NEWS
29 May 2026 - Hedge Clippings |29 May 2026
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Hedge Clippings | 29 May 2026
News | Insights
AI needs more than chips: Why power and grid buildout matter | Magellan Investment Partners 10k Words | Equitable Investors April 2026 Performance News Equitable Investors Dragonfly Fund |
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22 May 2026 - Hedge Clippings |22 May 2026
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Hedge Clippings | 22 May 2026 The 2026 Budget may come to be remembered less for its promised "fairness" than for the investment shock it has unleashed. Labor's changes to negative gearing and capital gains tax are being sold as a rebalance in favour of younger Australians. The political risk for Albanese and Chalmers is that they want to make it look like a targeted hit on the very wealthy, and older, asset rich, boomers. In reality, it is a broader attack on investment, property ownership and household balance sheets across a much wider demographic. For the property market, the early signs are not encouraging. Macquarie has reportedly stopped factoring negative gearing into some serviceability calculations, and Westpac has told brokers that some investor's loan pre-approvals will need reassessment. Once banks begin changing lending assumptions, policy theory quickly becomes market reality. The danger is not simply that investor demand weakens. It is that prices fall into an already fragile housing market. Morgan Stanley has reportedly warned of a 5-10% national house-price correction, with some analysts pointing to sharper risks in Sydney and Melbourne. That may sound like good news for first-home buyers. But falling prices are not costless. Recent buyers with high loan-to-value ratios are most exposed. The RBA has previously warned that negative equity makes borrowers and lenders more vulnerable, because a stressed borrower may be unable to repay the loan even by selling the property. The housing market is not the share market, and home loans do not operate like margin loans. But the feedback loop can still be brutal: weaker sentiment, tighter credit, fewer buyers, forced sales, lower prices, and then even tighter credit. What makes the current environment particularly dangerous is that the pressure points are no longer confined to one part of the economy. The Budget has not only shaken confidence in residential property investment. It has also fundamentally altered the tax landscape for equities, private investment and small business. At the very moment the government should arguably be encouraging investment and risk-taking, it has instead introduced a level of policy uncertainty that is causing both investors and lenders to reassess their appetite for risk. Meanwhile, inflation is proving far more stubborn than Canberra anticipated. To be fair to the government, a large part of the latest inflation shock is external. The RBA now expects headline inflation to peak at 4.8% in mid-2026, with underlying inflation remaining above the top of its target band until at least mid-2027. Consumer sentiment has already deteriorated sharply. The latest Westpac-Melbourne Institute survey reportedly fell 12.5% in April to levels not seen since the pandemic, while NAB business confidence suffered one of its steepest monthly falls in decades. And now the labour market is beginning to crack. Australia's unemployment rate rose to 4.5% in April - the highest level since November 2021 - after employment unexpectedly fell by almost 19,000 jobs. Economists are increasingly describing the labour market as "softening", with hiring intentions weakening under the combined weight of higher borrowing costs, weaker consumer demand and growing uncertainty. The result is a deeply uncomfortable combination: slowing growth, weakening confidence, and persistent inflation. Which brings us to the question nobody in Canberra wants to answer or us to ask: How close are we to recession? The margin for error is narrowing rapidly. The RBA itself has acknowledged that each successive rate rise increases recession risk. Under its more adverse scenarios, unemployment could rise above 5% and economic growth could slow to levels consistent with recession. At a time when confidence was already fragile, Chalmers chose to target the very areas most sensitive to confidence and leverage - housing, investment and small business - which drive the economy. The government may have hoped voters would see "fairness" - odd from a government that broke explicit pre-election promises. And this is where the Budget may prove both economically damaging for all, and for the government, politically catastrophic. For the past year Albanese has appeared untouchable. Today, the parallels with Bill Shorten's franking credits debacle prior to the 2019 election are becoming harder to ignore. News | Insights Market Commentary | Glenmore Asset Management China's Luxury Reset: What we're seeing on the ground and why it matters | Insync Fund Managers April 2026 Performance News Bennelong Concentrated Australian Equities Fund |
