ARTICLES

Welcome to the latest edition of Making Sense with Portfolio Manager, Dr Jerome Lander.

The January 2024 Dynamic Assets Making Sense webinar features Dr. Jerome Lander discussing the macroeconomic and geopolitical landscape. We also discussed the main issues affecting markets including inflation, interest rates, and economic growth amid geopolitical influences. 

You can watch an edited version of the webinar (12min 44sec) by clicking the link below.

About Dr Jerome Lander and Dynamic Asset

Dr Jerome Lander is responsible for asset allocation, fund manager selection and portfolio construction of Dynamic Asset's Goals Based Portfolios. 

Dr Lander is well-known in the institutional investment community. His 20 years of experience in asset management and investment strategy demonstrate his strong capabilities in multi-asset class investment management.

He was the Chief Investment Officer of the WorkCover insurance fund where he was responsible for managing a $12 billion institutional investment fund, reporting to the Investment Board. In that time, the investment fund ranked as the best institutional investment fund of its kind in Australia and the best performing of all Mercer’s (nearly 100) institutional clients.

Jerome has also been a Director of Investment Consulting for Russell Investments, a Diversified Assets Portfolio Manager at Credit Suisse and Head of Manager Research for Van Eyk. Jerome has also served as a Board member for the Investment Management Consultants Association (IMCA).

If you would like to find out more about Dynamic Asset's Managed Account Services under the direction of Dr Jerome Lander contact Dynamic Asset today.

 

 

Disclaimer 

This material has been prepared by Dynamic Asset Consulting Pty Limited (ABN 82 079 145 298, AFSL 502623) of Level 20, 56 Pitt Street Sydney NSW 2000. Any content provided in this Report is for general information purposes only. It is not personal advice and does not take into account the investment objectives, financial situation or needs of any person. Please seek specific advice before making a decision in relation to any investment. Before making any decision about any product you should obtain a Product Disclosure Statement (PDS) or Investment Mandate (IM) document for further information. A copy of our PDS or IM is available from your adviser or by contacting us through our website at www.dynamicasset.com.au 

The information is provided in good faith and we do not make any representation or warranty as to its accuracy, reliability or completeness. Any information contained in this presentation is subject to change without prior notice by Dynamic Asset Consulting and Dynamic Asset Consulting is not obliged to update any information. References made to any third party or their data is based on information that Dynamic Asset Consulting believes to be true and accurate as at the date of this Report but without independent verification. All information provided in this Report is correct as at the date of this Report. To the extent permissible by law, we do not accept any responsibility for any error, omission, indirect or consequential loss or damages (whether arising in contract, tort, negligence or otherwise, in any case whether foreseeable or not). Any person receiving this document should rely and act on that basis and entirely at his / her own risk. 

Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market. Returns are not guaranteed and actual returns may vary from any target returns described in this communication. Unless stated otherwise Dynamic Asset Consulting returns are net of all asset manager, program adviser and administration fees. The measure of inflation is the Consumer Price Index, calculated by the Australian Bureau of Statistics. Where the official number was not available at the time of publication a proxy CPI value has been calculated. 

Further distribution of this material is prohibited without prior permission from Dynamic Asset Consulting. 

Our portfolios provided largely unremarkable performances for the month with Wealth-Builder being the noticeable outperformer as equities continued to do well.

Although inflation has come through strongly, recently deflationary concerns have resurfaced with the delta variant and slowing growth.  The bond market remains unphased by inflation for now, perhaps anticipating its “transient” nature and an economic slowdown or persistent policy support.

We remain concerned about medium-term economic prospects including the risk of stagflation, deflation without further stimulus, geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating selectively in risk assets.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance and greater alternatives allocations than most.  We continue to see the need for strong active management to produce acceptable risk/return trade-offs. 

We continue to look to diversify the portfolios where appropriate and sensible.  We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge geopolitical, social and economic issues persist.  We note that economic and political risks remain very elevated globally and have recently attracted broader investor attention with the Afghanistan withdrawal a case in point.

Our Cash-Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios.   

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind.  The Wealth-Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature.  Active management in general has become more productive since COVID, despite large flows to more passive instruments.

