How will the US election impact my investments?

With any change comes uncertainty, volatility, concern.  There is going to be a change in the US due to the current President not being eligible for re-election.  The choices?  Trump or Clinton?

Keeping in mind that there will be issues either way, we need to keep in mind that which is important, which is NOT the hype or controversy.  Your investments should be in companies that will still be around tomorrow, and the next day.  Yes the price will jump around a bit for a while, but standing still is often the only answer when everything is swirling around you.  Take the time to wait, to ponder, to be confident that you have made the right choices for you in the long term, 5-10 years, do not worry about the first 10 minutes of the news.

Here is what Bloomberg had to say on the matter:

Don’t Worry When the Stock Market Goes Crazy After the Election

By Oliver Renick – 7/11/2016, 6:00:01 PM

In the hours after the president is elected, equity investors need to brace for volatility. What they shouldn’t do is panic.

That’s because regardless of how prices react on Nov. 9, next-day moves in the S&P 500 Index are useless in telling what comes after. While the index swings an average 1.5 percent the day after the vote, gains or losses over the first 24 hours predict the market’s direction 12 months later less than half the time.

This matters because the compulsion to act in the vote’s aftermath is often very strong — stocks swing twice as violently as normal those days, data compiled by Bloomberg show. They plummeted 5 percent just after Barack Obama beat John McCain in 2008. But while nothing says Wednesday’s reaction won’t be a harbinger for the year, nothing says it will, either, and investors should think before doing anything rash.

“Trying to trade that is very difficult,” said Thomas Melcher, the Philadelphia-based chief investment officer at PNC Asset Management Group. “Even if the market sells off, if you have any reasonable time horizon, that should be a buying opportunity. The dust will settle and people will conclude the economy is OK.”

In the 22 elections going back to 1928, the S&P 500 has fallen 15 times the day after polls close, for an average loss of 1.8 percent. Stocks reversed course and moved higher over the next 12 months in nine of those instances, according to data compiled by Bloomberg.

Nothing shows the unreliability of first-day signals more than the routs that accompanied victories by Obama, whose election in the midst of the 2008 financial crisis preceded a two-day plunge in which more than $2 trillion of global share value was erased. It wasn’t much better in 2012, when Election Day was followed by a two-day drop that swelled to 3.6 percent in the S&P 500, at the time the worst drop in a year.

Of course, Obama has been anything but bad for equities — or at least, he hasn’t gotten in their way. The S&P 500 has posted an average annual gain of 13.3 percent since Nov. 4, 2008, better than nine of the previous 12 administrations. Data like that implies investors struggle to process the meaning of a new president just after Election Day, or infuse the winner with greater influence than they have.

“Some people are probably going to overreact, and there will be other investors trying to second-guess what those investors are doing,” said David Brown, a professor of finance at the University of Wisconsin School of Business, in Madison, Wisconsin. “There is a salience of short-term events, particularly bad events, that lead people to react to short-term information.”

Swings in industries are no more prescient than the broader market. The S&P 500 Health Care Index declined 3.6 percent the day after Obama first won; since then it’s the stock market’s third-best performing group with a 149 percent advance. Also meaningless is the victor’s party. The median S&P 500 gain in Democratic terms since 1928 has been 27.7 percent, according to Leuthold Group LLC, compared with 27.3 percent under Republicans.

“The results suggest that policy differences between the parties are either fully reflected in stock prices by the time a candidate officially takes office, overwhelmed by larger cyclical forces, or fundamentally indistinguishable from one another,” said Doug Ramsey, the firm’s chief investment officer. “In practice, all three factors are likely at work.”

Infusing certain days and events with special meaning is a tradition on Wall Street, with everything from Santa Claus to the Super Bowl supposedly holding influence for share prices. Lots of people believe the direction of equities on Jan. 1 contains insights into how the year will go in stocks, but the system has n o more predictive value than a coin toss.

Letting emotions rule investment decisions was a temptation that Erik Davidson resisted after the Brexit vote. On June 24, as the S&P 500 was plunging 3.6 percent on concern Britain’s vote would snarl trade and spur a global recession, the chief investment officer of Wells Fargo Private Bank said in a Bloomberg News story the selloff was a buying opportunity as investors overestimated the pain. Stocks are up 2.3 percent since he spoke.

“The markets could sell off if Trump wins, like we saw with Brexit, but we also saw how markets recovered,” said Davidson. “If Donald Trump is in office, it’s a concern, but there are so many other things that are going well and starting to turn the corner.”

That doesn’t mean it’ll all be smooth-sailing for stock investors. Equity volatility in the November of presidential election years has historically been 22 percent above the average for all months, according to data compiled by Bloomberg going back to the Herbert Hoover administration.