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15 May 2026 - Hedge Clippings |15 May 2026
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Hedge Clippings | 15 May 2026 Last week, Hedge Clippings focused on the RBA's decision to raise rates, and the concerns raised by Nick Chaplin from Seed Funds Management and Renny Ellis from Arculus Funds Management that the Bank may have moved too soon when cutting rates last year, and now, thanks to inflation and energy prices, they're heaping further stress on households by returning them to their previous levels. Now we have the Budget. There is plenty in it for tax advisers, accountants and political commentators, but that is not AFM's lane. For managed fund investors, the issue is not tax detail, but the assumptions underneath the Budget, and the general thrust of the government, which is to target those with assets, or income, to find extra revenue. Our real concern is the emphasis and increased reliance on personal income tax as the major source of government revenue. Currently, this accounts for around 48-50% of total government revenue, but the AFR estimates it will rise to 54.5% by FY29-30. And you can forget the Treasurer's handout of $250 to each wage earner; this doesn't kick in until FY 2027-8, by which time the 68 cents per day will have been fully eroded by a combination of inflation and/or bracket creep. Thanks, Jim! Budgets are full of forecasts. Markets are full of people discovering which forecasts were wrong. Treasury expects headline inflation to reach 5.0% through the year to the June quarter 2026, with most of the increase attributed to higher fuel prices. It then expects inflation to decline to 2.5% by the June quarter 2027, helped by an assumed fall in global oil prices from mid-2026. Growth is forecast to slow from 2.25% in 2025-26 to 1.75% in 2026-27, before recovering to 2.25% in 2027-28. That is the soft-landing version: inflation eases, growth slows but does not break, unemployment rises gradually, and households absorb more pressure. It may prove right. It may also prove optimistic. The Budget acknowledges the outlook is highly uncertain, particularly around the Middle East conflict, supply chain disruption, and persistently high inflation. For managed fund investors, the question is not whether Treasury's forecasts are right or wrong. The better question is whether portfolios are being built as though those forecasts are guaranteed. That is where fund selection matters. If rates stay higher for longer, long-duration growth assets, listed property, infrastructure and parts of fixed income remain exposed to valuation pressure. If growth slows more sharply than expected, credit risk becomes more important, particularly in lower-rated or less liquid strategies. If inflation remains sticky, cash and floating-rate income may continue to look attractive, but investors still need to understand what risk is being taken to generate yield. Private credit is a useful example. It has become popular for good reason: investors want income, floating-rate exposure, and lower correlation to listed equities. But ASIC has identified poor private credit practices as one of its 2026 enforcement priorities, and has flagged increased retail exposure to private credit markets as a key issue. However, not all private credit is the same, depending on the way the fund is managed, spread of risk, and the underlying asset type in the fund. The Budget also points to more scrutiny of managed investment schemes, including ASIC's use of data and consultation on new data collection powers. That is no bad thing. In a tougher market, investors need more than a good headline return. They need to understand liquidity, leverage, valuation policies, concentration, volatility, drawdowns and how a fund may behave if the assumptions do not hold. The Budget's real message for investors is not hidden in the tax act which now exceeds 14,000 pages. It is in the forecasts. If inflation falls, oil prices ease, and growth holds up, the path is manageable. If not, the next twelve months may test which funds are resilient and which were priced for a forecast that was too neat. News | Insights
Prediction Markets: The next big disruption in investing? | Magellan Investment Partners April 2026 Performance News Seed Funds Management Financial Income Fund Insync Global Capital Aware Fund |
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8 May 2026 - Hedge Clippings | 08 May 2026
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Hedge Clippings | 08 May 2026
