ARTICLES

Our portfolios were mostly down over the month as bonds and equities markets sold-off.

Inflationary concerns have garnered the attention of the market with supply chain issues persisting and wages pressures growing. Central bank policy now poses the major risk to markets with the FED forced to react to inflationary risks as it appears to be “behind the curve”.

We remain concerned about the medium-term market and economic prospects, including the risk of stagflation, inflationary pressures persisting, recession and deflation, geopolitical risks, ongoing challenges to real growth and sustainable profitability, and highly elevated market valuations, and hence participating selectively in risk assets.

The greatest medium-term challenge for all portfolios is probably achieving returns without suffering unduly in future market crises as the reality of the fundamentals - challenged economic circumstances amidst high market valuations - becomes an issue again.

We are seeking to mitigate risks such as these and inflationary pressures in part by avoiding the worst of the market exuberance and with meaningful alternatives and selective commodities and resources allocations. We continue to see the need to have lower market risks, greater diversification and strong active management to produce acceptable risk/return trade-offs.

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 Builders' larger risk tolerance gives us leeway to back higher risk assets based on our insights and research while still prudently managing risk over a longer-term time frame.

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 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 are better positioned for inflation than most as 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 for now.

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 very concerned about high asset prices. We 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), along with precious metals exposures and greater weightings to real assets. We aim to remain astute and flexible, and highly risk-aware in an ever-changing and potentially highly challenging investment climate.

Our portfolios all provided positive returns over the month. Inflationary concerns have risen in recent months with supply chain issues persisting and wages pressures growing. Central bank policy now poses the major risk to markets with the FED forced to react to inflationary risks as it appears to be “behind the curve”.

We remain concerned about medium-term market and economic prospects, including the risk of stagflation, inflationary pressures persisting, recession and deflation, geopolitical risks, ongoing challenges to real growth and sustainable profitability, and highly elevated market valuations, and are hence participating selectively in risk assets. We are seeking to mitigate risks such as these and inflationary pressures in part by avoiding the worst of the market exuberance and with meaningful alternatives, selective commodities and resources allocations.  We continue to see the need to have lower market risks, greater diversification and strong active management to produce acceptable risk/return trade-offs. 

We continue to look to diversify the portfolios where appropriate and sensible. 

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. 

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 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 - such as towards inflationary positioning rather than disinflation - our approach and portfolio is able to respond to this. (That said, the market outlook remains challenging for everyone currently, no matter what the approach). 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 very concerned about high asset prices. We 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 reasonably good returns over the month in what was generally a weak month for markets, with the shorter duration portfolios being the exception with modest negative returns. All our longer duration and more diversified portfolios provided positive returns as we benefited from our diversification.

In recent months, inflationary concerns have risen, with supply chain issues persisting and wages pressures growing. Central bank policy now poses the major risk to markets should the FED be forced to react to inflationary risks as it appears to be “behind the curve”.

We remain concerned about the medium-term market and economic prospects, including the risk of stagflation, inflationary pressures persistently, deflation without further stimulus, geopolitical risks, ongoing challenges to real growth and sustainable profitability, and highly elevated market valuations, and are hence participating selectively in risk assets. The greatest medium-term challenge for all portfolios is achieving returns without suffering unduly in future market crises as the reality of our challenging economic circumstances becomes an issue again.

We are seeking to mitigate risks such as these and inflationary pressures in part by avoiding the worst of the market exuberance and with meaningful alternatives and selective commodities and resources allocations. We continue to see the need to have lower market risk, greater diversification and strong active management to produce acceptable risk/return trade-offs.  

Our 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 - such as towards inflationary positioning rather than disinflation - our approach and portfolio should be much more effective than the average. That said, the market outlook remains challenging for everyone currently, no matter what the approach.

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.

Overall, we consider that extraordinary monetary and fiscal stimuli have been implemented by central banks and governments, creating distortions through 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. 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 continued to surprise. 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.

Our portfolios provided disparate returns over the month, with the shorter duration portfolios affected by poor market conditions for bonds and cash – which were challenged by inflationary surprises.  Our longer duration and more diversified portfolios provided positive returns as our inflationary positioning benefitted the portfolios.

Inflationary concerns have risen in recent months with supply chain issues persisting and other inflationary issues growing.  The bond market has become concerned about inflationary pressures challenging unsustainable central bank policy, along with the risk of another economic slowdown.

We remain concerned about medium-term market and economic prospects including the risk of stagflation, inflationary pressures persistently, deflation without further stimulus, geopolitical risks, ongoing challenges to real growth and sustainable 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 future market crises as the reality of our challenged economic circumstances becomes an issue again.   We are seeking to mitigate risks such as these and inflationary pressures in part by avoiding the worst of the market exuberance and with meaningful alternatives and selective commodities and resources allocations. 

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 and inflationary pressures continue.  Our non-consensus position here has begun to be rewarded again in recent times.  We note that economic and political risks remain very elevated globally with a real risk of future conflicts.

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 the 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 - such as towards inflation rather than disinflation - our approach and portfolio should be much more effective.  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 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.

Our portfolios provided relative defensive outcomes for the month as most markets suffered relatively meaningful losses.

With reopening now imminent, inflationary concerns have risen in response to past excessive degrees of stimulus. The bond market is becoming a little more concerned about inflationary pressures, and the risk of another economic slowdown as the prospects of central bank tapering looms.

We remain concerned about medium-term market and economic prospects including the risk of stagflation, deflation without further stimulus, geopolitical risks, ongoing challenges to true corporate profitability, and highly elevated market valuations. We are hence participating very 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 risks such as these and inflationary pressures in part by avoiding the worst of the market exuberance and with meaningful alternatives and selective commodities and resources allocations. 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 and inflationary pressures continue. We note that economic and political risks remain very elevated globally with a real risk of future conflicts.

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. Active management in general has become more productive since COVID, despite large flows to more passive instruments.

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. 

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. 

We also 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 believe 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 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 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.