Since the outlook for rates and equities has lately been joined at the hip, that may be of interest to traders who are all but certain the Federal Reserve will hike rates in December. Since 1930, the S&P 500 has an average 30-day realized volatility of 19.2 in election-year Novembers, more than 20 percent higher than the historical average of 15.7.

Should the past prove to be prologue and volatility rise, the ride may seem even bumpier given the market’s current placidity. The S&P 500’s 30-day volatility registered at 16.8 on Monday, 55 percent below the average of all November months — both in and out of election years.

“It’s fair to say no one knows what these candidates’ policy prescriptions are going to be and that uncertainty will resonate into volatility,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors, which oversees $1.5 billion in assets in Oklahoma City.

Brexit: What does it mean?

As many of you are aware, the UK leaving the EU has brought out much uncertainty about the financial and economic future of the UK.

Below is an opportunity to watch what AMP Capital have to say, the first part is about equities and the second part from about 3 min is about fixed interest.

If you would like more information please contact us.

Our clients will get a special report early next month with a summary of the best information we can find.

Congestion ahead: Expect delays

By Colin Austin

Living most of my life in Auckland, I am very familiar with the variability of the Auckland motorway system.  Generally speaking, if you’ve got a long distance to cover the motorway is the best bet. Occasionally you will spot the flicker of brake lights ahead and you know that things might slow down for a while, but once you get passed that slow spot, you’ll be back on track.

ExpectDelays

In very heavy traffic, we can be tempted to take the off-ramp, use the slower suburban roads for a while, and re-join the motorway when we think things might have improved. Occasionally this strategy might work, but if we were to hit the off-ramp every time we saw the flicker of brake lights ahead, or got the slightest inkling that there might be delays, we would be on and off the motorway every other exit. Most of the time, staying on the motorway is the best strategy, even with heavy traffic.

It’s the same with investing. Research and history shows us that the fastest and best way to reach our financial goals is to include an investment in shares. While there can be volatility, or short periods of time when other asset classes (e.g. fixed interest) can outperform shares, over the long term, shares outperform all other major asset classes. Staying invested in the market and accepting that sometimes we might feel we would be better off taking a different route is better than trying to time our entries and exits from the market. If we tried to time the market and got out or in every time we saw the flicker of brake lights ahead, we would risk exiting when prices are slightly down, and then buying back into the market after prices have recovered. We would lose ground every time.

Continuing the analogy, we reduce risk by diversifying our clients’ portfolios, ensuring we are not putting all our eggs in one basket, or in one vehicle on the motorway. We are investing in many different styles of funds and in a wide range of companies across several industries, markets and countries. Furthermore, depending on each client’s risk profile, we only have a portion of any portfolio invested in shares. The balance of the portfolio is already invested in slower moving, fixed interest investments.

We have started to see the flicker of brake lights ahead in international share markets. There are concerns over the potential exit of Britain from the Euro (which are subsiding) and uncertainty over the US elections. This is likely to mean that we will enter a period of falling share market prices. While we could lurch to the left and take the next exit, we believe that this would be a potentially costly mistake. Our advice is to expect that there will be some delays ahead, but stick to the strategy that will provide the best long term outcome.

As always, if you have any questions, please give your adviser a call.

It is that time of year again…

Yes, it is tax time…  If you have had a change of tax rate or change in income this last year please let your adviser know NOW.

Tax rates are important especially for investments, when you have them with fund managers.  These tax rates are called your PIR – Prescribed Investor Rate.  If you have invested in or are considering investing in a certain type of portfolio investment entity (PIE) such as a KiwiSaver scheme, then you will need a prescribed investor rate (PIR) to give to the PIE along with your IRD number.

Here is the link to the IRD website to check that you have your PIR correct:

Work out your PIR on the IRD website

If you have given your adviser/fund manager your PIR and you now think it is changed you can check what to do from the link below.  If you are investing through a Trust you have options, you may choose a 28% or 0% tax rate, depending on your circumstances.  The information about all obligations is listed in the IRD website here:

PIR ObligationsFeijoa-with-leaves-00005378

If you have any questions about this please discuss it with your financial adviser or fund manager.

On a more enjoyable note, it is also feijoa time, apple and feijoa crumble, yum!

The kiwifruit need just a bit more colder weather and it will be time to pick them too.

Edinburgh Tattoo in Wellington

This amazing event was held in Wellington this weekend.  Over 1200 people entertained thousands over four nights.  I went on Friday night, not expecting much, as I had no idea what it was or why it was special. I was so proud to be a kiwi, the rendition of Pokarekare Ana was spectacular, and here is a link to video to prove it (although it was much more powerful to be there with the audience humming the tune).

