superannuation

Stay up to date with our latest blog on political, economic and market news:

What are the different types of superannuation funds?

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

There are several different types of superannuation funds. Knowing the different types of funds will make it easier for you to choose a fund that is appropriate for your purposes. Superannuation funds can be grouped into several categories. Features differ in each category.

Retail Funds

These are usually run by banks or investment companies; their general characteristic are as follows:

Anyone can join;
They often have a large number of investment options, sometimes in the hundreds;
They are usually used by financial advisers who may receive a fee or commission;
They offer both accumulation and pension fund options most Australians have their superannuation in an accumulation fund. They are called ‘accumulation’ funds because your money grows or ‘accumulates’ over time, but with the ageing population, many Australians are now using their superannuation to provide regular income payments in retirement;
Most retail funds range from mid to high cost, but some are now offering a low cost alternative;
The company that owns the fund aims to retain some profit.

Industry Superannuation Fund

Larger industry superannuation funds are open for anyone to join. Some others are restricted to employees in a particular industry. The main features of an industry fund are:

They usually have a range of investment options, which will meet most people’s needs;
They are generally low to mid cost funds although some have high fees;
They are ‘not for profit’ funds which means all profits are put back into the fund for the benefit of all members.

Public Sector Funds

Public sector funds were created for employees of Federal and State government departments. Most are only open to government employees. The main features are:

Some employers contribute more than the 10% minimum;
A modest range of investment choices that will meet most people’s needs;
Many long-term members have defined benefits, newer members are usually in an accumulation fund;
They generally have very low fees;
Profits are put back into the fund for the benefit of all members.

Corporate Superannuation Funds

A corporate fund is arranged by an employer, for its employees.

Some larger corporate funds are ’employer sponsored’ funds where the employer also operates the fund under a board of trustees appointed by the employer and employees.

Other corporate funds will be operated by a large retail or industry superannuation fund (especially for small and medium-sized employers).

Features of these funds include:

Funds run by the employer, or an industry fund will return all profits to members. Corporate funds run by retail companies will retain some profits;
If it is managed by a retail or industry fund it may offer a wide range of investment options;
They are generally low to mid cost funds for large employers but may be high cost for small employers;
Some older corporate funds have defined benefit members, most others are accumulation funds.

Eligible Rollover Fund

An Eligible Rollover Fund (ERF) is a holding account for lost members or inactive members with low account balances. These funds often have low investment returns and may charge high fees.

Your money is likely to grow faster if you consolidate your ERF with your active superannuation fund.

Self-Managed Superannuation Fund (SMSF)

SMSFs are essentially DIY superannuation for those that want the hands-on control with their superannuation. Of course, with added control comes added responsibility and workload.

SMSFs can be suitable for people with significant superannuation savings and skills in financial and legal matters. You must be prepared to research and track your superannuation investments regularly if you want to manage them yourself.

You can set up your own private superannuation fund and manage it yourself, but only under strict rules regulated by the Australian Taxation Office (ATO).

A SMSF can have one to four members. Each member is a trustee (or director if there is a corporate trustee).

Running your own fund is complex so think carefully before setting one up. If you set up a SMSF you must:

Carry out the role of trustee or director, which imposes important legal duties on you;
Use the money only to provide retirement benefits;
Set and follow an investment strategy that ensures the fund is likely to meet your retirement needs;
Keep comprehensive records and arrange an annual audit by an approved SMSF auditor.

If you’re running a SMSF, you will typically need:

A large amount of money in the fund to make set up and yearly running costs worthwhile
To budget for ongoing expenses such as professional accounting, tax, audit, legal and financial advice;
Plenty of time and energy to manage the fund;
Financial experience and skills so you are more likely to make sound investment decisions;
Separate life insurance, including income protection and total and permanent disability cover.

You can pay an adviser a fee to do the administration or help with the investment decisions for your SMSF. However, you cannot pass on the responsibility of being a trustee or director.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

What is superannuation?

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

Superannuation is a tax advantaged way of saving for retirement and makes up two of the three “pillars” of the Government’s retirement income policy. The three pillars are:

A Government funded means-tested age pension
Compulsory superannuation contribution (i.e., the Superannuation Guarantee)
Voluntary superannuation contributions

Superannuation is often simply referred to in everyday conversation as “super”. The Australian superannuation sector has grown to become one of the largest private pension funding arrangement in the world with assets exceeding $3.5 trillion as at the end of December 2021.

