1 00:00:10,080 --> 00:00:13,080 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,160 --> 00:00:17,200 Speaker 1: James Kirkby. Welcome aboard everybody now today for your Easter 3 00:00:17,480 --> 00:00:20,880 Speaker 1: break listening pleasure, I have a very special guest who 4 00:00:20,920 --> 00:00:25,599 Speaker 1: is Chris Cuff, a legendary fund manager de facto legendary 5 00:00:25,640 --> 00:00:29,479 Speaker 1: fund manager martiad who initially came to fame almost became 6 00:00:29,480 --> 00:00:32,239 Speaker 1: a household name at one stage through his success as 7 00:00:32,280 --> 00:00:36,000 Speaker 1: an investor and manager at what is still the Colonial Group, 8 00:00:36,560 --> 00:00:39,000 Speaker 1: and since then he's had a portfolio of interest. You'll 9 00:00:39,040 --> 00:00:42,320 Speaker 1: see him on a variety of boards. Some boards you 10 00:00:42,360 --> 00:00:44,640 Speaker 1: won't see him on because they're family offices, but you 11 00:00:44,680 --> 00:00:47,320 Speaker 1: would be familiar of course with UNI Super, which is 12 00:00:47,440 --> 00:00:50,760 Speaker 1: I think the fourth biggest industry fund in the country, 13 00:00:51,120 --> 00:00:52,960 Speaker 1: so that is a very big gig as you can imagine. 14 00:00:52,960 --> 00:00:56,920 Speaker 1: He's also on the board of Argyll, the listed investment company, 15 00:00:57,000 --> 00:00:59,639 Speaker 1: the original of the species. You have to mention Don 16 00:00:59,640 --> 00:01:02,160 Speaker 1: Bradman when you mentioned al Go, because he was once 17 00:01:02,360 --> 00:01:06,640 Speaker 1: involved with that. Do you know that his passion Chris's 18 00:01:06,680 --> 00:01:10,560 Speaker 1: passion is philanthropy. I have talked to him before regularly. 19 00:01:11,120 --> 00:01:14,480 Speaker 1: He's got involved in some terribly interesting projects of late 20 00:01:14,480 --> 00:01:16,639 Speaker 1: we're going to talk about that too, and the extent 21 00:01:16,680 --> 00:01:19,120 Speaker 1: to which you may be able to access some of 22 00:01:19,160 --> 00:01:21,520 Speaker 1: this if you wish to. But first I want to 23 00:01:21,720 --> 00:01:24,600 Speaker 1: hear what he has to say. Needless to say, I 24 00:01:24,640 --> 00:01:26,520 Speaker 1: want to hear what he says. You want to hear 25 00:01:26,520 --> 00:01:29,760 Speaker 1: what he says about the markets and the conditions of 26 00:01:29,800 --> 00:01:32,800 Speaker 1: the markets that were currently investing in. How are you, Chris? 27 00:01:33,880 --> 00:01:36,720 Speaker 2: Very well? Thank you, James, straight. 28 00:01:36,480 --> 00:01:41,360 Speaker 1: Up question, Okay, there's always periods of great uncertainty. I'm 29 00:01:41,360 --> 00:01:44,840 Speaker 1: always entertained when people talk about uncertainty and how there's 30 00:01:44,840 --> 00:01:47,800 Speaker 1: never as if there was never uncertainty before. I mean, 31 00:01:47,840 --> 00:01:51,440 Speaker 1: COVID was pretty uncertain, GFC was pretty uncertain. But this 32 00:01:51,520 --> 00:01:56,560 Speaker 1: particular period, instinctively to you, is there reasons for the 33 00:01:57,400 --> 00:02:00,760 Speaker 1: every day investor to change their approach to invest in 34 00:02:00,840 --> 00:02:05,400 Speaker 1: looking at the global trade crisis that we have in 35 00:02:05,400 --> 00:02:06,200 