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Long-term financial services sector stock picks on the ASX

Discussion in 'Medium/Long Term Investing' started by TPI, Apr 5, 2015.

  1. TPI

    TPI

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    Hi,

    Any ideas on some long-term stock picks in the financial services sector on the ASX, asides from the major banks?

    Any suggestions appreciated.

    Thanks.
     
  2. So_Cynical

    So_Cynical The Contrarian Averager

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    WWB has just got a banking licence and rebranded, looks cheap on the chart..been meaning to have a deeper look.

    http://www.auswidebank.com.au/

    BFG - Bell Financial still trading pretty cheap.

    http://www.bellfg.com.au/
     
  3. systematic

    systematic

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    Never shy of an opinion on a stock (for better or worse)...

    Financials only, no real estate. From ASX 300.

    I'd have a look at BEN.

    A couple others would be QBE and BOQ.
     
  4. skc

    skc Goldmember

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    The greatest long term driver to local financial stocks is the mandated increase in super contributions to 12% by 2025. That's 33% jump from the current 9% in 10 years. So companies exposed to this sector have a good tailwind / backstop compared to other companies, all else being equal.

    Have a look at AMP, IFL, PPT amongst the majors, and others like PPS, HUB, FID etc in the micro space.

    Not recommendations, just ideas for research.
     
  5. TPI

    TPI

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    Thanks all for those suggestions, will investigate further.

    I like the superannuation theme too skc, have you looked at CGF?

    This rides on the tailwind of the gradual switch from superannuation in accumulation phase to pension phase as baby boomers age and retire.
     
  6. skc

    skc Goldmember

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    Yes it will be a beneficiary of the growing hoards of retirees looking for annuity products.

    However, personally I am not familiar with how annuity products actually work. You buy an annuity product and the issuer pays you some amount back (which includes returns and capital) over the ensuing years. Questions that I don't have an answer for:
    - How do they invest to generate the returns?
    - Are the returns guaranteed?
    - If guaranteed, how do they forecast the future returns?
    - What are the risks associated with variations in return assumptions?

    It feels to me that annuity is a bit like selling insurance. You want to make sure you have good actuaries who can price the risks profitably long term. How does it work with CGF? Is there a tail risk? e.g. if the bond bubble bursts, does it matter?

    I haven't really worked it all out but it would be fantastic if someone could offer some explanations!
     
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