This week saw the RBA meet most market observers' expectations by increasing rates by 0.25% - the second such move in a row, taking them back up to their previous post-COVID peak, and eradicating the three rate cuts they made last year. Hedge Clippings checked in with our regular contributors, Nick Chaplin from Seed Funds Management, and Renny Ellis from Arculus Funds Management, to get their respective views on the wisdom - or otherwise - of the Bank's decision. Both were broadly united in the view that the RBA's latest 0.25% rate rise to 4.35% may have been widely anticipated, but was poorly timed, and raised more questions than it answered. Nick Chaplin argued the move effectively reverses last year's rate cuts, taking the cash rate back to where it was before the RBA began easing. His central concern was the distinction between temporary inflation pressures and persistent inflation. With the trimmed mean holding at 3.3%, he questioned whether the RBA was reacting too heavily to energy-driven price pressures and their knock-on effects through logistics and household costs. While he accepted the Bank is right to be focused on inflation, he was skeptical of its approach, particularly the continued reliance on incremental 0.25% increases. If the RBA believes inflation risks are still rising, Nick suggested it may need to be clearer about where rates are heading, with the possibility that the cash rate could move as high as 4.85% before year-end. Renny Ellis was more direct, describing the energy shock as transitory and arguing the RBA should have looked through it, at least until the June meeting. His concern is not that inflation should be ignored, but that the Bank has acted before the full economic impact of the previous two rate increases has flowed through. Renny also warned that the decision was made ahead of a Federal Budget due next week that may include higher taxes, housing-related measures and household handouts, all of which could materially alter the economic outlook. Both Nick and Renny highlighted the risk that policy is now being tightened into a fragile environment. Ellis was particularly concerned about the potential for diesel rationing, arguing that it would almost certainly push Australia into recession. He drew a sharp contrast with 2020, when both the RBA and the Federal Government acted aggressively to avoid recession, noting that Australia's high household debt levels make a downturn especially dangerous. A key point from Renny was that the usual transmission mechanisms for monetary policy look less effective in the current environment. With the Australian dollar already strong, he questioned how higher rates would help beyond depressing house prices and household spending. Nick added that a stronger dollar could itself make it harder for the economy to avoid recession, particularly given Australia's past reliance on currency weakness and resource exports to cushion downturns. Both agreed that further rate increases may still become necessary later in the year, particularly if wages growth, the Fair Work Commission decision, fiscal policy and household spending keep demand elevated. However, both also argued that this was not the right moment to move. Their central criticism was not that inflation is irrelevant, but that the RBA has acted in a period of unusually poor visibility, with energy markets, the Budget and household stress all still unfolding. So as Renny questions in the video below, that leaves the potential that we are headed not for the "recession we had to have" but for the "recession we can't afford"? The outcome or length of a one-page, paper-thin, so-called truce in the Middle East could tip the balance. News | Insights
Manager Insights | Altor Capital Stock Story: Ampol | Airlie Funds Management Property Update | Australian Secure Capital Fund April 2026 Performance News Bennelong Australian Equities Fund 4D Global Infrastructure Fund (Unhedged) Quay Global Real Estate Fund (Unhedged) Active ETF (ASX:QGRU) |
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1 May 2026 - Hedge Clippings | 01 May 2026
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Hedge Clippings | 01 May 2026 Are the RBA and Jim Chalmers caught between a rock and a hard place? The March inflation number looks ugly at first glance. Headline CPI jumped to 4.6%, up from 3.7% in February, with transport, housing and food doing much of the damage. But as ever, the headline only tells part of the story. The RBA's preferred measure of underlying inflation, the trimmed mean, held steady at 3.3%, suggesting the latest spike is being driven more by volatile fuel and energy prices than by a fresh broad-based inflation breakout. That is why Hedge Clippings' regular fund manager contributors, Renny Ellis from Arculus, and Nick Chaplin from Seed, both argue in this week's video that the RBA should hold fire at next Tuesday's Board meeting. Their view is that raising rates in response to an energy shock risks using the wrong tool on the wrong problem. Higher interest rates will not reopen the Strait of Hormuz, lower oil prices, or make global shipping routes safer. What they can do is add more pressure to households and businesses already dealing with higher costs and a slowing economy. It is worth noting that both Nick and Renny have been consistently on the money over the past 12 months, even when their views have sat at odds with the RBA's decisions. Their