Pokarekare Ana 2016 Edinburgh Military Tattoo Wellington

Well done New Zealand, if you are back again in 10 years I will be getting tickets and bringing the family.

I have added a couple of photos, neither of which explain the shear volume of people at the “cake tin” or the amount performing, but you get the idea.

 

 

NZ Fund Manager of the Year 2016 – Harbour

Well done and congratulations to Harbour Asset Management!Harbour Asset Management

New Zealand Fund Manager of the Year 2016 – Harbour Asset Management
Harbour is an outstanding steward of its investors’ capital and the well-deserved winner of Morningstar’s overall award for New Zealand funds management excellence. Originally established as a domestic equities house, the firm has expanded its offering, which now encompasses fixed interest and global capabilities, in
a sensible and well-structured manner. Performance across all asset classes was top-notch in 2015, with investors benefitting from shrewd security selection and well-judged portfolio positioning in difficult market conditions.

Fund Manager of the Year: Fixed Interest Category, New Zealand 2016 – Harbour Asset Management
Harbour’s Christian Hawkesby and Mark Brown have done an exceptional job at developing the firm’s fixed interest capability since joining forces in 2011. Their sound investment process, backed by detailed economic research and modelling, has resulted in a noteworthy track record to date. Investors looking to diversify their portfolio by including fixed interest exposure need look no further than Harbour.

THIS IS NOT INVESTMENT ADVICE.
PLEASE CONSULT WITH YOUR FINANCIAL ADVISER FOR PERSONALIZED ADVICE THAT IS APPROPRIATE FOR YOU.

Well Done ANZ Investments

ANZ Inv logo-header

ANZ Investments was last night named International Equities Manager of the year in the 2016 Morningstar Awards.

This is great recognition for their investment team, who were also finalists for Morningstar Fund Manager of the Year and Morningstar KiwiSaver Manager of the Year.

ANZ Investments is the largest fund management company in New Zealand with over $24 billion in Funds Under Management.

Beyond the annual awards, their investment funds are consistently receiving top ratings for investment performance in Morningstar’s quarterly reports.

*Morningstar award winners are selected based on sound methodologies that emphasise outperformance over one, three, and five-year periods.  The analyst-driven Fund Manager of the Year awards recognise managers who have not only achieved impressive returns, but also been strong stewards of investors’ money.

THIS IS NOT INVESTMENT ADVICE.
TO RECEIVE PERSONALIZED ADVICE PLEASE CONSULT YOUR FINANCIAL ADVISER.

decisionmakers.co.nz

Well Done Mint Asset Management

Mint Wins Morningstar Fund Manager of the Year Award
for Domestic EquitiesMINT logo

Mint Asset Management has taken out the Fund Manager of the Year award for Domestic Equities at the 2016 Morningstar Fund Manager of the Year awards.

Rebecca Thomas, CEO of Mint Asset Management, said “There are nine years of collective toil behind this win. We are delighted with the award, which is a testament to the rigorous investment process and highly experienced team we have at Mint.”

Tim Murphy, Morningstar Australasia’s director of manager research, said: “The winners of the New Zealand Morningstar Awards have all shown themselves to be first-class stewards of investor capital. The quality of their people, process, parent, price and performance demonstrates their commitment to investors.”

www.mintasset.co.nz

THIS IS NOT ADVICE TO INVEST.
PLEASE SEE YOU FINANCIAL ADVISER FOR PERSONAL RECOMMENDATIONS AS THIS MAY NOT BE APPROPRIATE FOR YOU AS AN INVESTOR.

Once upon a time in a land far away…

I often feel that the opening line to most financial commentators should read like the opening line to a fairy tale, or a nightmare.  They tell stories about a future that hasn’t happened and make up stories that sound like the markets (read share markets) are driven by computers and not humans.

For the person who is just trying to earn a living, save a bit for retirement and generally get along with others the whole idea that there is many options for their savings is usually overwhelming.  This is where we come in, as advisers we understand the majority of options and choose the right one for you.  It is not about product, it is about the best solution for you, which may be a product or a service, or nothing at all, you are sorted.

Right now there is a new product on the market, called Lifetime Retirement Income.  You may remember annuities, they pay an income to you after you had saved for years to gain a lump sum for them to take the income from.  I have seen the conditions of some of these policies, and they are scary.  This is different.

Check out their website and see if this type of solution is right for you, then come and talk to us about it, as always there are risks, conditions and terms that must be understood. Come and see us and we will answer any more questions you have, explain the process and be able to guide you through.

This may not be the right solution for you, so come and see us to discuss your options.

DecisionMakers – and while you are there take the FREE risk tolerance test, find out what type of investor you are, or will be.

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