The markets will remain volatile for some time given the unprecedented impact from the Coronavirus on global economies, business supply chains and consumer spending patterns. However, as the landscape is rapidly evolving, it remains to be seen whether the direct impacts will prove to be transient or longer lasting. We are now experiencing unprecedented times, with balance sheets across the world being tested. It will be the survival of the fittest, or strongest balance sheet.
We did a 5 minute Q&A with Simon Karlsson, Portfolio Manager at Freehold.
Global share markets have tanked - where are we now?
The rapid global spread of COVID-19 has quickly evolved to the equally rapid shutdown of economies, causing anxiety in financial markets. Whilst stopping the spread is paramount, the damage to small businesses, supply chains and the broader economy from Governments efforts to reduce infections will be large, and sustained.
While the primary impacts of Coronavirus are currently being felt by individuals and communities around the world, the duration and severity of its effect is still largely unknown.
Real Estate debt has been one of the faster growing property asset classes in recent years. Here, Omar Khan, Executive Director & PM at Freehold, discusses the growth and why it’s an attractive option for investors that are seeking yield in this current low interest rate environment.
This article was originally published on SMSTrusteeNews.
SMSF investors looking to offset low returns from cash investments should consider non-residential property investments to boost income, according to a specialist real estate investment manager.
In September, increases in bond yields both domestically (+13bpts) and in the US (+16bpts) were a key driver of weakness within listed equity markets, given the long term negative relationship. Bond yields at the long end of the curve rose despite the US Federal Reserve cutting its official cash rate by -25bpts to 1.75% and the RBA cutting to 0.75%. These increasingly aggressive actions by central banks are responses to stimulate economic activity, however, it is questionable whether these actions have so far proved to be successful amid a backdrop of global geopolitical tensions.
Freehold has launched a new fund that aims to deliver investors an annualised pre-tax return of 7 – 8% p.a. paid monthly*. The fund will primarily have exposure to a diversified portfolio of real estate debt that is secured by Australian real estate across the east coast.
Alceon Group acquires a significant shareholding in specialist real estate and infrastructure manager, Freehold Investment Management. First joint fund launched.
In August, our Funds outperformed the broader equities market. There were several catalysts for this. Firstly, the macroeconomic backdrop continues to deteriorate with no real improvement in the ongoing trade dispute between China and the US and this is impacting global growth expectations. Secondly, the month was dominated by reporting season, which, in many cases only reinforced the increasingly difficult global conditions. This is further evidenced by the continued bond market rally which saw US bond yields decline by 50bpts to 1.50% and domestic 10yr bonds fall by 30bpts to 0.89% over the month. Central Banks around the world are also reacting, with official interest rates continuing a downward trend in the hope of stimulating an increase in economic activity and generate some upwards inflationary pressures. It is hard to say if this has been truly successful to date.
In July, defensive equities continue to be underpinned by declining global bond yields. The ongoing trade dispute between China and the US continues to gain momentum with neither side looking to back down from their respective views. Meanwhile in the UK, Boris Johnson became the new Prime Minister replacing outgoing Theresa May. With Johnson perceived as a hardliner towards Brexit, the uncertainty as to how this plays out continues to be a headwind for the market. This ever increasing uncertainty is being reflected in the ongoing bond yield rally – with Aussie 10yr bonds declining by a further -14bpts in July. Central banks around the world are also reacting, cutting official interest rates in the hope of stimulating an increase in economic activity and to generate upward inflationary pressures. To date this has been met with mixed success.