Markets

APRA put the cat among the pigeons when it put these securities on notice. Investors looking for alternative investments offering similar yields are finding they also come with risks.

For self-funded retirees looking for portfolio diversification offshore, the US, led by the Mag 7, seemed the obvious destination. That option is losing its allure as a Trump presidency fuels fears of higher inflation and an economic slowdown. Perhaps it’s time to look elsewhere.

Three adviser firms are telling their clients to trust their portfolio structures to ride out the current market volatility largely sparked by a looming trade war.

If was Corporal Jones from Dad’s Army who used to utter that immortal phrase, “don’t panic”. It’s advice retirees watching the value of their portfolios shrink in response to Trump’s economic nostrums should heed.

Growth and balanced super funds shot the lights out in 2024 off the back of bullish international equity markets and a weaker Australian dollar. While it was a standout year, Chant West research shows their returns were in keeping with the historical trend.

History suggests that economics, not politics, has the biggest influence on markets. But that thesis could be tested when the 78-year-old Republican returns to the White House with a suite of proposals that will have implications for geopolitics, globalisation and financial markets.

A Trump victory on Tuesday is likely to rattle currency markets expecting trade wars and fiscal stimulus to be major policy consequences. Investors will need to be alert to their currency exposure, as well as appreciating it could provide opportunities to acquire Australian equities with US exposure.

It was a mixed bag for self-funded retirees this reporting season. The big banks continued to deliver those precious franked dividends, Charter Hall gave the office sector a much-needed fillip, while Dexus reminded everyone just how much financial pain some property groups are still experiencing.

Sharp market downturns can play havoc with those in retirement who must draw down on their savings and have less capacity and time to wait for their investment portfolios to recover.

While retirees understandably fret when markets resemble a roller-coaster ride, their fears are misplaced. A new study shows that over the past three decades markets have performed strongly, the GFC, COVID, economic downturns and geopolitical events notwithstanding.

It was lance corporal Jones of Dad’s Army fame who immortalised those two words, ‘don’t panic’. It’s exactly the right advice for those in retirement who are seeing equity markets see-saw due to geo-political events, profit-taking and rising Japanese interest rates.

It might just prove a double whammy for self-funded retirees. A looming US recession is not only bringing sharemarket bears out of hibernation but could prompt the Reserve Bank to cut interest rates earlier than many analysts expected.