DAC’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying more upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market outlook remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli have been implemented by central banks and governments, creating distortions and market interference.  The sheer size and extent of their actions is providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile.  We believe large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We continue to be concerned about asset prices.  We believe growth outcomes, geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as coronavirus has.  Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus.  We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value-adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures and greater weightings to real assets.  We aim to remain astute, flexible, and highly risk-aware and are invested in liquid assets whose weightings we can adjust over time to respond to an ever-changing and potentially highly challenging investment climate.

Our portfolios provided positive performances for the month, starting the new financial year in a pleasing way.

Although inflation has come through strongly economically, recently deflationary concerns have resurfaced with the delta variant.  The bond market remains unphased by inflation for now, perhaps anticipating its “transient” nature and an economic slowdown.

We remain concerned about medium-term economic prospects including the risk of stagflation, deflation without further stimulus, geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating selectively in risk assets.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in the continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance and greater alternatives allocations than most.  We continue to see the need for strong active management to produce acceptable risk/return trade-offs. 

We continue to look to diversify the portfolios where appropriate and sensible.  We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge geopolitical, social and economic issues persist.  We note that economic and political risks remain very elevated globally and have recently attracted broader investor attention. 

Our Cash Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios.   

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature.  As active management has become more productive since COVID, we have seen a positive performance gap between us and our competitors.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market outlook remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli have been implemented by central banks and governments, creating distortions and market interference.  The sheer size and extent of their actions are providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. 

We believe large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We continue to be concerned about asset prices.  We believe growth outcomes, geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as coronavirus has.  Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus.  We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value-adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures and greater weightings to real assets. 

We aim to remain astute and flexible and highly risk-aware and are invested in liquid assets whose weightings we can adjust over time to respond to an ever-changing and potentially highly challenging investment climate.

Most of our portfolios provided positive performances for the month, ending the financial year with very strong returns overall.

Although inflation has come through strongly economically, recently deflationary concerns have resurfaced with the delta variant making more of an impact. The bond market remains unphased by inflation for now, perhaps anticipating its “transient” nature and an economic slowdown due to COVID related factors.

We remain concerned about medium-term economic prospects including the risk of stagflation, deflation without further stimulus, geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating selectively in risk assets. The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing periodic market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance and greater alternatives allocations than most.  We continue to see the need for strong active management to produce acceptable risk/return trade-offs. 

We continue to look to diversify the portfolios where appropriate and sensible.  We continue to believe some meaningful exposure to assets such as precious metals are essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge geopolitical, social and economic issues persist.  We note that economic and political risks remain very elevated globally and have recently attracted broader investor attention. 

Our Cash Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios.   

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets based on our insights and research, while still managing risk prudently over a longer-term time frame has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature. As active management has become more productive since COVID, we have seen a positive performance gap between us and our competitors.

DAC’s portfolios are designed to be diversified but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the relevant time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a more traditionally managed portfolio based on a more fixed Strategic Asset Allocation approach which tends to be much more biased to what has happened may be markedly different from the future.  We consider future scenarios proactively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions. That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli have been implemented by central banks and governments, creating distortions and market interference. The sheer size and extent of their actions provide meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. Furthermore, we think good active managers will better differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We continue to be concerned about asset prices. We believe growth outcomes, geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as coronavirus has. Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus. We hence think investors are best served by thinking outside the box to better protect and grow their capital, including potentially greater use of liquid value-adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures and greater weightings to real assets. We aim to remain astute and flexible and highly risk-aware and are invested in liquid assets whose weightings we can adjust over time to respond to an ever-changing and potentially highly challenging investment climate.

The portfolios once again universally provided positive performances for the month. 

Inflationary pressures have picked up recently and we have seen our solid positioning in resources be well rewarded.  This is in no small way due to combined monetary and fiscal government stimulus and investor extrapolation of the same.  Despite this, the bond market remains unphased by inflation for now, perhaps anticipating its “transient” nature and an economic slowdown.