Speaker 1: front of us. 36 00:02:07,400 --> 00:02:10,560 Speaker 2: I don't think there's great reasons to change. I mean, 37 00:02:10,600 --> 00:02:14,160 Speaker 2: I hope for every investor, if they're a true investor, 38 00:02:14,200 --> 00:02:17,160 Speaker 2: they should have a plan and they should have a 39 00:02:17,200 --> 00:02:20,720 Speaker 2: diversified portfolio. People ask me all the time, what do 40 00:02:20,800 --> 00:02:23,200 Speaker 2: you react? How are you reacting in this time? And 41 00:02:23,240 --> 00:02:25,440 Speaker 2: I think I just check down the securities I have 42 00:02:25,560 --> 00:02:28,680 Speaker 2: in my portfolio and make sure it's well diversified, because 43 00:02:28,720 --> 00:02:31,600 Speaker 2: I can't pick day to day or months a month 44 00:02:31,680 --> 00:02:33,760 Speaker 2: what's going to do well and what's not. And we're 45 00:02:33,760 --> 00:02:37,040 Speaker 2: in a period now, you know, sometimes there's no one 46 00:02:37,280 --> 00:02:42,040 Speaker 2: unknowns and now we've got unknown's unknowns, So we sort 47 00:02:42,040 --> 00:02:44,480 Speaker 2: of wake up each day and just sort of work 48 00:02:44,520 --> 00:02:46,960 Speaker 2: off the seat of your pants. But look, it also 49 00:02:47,080 --> 00:02:50,440 Speaker 2: very much depends on whether you're running your portfolio with 50 00:02:50,520 --> 00:02:53,120 Speaker 2: new money coming in, whether you're in draw down phase. 51 00:02:53,160 --> 00:02:56,120 Speaker 2: There'll always be issues around that. But look, right now, 52 00:02:56,160 --> 00:02:59,000 Speaker 2: I think it's a pretty good time to draw breath. 53 00:03:00,040 --> 00:03:03,280 Speaker 2: Probably don't get too anxious about anything, particularly if you've 54 00:03:03,280 --> 00:03:08,960 Speaker 2: got a well diversified portfolio, and really just you know, 55 00:03:09,280 --> 00:03:11,520 Speaker 2: it's a strange time we're in, James. What else can 56 00:03:11,560 --> 00:03:11,880 Speaker 2: we say. 57 00:03:12,440 --> 00:03:14,959 Speaker 1: Would you have a hunch that the worst is over? 58 00:03:16,440 --> 00:03:19,280 Speaker 2: I think the worst is over, as in the initial 59 00:03:19,400 --> 00:03:23,239 Speaker 2: shock of what has happened in America at the leadership 60 00:03:23,280 --> 00:03:25,840 Speaker 2: position and the fact that there are p and O 61 00:03:25,960 --> 00:03:29,080 Speaker 2: guardrails on making those decisions. You know, I would have 62 00:03:29,080 --> 00:03:31,920 Speaker 2: thought it's not legally possible when I first heard it 63 00:03:31,960 --> 00:03:35,600 Speaker 2: that the American President can just you know, issue tariff's 64 00:03:35,640 --> 00:03:38,080 Speaker 2: left right at the center without some type of emergency 65 00:03:38,120 --> 00:03:40,920 Speaker 2: going on. But anyhow, they've done it, so we just 66 00:03:40,960 --> 00:03:42,600 Speaker 2: have to live with that. So I think the shock 67 00:03:42,640 --> 00:03:45,480 Speaker 2: of seeing the magnitude is the big thing. And now 68 00:03:45,520 --> 00:03:49,480 Speaker 2: I think we'll grind for a probably a long period 69 00:03:49,560 --> 00:03:53,280 Speaker 2: of time as we see the effects of maybe the 70 00:03:53,320 --> 00:03:56,160 Speaker 2: base twer for ten percent. You know, it's probably going 71 00:03:56,240 --> 00:03:58,920 