Question: I bought Magellan Financial Group (MFG), Platinum Asset Management (PTM) and Macquarie Group (MQG) a year or so ago in response to what seemed to be a general view that investors should favour stocks with overseas activities. There have been considerable gyrations in the stock prices in recent weeks. I am inclined to view these stocks as long-term investments but what about MQG? I would appreciate your views.
Answer (Paul Rickard): Platinum (PTM) and Magellan (MFG) have two main drivers of revenue growth – net funds flow, and potentially, performance fees. They also benefit if the Australian dollar weakens. In regards to performance fees, if equity markets get the wobbles, then performance fees evaporate and the share price gets hit. This is what we have seen over the last two months.
Macquarie is a far more complex institution. While it has been hit because of the equity market wobbles (reduced investment and corporate banking opportunities, funds management performance fees), I think it looks in pretty good shape.
An important point to note with all these stocks is that they will typically be more volatile than the market, and are somewhat dependent on the health of global equity markets. While they will benefit from a weaker Australian dollar, they are probably more exposed to the state of the equity markets than the currency. You may want to consider this in your portfolio allocation.
Question: My question relates to benchmarking my SMSF. How do you suggest that the performance of an SMSF be assessed? Should it be against a common index fund, or better still, against industry performance data?
Where can I find monthly, quarterly and yearly benchmarking data, suitable for me to say whether I am ahead or behind an industry/ retail superannuation fund?
Answer (Paul Rickard): I think that the obvious thing to benchmark performance against is against the comparable industry/retail fund. You need obviously to separate between accumulation and pension funds, and then by the asset mix (percentage in growth vs. income based assets).
Two sites that publish well-researched industry data are: www.superratings.com.au and www.chantwest.com.au. Both publish monthly reports that show returns for the median fund.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