Superannuation consists of two distinct components:

Are over 18 years of age, working on a full-time, part-time, or casual basis; or
If under 18 years of age, you are employed for more than 30 hours per week.

Compulsory Superannuation

If you work in Australia, your employer may have to contribute to a superannuation fund for you under the Superannuation Guarantee system if you:

In certain limited situations, and industrial award or workplace agreement may impose additional superannuation obligations of an employer.

Superannuation payments are paid by your employer in addition to the salary or wages you receive. If you are eligible for superannuation, your employer will pay your superannuation directly into a superannuation fund.

Voluntary Superannuation

In addition to compulsory superannuation contributions, individuals may make their own personal and tax-deductible contributions and employers may make additional contributions for an employee, generally structured under a “salary sacrifice” arrangement. Salary sacrificed contributions are made from an employee’s pre-tax salary

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

Benefits and disadvantages of managed funds

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

Benefits of Managed Funds

Managed funds have a number of advantages that allow you to select options that suit your specific needs and objectives. These benefits may include:

Diversification: Managed funds can provide you with a diversified portfolio that may invest across a range of asset classes and securities
Wide choice of investments: Wide choice of asset classes and diversified portfolios
Specialists: Access to specialist investments and investment styles
Tailored portfolio: Can have a tailored portfolio where specialist managed funds are chosen (e.g. infrastructure, emerging markets, small caps)
Professional investment manager: Team of professional investment managers responsible for the investment selection, review and monitoring. This also includes risk management
Active performance: Active managed funds will actively manage investments to take advantage of the changing market outlook and therefore have the potential to outperform their index
Low level of participation: There is a low level of participation and time involvement required by you in the management of the managed fund compared to investing directly
Regular investments: Many managed funds allow regular investments including small minimum amounts. This can assist you if you are investing using a ‘Dollar cost averaging’ approach and/or a regular savings plan
Tax statements: Managed funds provide tax statements to assist with you with completing your tax returns

Disadvantages and Risks of Managed Funds

There are a number of risks and disadvantages of managed funds to be aware of. The key risks will be determined by the nature of the managed fund including the asset classes and securities that it invests in. The risks and disadvantages include:

Market risk: The performance of the managed fund will be affected by the assets and securities that it invests into. If it invests in ‘growth’ assets like shares and property, it has the potential to provide higher returns over the long term but will also have a higher level of risk including the risk of capital losses compared to more secure investments like cash and bonds.
Limited control: You have no control over the individual investments that are bought and sold.
Tax management: You have no control over the timing of sales and purchases of assets or assets selected to be sold. This may affect the capital gains tax outcome of the managed fund.
Capital gains in distributions: The distributions paid from a managed fund may include a return of capital which can be less tax effective for investors.

Limited transparency: There is limited transparency of the underlying portfolio and investments. A managed fund will tend to report of the securities and assets held in the portfolio but this tends to be reported with a lag.
Higher fees: Fees can be high due to the management and administration fees and buy-sell spreads.
Currency risk: Movements in the relative value of international currencies can influence the value of international assets.

Gearing risk: Some managed funds may borrow funds to increase potential returns. This gearing can magnify both gains and losses.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

What is a managed fund?

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

A managed fund is a professionally managed investment portfolio that pools the money of multiple investors. Investment/fund managers are appointed to manage the money within the fund including the selection, buying and selling of the underlying investments.

By pooling money with other investors you may gain access to investments not normally available if you invested directly or enable you to achieve a greater level of diversification. The managed fund structure also allows for the professional management of your money.

If you invest money into a managed fund you will receive a number of ‘units’ in that fund. The number of units you receive is calculated as the amount of money you invest divided by the ‘entry’ unit price on that day. This is why managed funds are also often called ‘unit trusts’. The unit price may increase or decrease in line with the value of the underlying assets.

Investment Options

The investment/fund manager or administrator of the fund, may offer a range of investment options that you can choose to invest in. Each option has different investment goals, timeframes, risk profiles and underlying assets.