Speaker 2: to cause inflation at least in the short term. That's 72 00:03:59,000 --> 00:04:01,839 Speaker 2: probably going to put interest rates on hold at least 73 00:04:01,880 --> 00:04:04,400 Speaker 2: for the short term. And then I think behind the 74 00:04:04,440 --> 00:04:09,720 Speaker 2: scenes in Washington will be concession, slow concessions over time 75 00:04:10,440 --> 00:04:14,320 Speaker 2: as the American people get very hurt by what's happening, 76 00:04:14,440 --> 00:04:18,640 Speaker 2: and I think that will reverberate back to their members, 77 00:04:18,839 --> 00:04:22,320 Speaker 2: their elected officials, and hopefully, you know, get to the 78 00:04:22,360 --> 00:04:26,040 Speaker 2: President and his men. I don't think they anticipated anything 79 00:04:26,160 --> 00:04:28,400 Speaker 2: like what's going on, and I don't think there was 80 00:04:28,440 --> 00:04:32,640 Speaker 2: a grand plan. I think it was a complete mess. 81 00:04:32,960 --> 00:04:35,560 Speaker 1: Can I ask you, when you say stable interest rates, 82 00:04:35,600 --> 00:04:40,200 Speaker 1: you mean global rates right, correct? Australian rates could fall 83 00:04:40,760 --> 00:04:41,479 Speaker 1: in the short term. 84 00:04:41,560 --> 00:04:44,000 Speaker 2: You could definitely mount a case that if we get 85 00:04:44,040 --> 00:04:50,760 Speaker 2: a global recession, growth really going downhill, people losing jobs, 86 00:04:51,400 --> 00:04:55,560 Speaker 2: interest rates will drop, that's definitely on the cards. But 87 00:04:55,720 --> 00:04:58,440 Speaker 2: I think none of this is going to happen immediately. 88 00:04:58,480 --> 00:05:00,760 Speaker 2: There's a lot of time to play up yet to 89 00:05:00,880 --> 00:05:04,320 Speaker 2: see where these things land. I think you'd be a 90 00:05:04,400 --> 00:05:09,440 Speaker 2: brave person to think that the tariffs that America's put 91 00:05:09,480 --> 00:05:12,440 Speaker 2: on China and China put on America again to sit 92 00:05:12,560 --> 00:05:16,520 Speaker 2: as they are, it's just impractical. You just trade between 93 00:05:16,560 --> 00:05:21,040 Speaker 2: the nations will stop, and that just doesn't seem likely 94 00:05:21,080 --> 00:05:23,440 Speaker 2: to me at all. So this posturing going on, we've 95 00:05:23,440 --> 00:05:25,360 Speaker 2: got to wait for that to stop. But we might 96 00:05:25,440 --> 00:05:30,200 Speaker 2: get what they call imported inflation. If it costs Chinese 97 00:05:30,279 --> 00:05:33,440 Speaker 2: the Chinese a lot more to make the goodies that 98 00:05:33,480 --> 00:05:36,240 Speaker 2: we bring into Australia, it's going to cause some inflation. 99 00:05:36,640 --> 00:05:39,000 Speaker 2: But I think these are short term things. To go 100 00:05:39,120 --> 00:05:41,720 Speaker 2: back to your first question, I just wouldn't be in 101 00:05:41,800 --> 00:05:44,520 Speaker 2: a hurry to do anything radical right now and just 102 00:05:44,640 --> 00:05:45,839 Speaker 2: let the dust settle. 