We remain concerned about medium-term economic prospects including the risk of stagflation, geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating selectively in risk assets.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance and greater alternatives allocations than most.  We continue to see the opportunities for strong active management as highly prospective.

We continue to look to diversify the portfolios where appropriate and sensible.  We continue to believe some meaningful exposure to assets such as precious metals are essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge geopolitical, social and economic issues persist.  We note that economic and political risks remain very elevated globally, albeit they are largely being ignored for now.  We prefer precious metals to overpriced bonds over the medium term and believe investor portfolios may – depending upon the path forward from here – continue to turn away from bonds given their extremely low yields and potential susceptibility to debt, currency and sovereign crises, and rising inflationary pressures over time. 

Our Cash Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios.   

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature.  As active management has become more productive since COVID, we have seen the positive gap between us and competitors increase.

DAC’s portfolios are designed to be diversified but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli continue to be implemented by central banks and governments, despite now appearing inappropriate given the strength of the economic recovery and rising inflationary pressures.  The sheer size and extent of their actions is providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile.  We believe large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We continue to be concerned about some interest rate sensitive assets such as bonds given their substantively sub-inflation yields.  Furthermore, aside from inflation, we believe geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as the coronavirus has.  Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus.  We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value-adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures and greater weightings to real assets.  We aim to remain astute and flexible and highly risk-aware and are invested in liquid assets whose weightings we can adjust over time to respond to an ever-changing and potentially highly challenging investment climate.

The portfolios universally provided positive performances for the month. 

Inflationary pressures have picked up recently and we have seen our solid positioning in resources be well rewarded.  This is in no small way due to combined monetary and fiscal government stimulus and investor confidence in the same.

We remain concerned about medium term economic prospects including the risk of stagflation and rising inflation (the latter is now a more consensus view), geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating selectively in risk assets.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance.  That said, we continue to see the opportunities for strong active management as highly prospective.

We continue to look to diversify the portfolios where appropriate and sensible.  We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge geopolitical, social and economic issues persist.  We note that economic and political risks remain very elevated globally, albeit they are largely being ignored for now.  We prefer precious metals to overpriced bonds over the medium term and believe investor portfolios may – depending upon the path forward from here – continue to turn away from bonds given their extremely low yields and potential susceptibility to debt, currency and sovereign crises, and rising inflationary pressures over time. 

Our Cash Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios.   

Our more medium and longer-term orientated portfolios target returns and manage risk with longer term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature.  As active management has become more productive since COVID, we have seen the positive gap between us and competitors increase.

DAC’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli continue to be implemented by central banks and governments, despite now appearing inappropriate given the strength of the economic recovery.  The sheer size and extent of their actions is providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile.  We believe large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We continue to be concerned about some interest rate sensitive assets such as bonds.  Furthermore, aside from inflation, we believe geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as the coronavirus has.  Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus.  We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures and greater weightings to real assets.  We aim to remain astute and flexible and highly risk aware, and are invested in liquid assets whose weightings we can adjust over time to respond to an ever changing and potentially highly challenging investment climate.

The portfolios provided satisfactory performances for the month in what was a mixed month for markets generally. 

We believe the market is quite possibly being too monocular and sanguine about the outlook given the range of possibilities, but nonetheless continues to behave like we are in a bull market.  This is in no small way due to the ongoing and massive monetary and fiscal government stimulus and investor confidence in the same.

We remain concerned about medium term economic prospects including the risk of stagflation and rising inflation (the latter is now a more consensus view), geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating selectively in risk assets and always considering diversification.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance.

We continue to look to diversify the portfolios where able and sensible.  We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge political, social and economic issues persist.  We note that economic and political risks remain very elevated globally, albeit they are being ignored for now.  We prefer precious metals to overpriced bonds over the medium term and believe investor portfolios may – depending upon the path forward from here - increasingly turn away from bonds given their extremely low yields and potential susceptibility to debt, currency and sovereign crises, and rising inflationary pressures over time, as they have already been doing. 

Our Cash Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios. 

Our more medium and longer-term orientated portfolios target returns and manage risk with longer term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature. 