Some managed funds may provide a diversified allocation to asset classes based on a risk level. Examples of these include a ‘balanced’ fund which invests approximately half of the money within the portfolio in growth assets such as share and property, with the remainder in more defensive assets such as cash and bonds.

Other funds might invest in a specific type of asset (e.g. Australian shares, international shares, property or cash). There may be different investment styles used to manage the portfolios such as value or growth investing.

When investing in a managed fund you need to choose which options are best suited to your personal preferences and financial goals. This includes consideration for:

Your risk profile
Your investment time horizon
Your need for diversification across asset classes
Your preference to invest in a particular type of investment or asset class

The Product Disclosure Statement (PDS) provides you with information on the investment options and may help you to determine the suitability.

Investment Returns and Taxation

The underlying assets of the managed fund might produce income (including interest, rental income, realised capital gains and dividends) and/or capital growth.

The fund manager will deduct any applicable fees and expenses from the income generated and the remainder is more often than not, distributed to investors (unit holders).

This income is included in the investor’s own tax return and is taxed at the investor’s own marginal tax rate. If franking credits have been derived these will be passed onto investors and can help to reduce tax payable.

If units are sold, this may create a capital gain or loss depending on how the fund unit price has changed since your initial investment and any investment thereafter. If a capital gain has been realised on units held for more than 12 months a 50% capital gains tax discount will apply unless the units were owned by a company.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

Risk Profiling

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

There are a number of factors that you need to consider to determine the most appropriate investment for your personal preferences and financial goals. A key driver of this decision is your risk profile which measures your attitude towards risk. Your risk profile will depend on how you feel about a range of different issues such as:

Your comfort and knowledge of investment markets. The higher your knowledge, the more comfortable you may be investing in riskier assets like shares and property.
Your preference for capital growth (compared to capital preservation and/or income). The higher your preference for growth may be better suited to investing in riskier assets that offer a higher potential for capital growth.
Your level of concern when markets suffer a loss. If you are likely to sell and feel stressed from this loss, then a lower exposure to risky assets may be suitable.
How important it is to you for your investments to keep pace with inflation. If this is important to you, then shares and property are more likely to meet this need.
Your investment time horizon. If you are investing for the long term (at least 5-7 years), then you may consider investing in shares and property. Generally, risky assets are not suitable if you are investing for shorter periods of time and a higher level of investment in cash and bonds may be more suitable.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

Direct investing versus Managed Funds

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

You can access assets and/or securities by buying the investment directly or via a managed trust.

Direct investments involve buying the security such as a specific share or property such that you are a part or full owner of the security. As an example, you can become an owner in a specific company by buying its shares on the Stock Exchange which entitles you to receive dividends and vote at General Meetings (depending on your share structure).

An alternative means of gaining exposure to assets is via a managed fund. A managed fund is a professionally managed investment portfolio that pools the money of multiple investors. A fund manager is appointed to manage the fund including selection of the underlying investments and maintaining client records. By pooling money with other investors you may gain access to investments not normally available if you invested directly or enable you to achieve a greater level of diversification.

If you invest money into a managed fund you will receive a number of ‘units’ in that fund. The number of units you receive is calculated as the amount of money you invest divided by the unit price on that day. This is why managed funds are also often called “unit trusts”. The unit price may increase or decrease in line with the value of the underlying investments.

Each investment approach has its advantages and disadvantages that you should consider. These will include the implications for fees and investment control.

Investing directly in securities may require you to actively review and manage the investments in your portfolio on a regular basis. You may be required to make decisions and changes to account for corporate action events in the case of buying shares directly such as takeovers, rights issues and share purchase plans. This can require you to have the time and inclination to manage your direct investments portfolio. On the flip side, the advantage provided by a managed fund is that you do not need to devote the time to be actively involved in the investment decisions.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

What are the basic types of return on an investment?

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

The returns from the various asset classes are provided in the form of income and/or growth resulting from a change in the price of the investment. Some investments like cash will only provide income returns while the return from other investments may include a mix of income and capital growth.

Income returns can include interest from cash and bonds, rental income from property and dividends from shares. Managed fund may also pay realised capital gains as part of the income return.

This income is included in your tax return and is taxed at your marginal tax rate. If franking credits have been derived these will be passed onto you and can help to reduce tax payable.