103 00:05:46,720 --> 00:05:50,160 Speaker 1: You're on the board of family offices and investment vehicles 104 00:05:50,200 --> 00:05:54,520 Speaker 1: of some very wealthy people and families in Australia, so 105 00:05:54,640 --> 00:05:58,279 Speaker 1: anything that they are doing that would give our everyday 106 00:05:58,320 --> 00:06:02,480 Speaker 1: listeners an insight to sort of the tactical response to this. 107 00:06:02,680 --> 00:06:05,720 Speaker 1: Are they putting more money into gold? Are they lifting 108 00:06:05,760 --> 00:06:08,240 Speaker 1: their cash? Are their bargain hunting? Is there anything you 109 00:06:08,279 --> 00:06:10,760 Speaker 1: can insight you could give us as to how they're behaving. 110 00:06:11,880 --> 00:06:14,560 Speaker 2: Well, certainly the groups I'm involved with, I think it's 111 00:06:14,720 --> 00:06:18,039 Speaker 2: as a generalization, it's fair to say they're just letting 112 00:06:18,240 --> 00:06:21,440 Speaker 2: cash build up right now. And unless you know, there's 113 00:06:21,480 --> 00:06:25,640 Speaker 2: something peculiar about their liabilities or there some external factor, 114 00:06:25,680 --> 00:06:28,640 Speaker 2: but it's really let it build up. Don't have a 115 00:06:28,720 --> 00:06:32,760 Speaker 2: fear of missing out if anything, right now, the fear 116 00:06:32,880 --> 00:06:36,600 Speaker 2: might be the other way around. The people. We are 117 00:06:36,680 --> 00:06:39,400 Speaker 2: all talking about the Australian dollar. I mean it was 118 00:06:39,440 --> 00:06:42,600 Speaker 2: a week ago it was at fifty nine cents. Today 119 00:06:42,720 --> 00:06:46,599 Speaker 2: it's at sixty four cents. So I did see some 120 00:06:46,680 --> 00:06:51,080 Speaker 2: groups put on hedges very quickly, which not everybody can do, 121 00:06:51,160 --> 00:06:55,240 Speaker 2: although there are easily accessible instruments in the market that 122 00:06:55,640 --> 00:06:58,359 Speaker 2: any investor can do for that. And we've seen the 123 00:06:58,400 --> 00:07:02,440 Speaker 2: currency already firm from the US Australian dollar a firm 124 00:07:02,480 --> 00:07:06,000 Speaker 2: from fifty nine to sixty four, and that's a very big, 125 00:07:06,520 --> 00:07:10,520 Speaker 2: very big change. You know, the urgency to do perhaps 126 00:07:10,600 --> 00:07:14,440 Speaker 2: do something about the currencies calm down a little, though. 127 00:07:14,560 --> 00:07:17,440 Speaker 2: Sixty four cents in a long term sense is still 128 00:07:18,200 --> 00:07:22,200 Speaker 2: well below the long term average, which is around seventy cents, 129 00:07:22,240 --> 00:07:24,800 Speaker 2: which it always seems to head back to at some 130 00:07:24,920 --> 00:07:25,679 Speaker 2: stage or another. 131 00:07:26,000 --> 00:07:28,880 Speaker 1: We had people on the show saying, you're better off 132 00:07:28,920 --> 00:07:32,240 Speaker 1: being unheaged because the US is the heart of the machine, 133 00:07:32,360 --> 00:07:36,240 Speaker 1: heart of the markets. When the US markets fall, if 134 00:07:36,240 --> 00:07:38,640 Speaker 1: we all have more exposure to the US than we 135 00:07:38,680 --> 00:07:40,640 Speaker 1: ever had before, which is probably the case for both 136 00:07:40,680 --> 00:07:42,720 Speaker 1: our listeners and a lot of the big super funds, 137 00:07:43,280 --> 00:07:45,680 Speaker 1: that when the US markets fall, the US dollar, the 138 00:07:45,760 --> 00:07:50,040 Speaker 1: currency works your way. It's in your favor because you're 139 00:07:50,080 --> 00:07:52,920 Speaker 1: basically when the Australian dollar is falling as it has 140 00:07:52,960 --> 00:07:56,560 Speaker 1: so far, you're cushioned. You think that might not be 141 00:07:56,600 --> 00:07:57,960 Speaker 1: the case going forward. 