Australian Fund Manager hands back cash to clients: Looming correction

[helpme]

When comparing Australian stock markets with other Asian markets on dividend yield, I find valuation to be much better. I wouldn't exit stocks like Altair Asset Management thanks to good dividends.

Not into property investing but I heard Sydney properties are getting expensive.

http://www.smh.com.au/business/mark...ming-correction-20170529-gwfgua.html#comments

Australian asset manager Altair Asset Management has made the extraordinary decision to liquidate its Australian shares funds and return "hundreds of millions" of dollars back to its clients, citing an impending property market "calamity" and the "overvalued and dangerous time in this cycle".

 

[minwa]

I suspect they are winding down on the heels of recent poor performance, but using the potential collapse of property markets as excuse.

Thumbs up though, they could just continue the poor performance and collect fees like most other funds.

 

[Value Hunter]

Minwa, I hardly think small under-performance (less than 1%) over a 6 month period would be the rationale for winding a fund up. Its just noise. Not all of us are focused on 3 or 6 month time-frames. If they under-performed by 15% over a 5 year period that would be a reason.

 

[OmegaTrader]

When comparing Australian stock markets with other Asian markets on dividend yield, I find valuation to be much better. I wouldn't exit stocks like Altair Asset Management thanks to good dividends.

Not into property investing but I heard Sydney properties are getting expensive.

http://www.smh.com.au/business/mark...ming-correction-20170529-gwfgua.html#comments

I remember in 2016 ish they had news reports that overseas hedge funds were short Aussie equities and property exposure. The theory being that income relative to house prices were to high and that stress would lead to default and this would flow through to the banks loan book and therefore stock market.

Australians definitely have the mentality of property will never go down. In wa however recently property has been going sideways / down for the last 2-3 years or so. Yet Sydney still keep going etc etc.

There is always the calamity people who shout year in year out that the next crisis is coming.When and if who knows.. But where is the evidence at the moment?

The question is how long can it keep going. Eventually people will say I can't afford to rent or I can't afford to borrow. Going in the outer suburbs or downsizing no longer works, that is it- I am not paying a higher price anymore. That is when the bubble will burst by itself, if a shock doesn't do it beforehand.

my 2 cents

 

[Quant]

When this chart starts a journey north the housing Bubble will stop , Obv other factors with the weak AUD enticing foreigners to get in while the getting is good . When/if this chart starts to head north fair chance AUD will do same . Really is not much more complicated than that imo . I think the guy winding up the fund is not that far of the mark tbh . The fact banks are raising rates is a sign imo , sort of doing the RBA's job for them , the first RBA hike is the difficult thing to time .



This curve is pretty dynamic and whips about a lot but in recent history the right side has been higher than the left .

 

[OmegaTrader]

When this chart starts a journey north the housing Bubble will stop , Obv other factors with the weak AUD enticing foreigners to get in while the getting is good . When/if this chart starts to head north fair chance AUD will do same . Really is not much more complicated than that imo . I think the guy winding up the fund is not that far of the mark tbh . The fact banks are raising rates is a sign imo , sort of doing the RBA's job for them , the first RBA hike is the difficult thing to time .

View attachment 71353

This curve is pretty dynamic and whips about a lot but in recent history the right side has been higher than the left .

View attachment 71354

1) Who knows if rates will increase? What factors are improving the economy and inflation at the moment etc enough to warrant a rate rise?? The market expectation is not always right, even then it does not look like enough to cause a blow out.

2) Even if rates don't go up or there is no shock, it has to reach a breaking point eventually when people say no I'm not paying that.

In both scenarios it looks rather bad. Things improve, rates go up loan holders get blown out of the water, that flows through to banks and asx200. Increase in income is not enough to hold of increased loan repayments. Or a shock hits the economy, overall economy gets hit, loan holders get blown out of the water again, similar result.


or the economy could just grow really slowly and rates could stay low for a while, property could go sideways for a while with incomes and equities. No crisis no shock, effective stagnation a slow let down.

A new paradigm,change to the rule of thumb assumption that property and stock go up forever and double every 10 years...

my 2 cents

 

[minwa]

Minwa, I hardly think small under-performance (less than 1%) over a 6 month period would be the rationale for winding a fund up. Its just noise. Not all of us are focused on 3 or 6 month time-frames. If they under-performed by 15% over a 5 year period that would be a reason.

Hmmm half a year is a long time when your money is in other people hands and lagging the market. People don't mind losing money in a bear market but for the market to go up without them that is unbearable for most people and I'm sure they are feeling the pressure.

Someone else pointed out that Phillip Parker's previous fund Parker Asset management closed under poor performance as well.

 

[Quant]

) Who knows if rates will increase? What factors are improving the economy and inflation at the moment etc enough to warrant a rate rise?? The market expectation is not always right, even then it does not look like enough to cause a blow out.

Signs are there for the first time in many years if you look hard enough and know where to look , naturally there are no absolutes but I'm going to sell property into this bubble and the risk is next to zero . RBA mandates rates are based on unemployment and inflation but there are external factors at play as well . There have been rate rises previously when unemployment and inflation outside mandated bands to do so . The price of debt world wide has a say and that price trend is now reversing . 3 hikes into US cycle and a 4th almost a 100% chance in a couple weeks , watch the aust 30d bank rates after that , will be a leading ind . Anyway time will tell

 

[kid hustlr]

Time will tell but you wont get a property crash and rate hikes at the same time. Can't happen.

This was discussed in another thread on here recently RBA is recently trying to distance itself from property prices (it's the governments problem)

Curve has flattened in recent weeks if anything and outside of an inflation spike (no idea where that comes from? AUD at 30c maybe?) I just can't see rate hikes anytime soon.

 

[Quant]

Time will tell but you wont get a property crash and rate hikes at the same time. Can't happen.

This was discussed in another thread on here recently RBA is recently trying to distance itself from property prices (it's the governments problem)

Curve has flattened in recent weeks if anything and outside of an inflation spike (no idea where that comes from? AUD at 30c maybe?) I just can't see rate hikes anytime soon.

I doubt we see a rate hike in 2017 but if US rises rates further than the hike coming inside 3 weeks 2018 RBA hike is on the cards . Since AUD floated this is what RBA to FOMC is . The right hand side of the 30d curve supports this hypothesis to a degree . I'm just putting it out there , its not carved in stone either way . Ive done my research and now its all just waiting

 

[OmegaTrader]

I doubt we see a rate hike in 2017 but if US rises rates further than the hike coming inside 3 weeks 2018 RBA hike is on the cards . Since AUD floated this is what RBA to FOMC is . The right hand side of the 30d curve supports this hypothesis to a degree . I'm just putting it out there , its not carved in stone either way . Ive done my research and now its all just waiting



View attachment 71365

Time will tell. I hope your wrong for everyone else sake
I just don't see rates rising.
Hopefully the growth in the economy will offset mortgage stress by rising rates.