an efficient way to produce income. If the portfolio is in the name of the parent with the lowest income, it can help minimise taxes.*

Insurance Bonds

If you are in a higher tax bracket or you have at least ten years to save, insurance bonds can be efficient. They don’t impact personal taxes and your contributions are flexible within limits. If you need to access any or all of the funds before the bonds reach maturity, you can. However, a tax of 30% is levied within the bond. *

Your Super

If you make additional concessional or personal contributions to your super, they are taxed at 15% but can still increase your savings. However, you can’t get to your money until retirement. The good side of this strategy: you may take care of your retirement early enough to free up funds by the time your children are old enough for college.*

Call Approved Financial Planners Today

To learn more, call us today: 08 6462 0888.

*Financial Planning Association of Australia, “Top tips for planning your kids’ education,” 16th September 2015. http://fpa.com.au/blog/top-tips-for-planning-for-your-kids-education/