If an investment is sold, this may create a capital gain or loss depending on whether the price of the security or unit price of managed funds has changed since investment. If a capital gain has been realised on units held for more than 12 months a 50% capital gains tax discount will apply unless the units were owned by a company.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

Understand the Key Asset classes

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

It is important to understand the main asset classes and how they can affect the returns and risk of your portfolio. The types of asset classes include:

Shares
Property
Bonds (or fixed interest as they are often called)
Cash

There may be asset types within each asset class. For example, within shares, there is a choice of Australian and international shares and within international shares, there is choice of specific regions or countries like China or emerging market shares.

Generally ‘growth’ assets like shares and property provide the prospect of higher returns over the long term compared to ‘safer’ assets like bonds and cash. However growth assets have a higher level of risk including the risk of capital loss and more ups and downs in returns particularly over the short term. ‘Growth’ assets are only appropriate if you have an investment time horizon of at least five years due to their higher level of inherent risk.

Shares: Shares represent part ownership in a company and usually provide income payments through dividends and can produce growth if the share price increases.

For Australian companies, these dividends can be franked, which means that you receive a tax credit for the tax already paid by the company so that you are not taxed twice (once at the company tax rate and again at your marginal tax rate). If your tax rate is less than the company tax rate (currently 30%) you will receive a refund for the extra tax paid by the company. If your tax rate is higher you may need to pay some extra tax.

Property: An investment in property provides you with ownership in a property or a number of properties through a managed structure. Property investments allow you to benefit from the rent received by the properties as well as the change in the valuation of the property over time. The returns of these properties will depend on the quality of the tenant and the rent paid as well as the location and type of property such as residential, industrial or commercial.

Bonds (fixed interest): A bond is a tradeable debt security, usually issued by a government, semi-government or corporate body to raise money. Investors in the bond have effectively lent money, for which they receive a fixed rate of interest over a set period of time. The bond is repaid with interest on the predetermined maturity date.

For example, if you invest in a 5 year bond paying 3% coupon you will pay $1,000 to invest in the bond. In return, you will receive $30 (3% of $1,000) each year. At year 5, you receive the coupon of $30 plus the original $1,000 outlay.

It is possible to experience capital losses from a bond investment if it is cashed before maturity and interest rates have risen or capital gains if the reverse occurs. They are not as safe as cash.

Cash: Cash is one of the safest investments. Cash compared to other assets tends to provide lower variability in returns, high level of security on the capital invested and acts as a more defensive investment. This reduces investment risk so the money is available when you need it, with a minimal potential for capital loss.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

How to set goals

The starting point for any plan is to set your personal goals. Financial goals are likely to be different for each person and need to reflect your specific preferences, aspirations and needs. Your goals may vary from short-term goals (less than one year) like buying a car, paying off your debt or going on a holiday, medium term goals (1-3 years) such as saving for your children’s’ education or long-term goals (5 years or more) like saving for a comfortable retirement and leaving behind a legacy.

Your goals will be more real and achievable if you can apply the following attributes:

Specific: Make them specific to you and your family.
Measurable: Ensure there is a measurement in place to determine whether the goals have been met.
Achievable: The goals need to be achievable so while you may set a stretched target which requires you to be diligent don’t set the target too high.
Realistic: Your goals can be an aspiration but must still be grounded.
Time-targeted: You need to set time targets to achieve your goals.

Once you have determined where you are heading, you can work with your financial planner to develop the pathway to achieving your goals.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/

RUSSIA INVADES, SANCTIONS TO FOLLOW

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

MARKETS

Local and global equity markets weakened this week as escalating European tensions saw Russian troops enter Ukraine.

In local stock news, Magellan reported a net profit after tax of $251.6 million for the 1st half, an increase of 24% on the prior period, whilst the company declared an interim dividend of $1.10 per share, up from 97c. The fund manager is considering an on-market share buy-back.

AGL Energy has rejected a surprise $3.54 billion takeover approach from billionaire Mike Cannon-Brookes (Atlassian) and Canada’s Brookfield Asset Management in favour of a plan to split in two this year. A tech guy running an energy company……what could go wrong……

QBE Insurance reported a net profit of US$750 million for calendar 2021, compared with a US$1.5 billion loss in the previous year. Investors were unconvinced by the result.