DAC’s portfolios are designed to be diversified but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli continue to be implemented by central banks and governments.  The sheer size and extent of their actions is providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises and expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile.  We believe real growth may continue to disappoint in future as the large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth may improve.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We could see the previous disinflationary secular trend morph in to a stagflationary or reflationary outcome over time, albeit this depends on ongoing and very substantive policy actions.  This potentially continues to bode poorly for some interest rate sensitive assets such as bonds.  Furthermore, we believe geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as the coronavirus has.  Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus.  We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures.  We aim to remain astute and flexible and highly risk aware and are invested in liquid assets whose weightings we can adjust over time to respond to an ever changing and potentially highly challenging investment climate.

The portfolios provided satisfactory performances for the month in what was a very challenging month for markets due to bond yields rising aggressively.  Fortunately, we avoided much of this damage given our generally low direct weightings to duration and this overvalued asset class.

We believe the market is quite possibly being too monocular and sanguine about the outlook given the range of possibilities, but nonetheless is behaving like we are in a bull market.  This is in no small way due to the ongoing and massive monetary and fiscal government stimulus and investor confidence in the same.

We remain concerned about medium term economic prospects including the risk of stagflation and rising inflation (the latter is now a more consensus view), geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating very selectively in risk assets and seeking some diversification.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance.

We continue to look to diversify the portfolios where able and sensible.  We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge political, social and economic issues persist.  We note that economic and political risks remain very elevated globally, albeit they are being ignored for now.  We prefer precious metals to overpriced bonds over the medium term and believe investor portfolios may – depending upon the path forward from here - increasingly turn away from bonds given their extremely low yields and potential susceptibility to debt, currency and sovereign crises, and rising inflationary pressures over time, as they have already been doing. 

Our Cash Plus portfolio is very defensively positioned, while our Short Term portfolio is relatively defensive, with both designed to be less volatile over shorter term time periods than our longer duration portfolios. 

Our more medium and longer term orientated portfolios target returns and manage risk with longer term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature. 

DAC’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli continue to be implemented by central banks and governments.  The sheer size and extent of their actions is providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises, and expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile.  We believe real growth may continue to disappoint in future as the large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth may improve.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We could see the previous disinflationary secular trend morph in to a stagflationary or reflationary outcome over time, albeit this depends on ongoing and very substantive policy actions.  This potentially continues to bode poorly for some interest rate sensitive assets such as bonds.  Furthermore, we believe geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as the coronavirus has.  Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus.  We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures.  We aim to remain astute and flexible and highly risk aware, and are invested in liquid assets whose weightings we can adjust over time to respond to an ever changing and potentially highly challenging investment climate.

The portfolios provided mixed performances for the month in what was an ordinary month for risk assets. 

Subsequent to month end, the risk-on rally has escalated.  Investor optimism about vaccines and central bank and fiscal support for markets remains overarching support.  Markets have disregarded - for now - substantial and growing problems with debt and wealth inequality, along with risks from increasing inflation, higher yields and geopolitical risks.  We believe the market is quite possibly being too monocular and sanguine about the outlook given the range of possibilities, but nonetheless is behaving like we are in a bull market.

We remain concerned about medium term economic prospects including the risk of stagflation and rising inflation (the latter is now a more consensus view), geopolitical risks, ongoing challenges to true profitability, and highly elevated market valuations, and are hence participating very selectively in risk assets and seeking some diversification.  The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to mitigate this risk in part by avoiding the worst of the market exuberance.

We continue to look to diversify the portfolios where able and sensible.  We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge political, social and economic issues persist.  We note that economic and political risks remain very elevated globally, albeit they are being ignored for now.  We prefer precious metals to overpriced bonds over the medium term and believe investor portfolios may – depending upon the path forward from here - increasingly turn away from bonds given their extremely low yields and potential susceptibility to debt, currency and sovereign crises, and rising inflationary pressures over time, as they have already been doing. 

Our Cash Plus portfolio is very defensively positioned, while our Short Term portfolio is relatively defensive, with both designed to be less volatile over shorter term time periods than our longer duration portfolios. 

