OpenMarkets Blog

Top 3 listed investment trends to watch in 2017

Posted by Tracey Franks (OM blogger) on 20/02/17 13:11

Scrolling through LinkedIn last week, I was shocked by a headline – ‘Passive to overtake active in US by 2024, says Moody’s’.

Wowza! A fair chunk of my working life has been spent working for (active) funds managers, and the thought that their days might be numbered is disturbing. While there has been enormous growth in passive investment, often at the expense of active managers, surely this can’t be the end of the road?  This growth in passive investment has come during a prolonged bull market that history tells us will—eventually—end. This is where active managers earn their money, helping protect investors from the worst the bears have to throw at them.

Moody’s based its analysis on redemptions in the US from actively managed funds over the past decade versus inflows into passive equivalents. Is the US experience applicable to Australia?

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Topics: Industry Talk

Social trading: a social approach to trading in the 21st century

Posted by Tracey Franks (OM blogger) on 18/01/17 10:00

Anything with the word social in its name gets my immediate attention. Social investing conjures an image of a group of like-minded people sitting around a fire on a comfy couch, red wine in hand, and an animated discussion of what to do with the collective share portfolio.

While I’m sure such scenarios play out in real life, that’s not what social investing is all about.  

The traditional concept of social trading saw investors following successful traders via a plethora of newsletters and newspaper columns, and later, email and social media. It also saw real clubs, where people met, pooled their funds and debated investments. Such clubs still exist – take for example ProShare Investment Clubs, which share the collective experience of 100,000 club members in 12,000 clubs across the United Kingdom.

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Topics: Trading & Investing, Fintech Innovation

Chi-X: securities trading with cutting-edge technology

Posted by Tracey Franks (OM blogger) on 14/12/16 10:51

I was interested to watch John Fildes interviewed by OpenMarkets for a blog in December 2015. When describing the entry of Chi-X to the Australian market, he used the analogy of Woolies versus Coles; Chi-X and the Australian Securities Exchange (ASX), two similar businesses vying for a competitive edge that would deliver market share over the other.

However, I disagree. In the battle for supremacy, the two large supermarket chains have hurt third parties in their bid for market share, largely their suppliers…$1 milk anyone? ChiX has done the opposite. It arrived with the intent to offer better, faster, cheaper trading and this forced the incumbent ASX to innovate and reduce transaction costs.

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Topics: Trading & Investing, Industry Talk, Fintech Innovation

Own your age in bonds

Posted by Richard Murphy (Guest blogger from XTBs) on 05/12/16 12:55

A rule of thumb coined by John Bogle, founder of global asset manager Vanguard, is that your bond allocation should roughly equal your age. While clearly not an exact science, it demonstrates the increasing need for fixed income as we move through life.

If, like me, you’re Gen-X or a Baby Boomer, chances are you’ve worked hard and done your best to save for retirement. The great thing about retiring is the chance to move away from full-time work, and finally enjoy the things you’ve never had time to. The downside is that you no longer receive a regular salary.

The challenge lies in creating predicable and regular income. Income that can weather difficult market conditions and meet the longevity test, without adding risk to your capital. This challenge is top of mind for a growing number of Australians right now.

For many retirees, term deposit (TD) income has become their ‘salary’. Australian household deposits just ticked over $800 billion dollars*, with a large part of this being TDs. TDs are popular because they offer savers less risk than many other investments.

For other investors, high-dividend yielding shares are a key source of income. While both are valuable assets in their own right, it’s important to recognise the limitations of each – and how bonds can help deliver that stable, regular income your salary once did.

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Topics: Trading & Investing

Managed Accounts: a marathon, not a sprint

Posted by Tracey Franks (OM blogger) on 09/11/16 16:29

Before there were managed accounts there were platforms – largely master trusts and wraps. The earliest, Asgard, has been around since 1985, but it wasn’t until the 1990s that platforms really took off.

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Topics: Trading & Investing

What is all the fuss about Dividends?

Posted by Tracy Askew (Guest Blogger from Super Equity) on 20/10/16 15:05

Many of my clients know how much I love dividends and the franking credits attached to them. So I thought I should go over them again after reading recent research from the Association of Superannuation Funds of Australia (ASFA).

ASFA found that if you had 30% of your Superannuation money allocated to Australian equities over a 35 year accumulation period then your lump sum at retirement would be approximately 8% higher from the franking credits attached to your dividends than it would be without them.

It is certainly worth learning what Dividends and Franking Credits are all about if you could end up with more money from them when you retire.
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Topics: Trading & Investing

XTBs: Fintech zeitgeist opens door to corporate bonds

Posted by Tracey Franks (OM blogger) on 13/10/16 14:23

The launch of exchange traded bond funds in the Australian market significantly lagged their equity counterparts. There were a lot of ropes to jump, balls to juggle and hoops to hula. Personally, I find an index-tracking fixed income ETF perplexing – why track an index in which the highest weighting is given to the securities with the greatest debt and, potentially, the greatest risk?

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Topics: Trading & Investing

What is Fixed Income?

Posted by Tracey Franks (OM blogger) on 06/10/16 09:00

It surprised me to learn that the fixed income market is the largest securities market in the world, eclipsing sharemarkets by a fair margin. But when you think about it (clearly I hadn’t), it makes sense.

Companies issue shares. Fixed income securities are issued by governments, government authorities and corporates. Loans and other financial instruments are packaged up by investment banks and sold as a higher risk form of fixed income.

While it was hard to find an exact figure, most estimates suggest that globally, the bond market exceeds US$100 trillion, while equity market capitalisation sits around US$70 trillion.

In short, there is more debt in the world than equity.

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Topics: Trading & Investing

How Acorns 'invest your loose change' app works

Posted by Tracey Franks (OM blogger) on 16/09/16 12:42

My 19 year old son has a beer can next to his bed into which he lobs his loose change. Last week he took it to the bank and excitedly told me it was nearly $100 (I refrained from telling him it could have been more, but makes for handy coffee money in the mornings). The point is, loose change can add up quickly.

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Topics: Trading & Investing, Fintech Innovation

The world-leading, next wave of exchange traded investments

Posted by Tracey Franks (OM blogger) on 19/07/16 10:34

I recently published a blog about mFunds. While doing some research on the subject, I spoke to a number of financial advisers and brokers. 

One comment stuck in my mind:  “Magellan killed the mFund.” 

It was such a pithy statement, I felt the need to delve more deeply into that throw-away line and examine Magellan’s innovative Exchange Traded Managed Fund (ETMF) and others of that ilk. Not least because, according to research undertaken by Investment Trends/BetaShares, 61 percent of financial advisers are interested in using ETMFs in the future, and those advisers not currently recommending ETFs show a greater propensity to recommend ETMFs.

The research must have been compelling – just last month BetaShares teamed up with AMP Capital to launch two ETMFs.

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Topics: Trading & Investing, Industry Talk

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