Are you curious about what’s ahead for the Australian economy? Our Managing Director, Andrew Masson recently sat down with Charlie Jamieson, Co-founder and CIO of Jamieson Coote Bonds to discuss just that.
In the interviews below, Charlie and Andrew discuss current market conditions and the economic factors that are impacting the global market and Aussie investors today. Keep reading for our three key-takeaways from the interviews.
Charlie has managed difficult portfolios through a host of market scenarios during his career, running asset portfolios as large as USD$15 billion in a host of foreign currencies and derivatives. He has managed portfolios during the most extreme market conditions as a US Treasury Trader in London on 11 September, 2001 and a European Government Debt Trader in London at the height of the Eurozone crisis.
Watch the video below for Charlie and Andrew’s view on how to assess the investment process, why investors should consider Australian active government bonds and their macro economic view for what’s ahead.
Charlie and Andrew discuss how high grade bonds perform in comparison to shares in the interview below. They also touch on why they play a great diversification role inside a portfolio.
High grade bonds refer to government backed bonds or loans made by the government. They normally pay a fixed rate of interest. High grade bonds are now very defensive because their credit quality has the full faith and quality of the government.
There is often a significant portfolio benefit when investing in products such as Australian active government bonds. In this late cycle environment (end of a bull market), they are particularly valuable as growth styled assets can decline in pricing.
By diversifying portfolios with government bonds, investors have great optionality around what they can do with their portfolios if markets are to reprice.
Another important factor that investors need to consider is credit quality. In a government-only product where the government is standing behind these instruments, there is very little to worry about in terms of credit quality.
There are some challenges coming down the road. As a result of the Royal Commission in Australia and higher interest rates in offshore markets, we are already seeing periods of severe volatility in many markets.
With higher funding costs looking forward and less credit availability, the housing market is starting to roll-over, particularly on the east coast of Australia.
We are at a point, in this late cycle environment, where investors have had a really good run with their growth assets. It is now time to look at some of these more defensive alternatives to ride out the shifting structures and the change in the wind that is upon us at the moment.
We’d like to say a big thank you to Channel Capital for facilitating our interview with Charlie Jamieson. You can also find the interviews featured on international investment publication ETF Trends here.
If you would like to discuss the current economic climate further or have any questions about investment management, we’d love to catch up for coffee. Get in touch on: (02) 4047 1888.
The Infinity team.