Our more medium and longer term orientated portfolios target returns and manage risk with longer term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature. 

DAC’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future).  We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions.  That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli continue to be implemented by central banks and governments.  The sheer size and extent of their actions is providing meaningful impacts on market returns and, in many cases, causing substantive dislocations from underlying company and economic fundamentals.  Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others.  For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises, and expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile.  We believe real growth may continue to disappoint in future as the large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth may improve.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We could see the previous disinflationary secular trend morph in to a stagflationary or reflationary outcome over time, albeit this may depend on (as yet unknown) policy actions.  This potentially continues to bode poorly for some interest rate sensitive assets such as bonds. Furthermore, we believe geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as the coronavirus has. Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus. We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen and now more difficult to identify), along with precious metals exposures. We aim to remain astute and flexible and highly risk aware, and are invested in liquid assets whose weightings we can adjust over time to respond to an ever changing and potentially highly challenging investment climate.

The portfolios were largely up for the month in what was a very strong month for risk assets.

Subsequent to month end, the risk-on rally has escalated. Investor optimism about vaccines and central bank and fiscal support for markets remains despite worsening COVID-19 case counts and lockdowns worldwide. Markets have disregarded - for now - substantial and growing problems with debt, wealth inequality, and meaningful political unrest. We believe the market is probably being too optimistic about the outlook.

We remain concerned about medium-term economic prospects including the risk of stagflation and rising inflation (the latter is now a more consensus view), geopolitical risks, ongoing challenges to true profitability, and elevated market valuations, and are hence participating very selectively in risk assets and seeking some diversification. The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in continuing market crises; we are seeking to avoid the worst of the market exuberance. We continue to look to diversify the portfolios where able and sensible. We continue to believe some meaningful exposure to assets such as precious metals is essential as a hedge to navigate the coming months if governments continue to provide massive stimulus while huge political, social and economic issues persist. We note that economic and political risks remain very elevated globally, albeit they are being ignored for now. We prefer precious metals to overpriced bonds over the medium-term and believe investor portfolios may depending upon the path forward from here - increasingly turn away from bonds given their extremely low yields and potential susceptibility to debt, currency and sovereign crises, and rising inflationary pressures over time.

Our Cash Plus portfolio is very defensively positioned, while our Short Term portfolio is relatively defensive, with both designed to be more protective over shorter term time periods than our longer duration portfolios.

Our more medium and longer term orientated portfolios target returns and manage risk with longer term time periods in mind. The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame; it is in many ways a flagship portfolio for DAC and has – along with our other portfolios - proven highly competitive with both liquid retail and institutional portfolios of a similar nature.

DAC’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying upon past correlations and volatility which may be markedly different from the future). We consider future scenarios actively and if there is a major regime shift, our approach should hence be much more capable inherently of adapting to different market conditions. That said, the market remains challenging for everyone currently, no matter what the approach.

Extraordinary monetary and fiscal stimuli continue to be implemented by central banks and governments. The sheer size and extent of their actions is providing meaningful impacts on market returns and in many cases causing substantive dislocations from underlying company and economic fundamentals. Over time, we expect these policies to be very supportive for certain portfolio positions and require dynamic management of others. For example, and in particular, we hold meaningful weightings to ‘hard assets’ in different guises, and expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe real growth may be very slow in future as the large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth may improve. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We could see the current deflationary market environment morph in to a stagflationary or reflationary outcome over time as we eventually recover from this shock, albeit this may depend on (as yet unknown) policy actions. This potentially bodes poorly for some interest rate sensitive assets such as bonds. Furthermore, we believe geopolitical tensions and other risks and shocks pose further (unanticipated) risk to markets, potentially just as the coronavirus has. Indeed, it may take a market shock to end the current market rally given many investors appear to have become entirely valuation insensitive in the face of massive stimulus. We hence think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value adding alternatives (selectively chosen), discounted listed investment companies (selectively chosen), along with precious metals exposures. We aim to remain astute and flexible and highly risk aware, and are invested in liquid assets whose weightings we will adjust over time to respond to an ever changing and potentially highly challenging investment climate.