Super Retail Group had first-half profit fall 35% and warned higher freight and transport costs will continue to affect margins, with lockdowns and higher costs contributing to the weaker result.

Telstra and TPG will share their regional networks in what they claim will provide better service to people outside of major cities. The two companies revealed a 10 year network deal which will improve coverage without the need for costly network rollouts.

Coles reported a better than expected performance for the 1st half of its financial year but rising costs from covid wiped gains from improved sales. Woolworths reported lower 1st half profit due to virus-related costs with the company warning that it’s inevitable food prices will rise.

Seven Group improved 1st half earnings and is banking on its large stake in Boral to deliver better full year numbers. The company posted a 21% increase in net profit, which doesn’t include the 69% stake acquired in Boral.

Rio Tinto reported an improved full year profit of US$21.09 billion and announced a special dividend of US62 cents per share, which will be paid in addition to the final dividend of US$4.17 per share.

Scentre Group returned to full year profit benefiting from an uptick in property valuations. Net profit after tax was $887.9 million, with revaluation gains of $81 million. Investors will receive a higher distribution.

Oil prices surged above US$100 a barrel for the first time since 2014 following Russia’s invasion of the Ukraine before settling back down to trading levels earlier in the week on news that the US is considering a potential release from its strategic oil reserves in coordination with allies.

The Australian dollar fell this week as is normally the case when global risks rise, investors seeking out safety in the Japanese Yen, Swiss Franc, and US dollar.

ECONOMIC

CBA lending data for January showed that growth in new lending for housing eased, primarily driven by owner-occupiers, whilst higher fixed borrowing rates saw a decline in the share of fixed rate lending. Consumer lending growth softened whilst business lending growth remains solid.

A key Australian consumer confidence index fell 1.4% despite the easing of virus restrictions and re-opening of international borders, with concerns regarding inflation hitting home for consumers. The drop in confidence means household spending might be weaker in the period ahead.

Australian construction data showed that building work done fell by 1.7% in the 4th quarter because of a 3.7% fall in private sector residential work. Work completed on renovations also eased in the quarter but remains at a high level. Engineering work completed lifted driven by stronger public sector activity.

Australian wages rose by 0.7% in the 4th quarter, with the annual rate stepping up to 2.3%. Both private and public sector wages grew at the same pace in the quarter. Including bonuses, the annual rate lifted to 2.8%, but remains below headline inflation numbers. The labour market has tightened again over the last few months.

The volume of capital expenditure in Australia rose by 1.1% in the 4th quarter, with mining investment increasing by 2.6% and non-mining investment increasing by 0.5%.

A private US data firm said its manufacturing data rose to a 2-month high in February, suggesting the US economy regained momentum.

Prices charged for goods and services in the Euro area jumped by a record amount in February as an easing of pandemic restrictions led to a strong rebound in economic activity.

China’s central bank has kept its benchmark lending rates unchanged in February, in line with market expectations, after cutting rates a month earlier.

Hong Kong will boost support for consumers and the unemployed by allocating more than US$6 billion as a covid outbreak dents the economy. The government has banned travel from several countries, closed schools, and imposed a range of other restrictions.

POLTICS

Russia invaded Ukraine after 2 regions close to the Ukraine/Russia border declared themselves autonomous or independent, thus seeking support from Russia whist on Ukrainian land. Not a smart move from the Russians as sanctions could become crippling, but equally damaging for the West in terms of embarrassment and the sanctions that will now follow which will add further pressure to current high oil and gas prices and broader inflation. Sanctions could also force the US to reluctantly enter into a nuclear deal with Iran to ease oil supply concerns. China said it opposes the sanctions and called US actions “immoral”.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

Disclaimer

Macarthur Wealth Management Links

Blog https://www.macarthurwealth.com.au/insights/

Facebook https://www.facebook.com/macarthurwealthmanagement

Youtube https://www.youtube.com/channel/UCHde08SRVuDPchprbz0CE_g

Twitter https://twitter.com/MacarthurWealth

Pinterest https://www.pinterest.com.au/MacarthurWealth/

Linkedin https://www.linkedin.com/company/macarthur-wealth-management

Instagram https://www.instagram.com/macarthur_wealth/

Retirement: https://www.macarthurwealth.com.au/account-based-pension/