argument now is not that inflation should be ignored, but that the Board should distinguish between a genuine underlying inflation problem and a transitory supply shock. The danger, of course, lies in that word "transitory". Petrol and energy price spikes can be looked through if they are temporary. But that depends on the situation in the Middle East actually resolving - and quickly. Donald Trump originally suggested the conflict would be over in two or three weeks. That was more than two months ago. Currently, the situation still points to stalled diplomacy, disrupted energy flows and oil-price pressure thanks to the situation in the Strait of Hormuz, which potentially makes the inflation outlook much harder to dismiss as a short-term wobble. The RBA therefore faces an uncomfortable choice when they meet next week. Markets and most economists are leaning towards another 25 basis point increase, but the case for patience is stronger than the headline CPI number suggests. And with Jim Chalmers due to hand down the Federal Budget just one week later, the timing could hardly be more awkward. The RBA risks tightening before it has seen the fiscal response, while the Treasurer risks delivering a Budget that either fuels inflation concerns or deepens the slowdown. In short, the March CPI number gives the RBA a reason to worry, but not necessarily a reason to move. The smarter course may be to wait, watch the trimmed mean, and see whether the Budget helps or hinders the inflation fight. News | Insights
Manager Insights | East Coast Capital Management A decade of delivery: infrastructure's changing world | 4D Infrastructure March 2026 Performance News Glenmore Australian Equities Fund |
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24 Apr 2026 - Hedge Clippings | 24 April 2026
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Hedge Clippings | 24 April 2026
News | Insights
Market Commentary | Glenmore Asset Management March 2026 Performance News Insync Global Quality Equity Fund |
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17 Apr 2026 - Hedge Clippings |17 April 2026
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Hedge Clippings | 17 April 2026
Wall Street's Bright Side Blindness There is something slightly odd about watching the S&P 500 notch fresh record highs while the Middle East remains unstable, oil markets are distorted, and the IMF is warning that a prolonged energy shock could drag the global economy towards recession. Investors are clearly trading on hope: hope that diplomacy holds, hope that supply disruptions ease, and hope that inflation does not get a second wind from higher oil, gas, and fertiliser costs. Hope can be a powerful market force. It is not always a reliable economic indicator, and certainly not a good basis for an investment strategy, in spite of the number of punters who rely on it. The problem is that higher energy prices rarely stay confined to petrol stations and trading screens. They work their way through freight, food, manufacturing, and household budgets, lifting inflation while leaning on growth at the same time. That is the real risk now facing policymakers globally, and Australia will not be spared if the pressure persists. The RBA has already flagged that higher prices and prolonged uncertainty could weigh on growth both abroad and at home, while its February Statement noted that tensions around Iran posed upside risks to oil prices. That leaves the Reserve Bank in a distinctly awkward position when its Monetary Policy Board next meets on 4-5 May. By then, it will be staring at a familiar but deeply uncomfortable combination: inflation risks that argue for caution, and slower growth that argues for support. Treasurer Jim Chalmers is due to hand down the federal budget the following week, having already said the government is pulling the budget together with these global developments very much in mind. So while the government is doing its best to steady consumer nerves, both the RBA and the Treasurer are now treading the same tight rope. Lean too far in one direction and you risk worsening the growth scare. Lean too far in the other and you risk adding fuel to inflation at exactly the wrong time. It is not an enviable policy backdrop, particularly when so much of the shock is being imported, and neither interest rates nor fiscal policy can magically lower the global oil price. Against that backdrop, the red ink across fund strategies in March looks less like panic and more like reality asserting itself. With around 75% of funds having reported so far, losses have been broad-based. Small-Cap Australian equities have been hit hardest, down an average 10.19% for the month, with a handful of funds falling more than 20%, and some closer to 30%. Having said that, 53% of equity funds outperformed the ASX 200 in March, a sharp improvement on the February number of just 10%. Wall Street may still be looking on the bright side. Australian fund returns, however, are already dealing with the darker one. On the positive side, while the falls have possibly been overdone, there'll be some attractive pickings at very reasonable prices when the dust settles. News | Insights
