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Entrust Investment News

Hello Entrust Member,

In this month’s addition our Tech team provides a breakdown of the catch-up concessional contributions for the 18/19 Financial Year and the concept of ‘Value Investing’ is explained. The month of July is reviewed in Morningstar’s Australian Economic Update and three topics of interest are discussed in this months ‘Frankly speaking’ section.


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Morningstar’s Australian Economic Update for July 2018

Markets in recent weeks have been upset by the potential threat to world economic activity from trade frictions between the United States and other major countries and trading blocs. There have been other episodes of concern over global growth since the current post-crisis global recovery set in, and risk assets have eventually ridden through them, but the current trade stand-offs are nonetheless worrying. On balance, the world economy looks like it may keep on growing at close to previous rates, but as the IMF and many others have said, risks to the outlook have risen, and investors may want to start thinking about taking some insurance against the trade disputes playing out badly. Interest-rate-sensitive assets have also struggled as monetary policy has started to turn less supportive, particularly in the US.

At home, the local business cycle appears to be improving, and although there are still sectoral challenges for local risk assets, notably the weak outlook for financials, the uptick in growth should provide some selective opportunities.

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Value Investing

This week we thought it may be interesting to think about different ways to invest money. There are many different ‘styles’ of investing, in which an investment process is trying to harness a ‘factor’ that leads to a different return stream to that of the broader market (either to enhance returns or to lower risk). The most famous style is ‘equity Value’ investing.

Value investing is an investment strategy where stocks are selected that trade for less than their intrinsic values. Value investors actively seek stocks they believe the market has undervalued. Investors who use this strategy believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with a company's long-term fundamentals, giving an opportunity to profit when the price is deflated.

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Index / Indicator
AUSTRALIAN EQUITIES May-17 May-18 Change 1 Month Change 12 Months
ASX200 Accum 55,758.56 63,015.41 3.27% 13.01%
ASX200 Resources Accum 19,558.63 27,518.85 3.30% 40.70%
ASX200 Industrials Accum 53,600.62 57,380.08 0.68% 7.05%
MSCI World Index 1,916.43 2,089.30 -0.17% 9.02%
S&P500 (USA) 2,423.41 2,718.37 0.48% 12.17%
FTSE 100 (UK) 7,312.72 7,636.93 -0.53% 4.43%
Nikkei 225 (Japan) 20,033.43 22,304.51 0.46% 11.34%
Shanghai Composite (China) 3,192.43 2,847.42 -8.01% -10.81%
A-Dollar / US-Dollar $0.77 $0.74 -2.13% -3.64%
Trade Weighted Index 65.3 62.6 -0.32% -4.13%
Aust 90 Day Bank Bills 170.50% 211.05% 1307 bps 4055 bps
Aust 10 Year Govt Bonds 259.81% 263.70% -359 bps 389 bps
US 10 Year Govt Bonds 230.12% 286.50% 37 bps 5638 bps

Catch up Concessional Contributions

As part of recent superannuation reform, the Government has introduced increased flexibility with respect to concessional contributions. The current 2018/19 financial year is the first opportunity unused concessional contribution cap amounts can be accrued towards future years. The catch-up provisions will provide the option for certain individuals to effectively structure such contributions.

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Frankly Speaking

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Balanced Funds, Dividend Yield, Testamentary Trust.

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This publication has been compiled by Entrust Private Wealth Management ABN 80 100 088 168 AFSL 222152 (Entrust). This publication is current as at time of preparation. Past performance is not a reliable indicator of future performance. Any outlooks in this publication are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the outlooks given in this publication are based are reasonable, the outlooks may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The results ultimately achieved may differ materially from our outlooks. Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information and any advice in this publication do not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This publication may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. Entrust is not responsible for such material. To the maximum extent permitted by law: (a) no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up-to-date or fit for any purpose; and (b) neither Entrust, nor any member of the Entrust group of companies or its authorised representatives, is in any way liable to you (including for negligence) in respect of any reliance upon such information or advice. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from your adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances. More information? For further information on any issue discussed in this publication, or on any financial matter, please contact your financial adviser.
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