I Went to China's Robotics Hub - What I Saw Changed My View on the U.S. vs China Race | Insync Fund Managers March 2026 Performance News Seed Funds Management Financial Income Fund Bennelong Emerging Companies Fund |
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10 Apr 2026 - Hedge Clippings |10 April 2026
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Hedge Clippings | 10 April 2026
News | Insights Infrastructure in focus: The HALO effect | Magellan Investment Partners March 2026 Performance News |
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2 Apr 2026 - Hedge Clippings|02 April 2026
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Hedge Clippings | 02 April 2026 Active vs Passive: why averages can send you in the wrong direction The latest S&P report says most active managers underperformed their benchmark over the past 12 months. Fair enough. That is the headline. But as ever in funds management, the headline is only half the story. Because averages can be deceptive. It is a bit like the old line about having your head in the oven and your feet in the freezer - on average, you are fine. In practice, not so much. The same applies to active management. Saying that the "average" manager underperformed may be statistically correct, but it tells investors very little about the spread of outcomes, or whether strong active managers were still well worth backing. Take Australian Small and Mid Cap funds. Over the past 12 months, only 22% beat the S&P/ASX Small Ordinaries Index return of 22.75%. That sounds like a damning result for active management. But those funds that did outperform returned an average of 32%, and three delivered more than 50%. Suddenly the story looks less like "active failed" and more like "picking the right manager mattered a lot". Stretch the horizon to seven years and the picture changes again. More than 67% of Australian small-cap funds outperformed the index, which returned just 8.73% per annum. The average return of the outperformers was 13.04% per annum, while the top five averaged 20% per annum. That is not a rounding error. That is a meaningful gap. Australian Large Cap funds tell a different story. Over the last 12 months, 40% outperformed the S&P/ASX 200 Total Return Index, which returned 7.37%. Those outperforming funds averaged 15.27%, beating the index by almost 8%. But over seven years, only 32% stayed ahead, with outperformers averaging 12.16% per annum versus the index's 10.13%. Then there are Equity Alternative funds - long/short and market neutral strategies - which flipped the script again. Over the past year, 62% of global funds and 53% of Australian funds outperformed their respective indices, with outperformers averaging 29% and 27%. Over seven years, however, those figures dropped sharply, with only 25% of global funds and 35% of Australian funds outperforming, and the margin of outperformance narrowing to 3% and 5%. So what is the takeaway? First, averages make neat headlines, but messy realities. They flatten out the differences that actually matter. Second, outcomes depend heavily on where you look. Small caps, large caps and alternatives do not behave the same way. Nor do Australia and global markets. Third, market conditions matter. In strong markets, weak markets and sideways markets, the proportion of active managers outperforming can shift materially. The real lesson is not that active always wins, or that passive always does. It is that broad-brush conclusions can miss the point. Investors do not own the average fund. They own a specific fund, run by a specific manager, with a specific process. That is why manager selection remains critical. The data may show that many active funds underperform, but it also shows that the better managers can add real value - and sometimes a lot of it. The trick is knowing how to separate them from the pack. That is where detailed performance analysis matters. Or, for those who prefer a shortcut, a disciplined framework such as AFM's Star Rankings across multiple timeframes can help identify the managers that have delivered consistently, rather than occasionally. Because in funds management, averages may make the news. But selection drives outcomes. News | Insights Waymo has 70 Humans Running 3000 Vehicles | Insync Fund Managers Software risk or renaissance? | Magellan Investment Partners February 2026 Performance News |
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27 Mar 2026 - Hedge Clippings |27 March 2026
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Hedge Clippings | 27 March 2026
News | Insights New Funds on FundMonitors.com Market Commentary | Glenmore Asset Management Property Update | Australian Secure Capital Fund February 2026 Performance News Bennelong Twenty20 Australian Equities Fund Insync Global Quality Equity Fund |
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