142 00:07:58,680 --> 00:08:01,640 Speaker 2: Well, look, I would say my position and those that 143 00:08:01,720 --> 00:08:06,120 Speaker 2: I work with, it's generally when you're buying overseas securities 144 00:08:07,000 --> 00:08:09,720 Speaker 2: that be they manage funds or direct shares or whatever 145 00:08:10,240 --> 00:08:13,880 Speaker 2: is to have it unheitched. So that's default position. But 146 00:08:14,000 --> 00:08:17,880 Speaker 2: we have seen in history where you get very large 147 00:08:18,560 --> 00:08:23,880 Speaker 2: aberrations and look, I remember it's got I remember once 148 00:08:23,920 --> 00:08:26,760 Speaker 2: when the Australian dollar got to forty five cents to 149 00:08:26,840 --> 00:08:30,240 Speaker 2: the US dollar, and I remember, yeah, and I remember 150 00:08:30,360 --> 00:08:33,800 Speaker 2: traveling when the Australian dollar got to one hundred and twenty. 151 00:08:34,360 --> 00:08:36,680 Speaker 2: So you know what the out of bounds, you know, 152 00:08:36,720 --> 00:08:39,120 Speaker 2: if it's got a five in front of it for sure, 153 00:08:39,720 --> 00:08:43,120 Speaker 2: or a nine in front on the other end, they're 154 00:08:43,160 --> 00:08:48,360 Speaker 2: probably times where you could opportunistically probably take advantage of 155 00:08:48,400 --> 00:08:52,520 Speaker 2: that with great likelihood of success, as long as you 156 00:08:52,520 --> 00:08:53,880 Speaker 2: don't pick your time frame. 157 00:08:55,040 --> 00:08:57,600 Speaker 1: Okay, right, And just on the building up the cash, 158 00:08:57,760 --> 00:09:00,920 Speaker 1: can you give people any idea? You know a lot 159 00:09:00,920 --> 00:09:03,560 Speaker 1: of people have serf managed super funds. They're always been 160 00:09:03,679 --> 00:09:06,319 Speaker 1: criticized for having too much cash. And then the big 161 00:09:06,360 --> 00:09:11,359 Speaker 1: super funds have, compared to the smsfs, much lower cash levels. 162 00:09:11,760 --> 00:09:13,920 Speaker 1: With these family companies you have, it's the extent you 163 00:09:13,920 --> 00:09:16,839 Speaker 1: can answer this, what percentage would they generally have in cash? 164 00:09:16,840 --> 00:09:19,520 Speaker 1: What would be a neutral level? And then what might 165 00:09:19,559 --> 00:09:21,080 Speaker 1: they be building up to at the moment. 166 00:09:22,559 --> 00:09:24,160 Speaker 2: Well, first all, to make it clear to the big 167 00:09:24,200 --> 00:09:27,400 Speaker 2: super funds, they always have it. I serve with one 168 00:09:27,400 --> 00:09:29,040 Speaker 2: of them for many years, as I still do. They 169 00:09:29,040 --> 00:09:33,080 Speaker 2: always have let's use the term liquidity rather when they 170 00:09:33,160 --> 00:09:35,760 Speaker 2: must have it. Of course they must have liquidity because 171 00:09:35,760 --> 00:09:38,440 Speaker 2: they've got people coming and going all the time, but 172 00:09:38,600 --> 00:09:42,079 Speaker 2: they have sort of modest cash levels actual cash probably 173 00:09:42,160 --> 00:09:46,640 Speaker 2: compared to many individuals with their own self managed super fund. Look, 174 00:09:46,720 --> 00:09:49,440 Speaker 2: I don't know if there's a common level, James. I 175 00:09:49,640 --> 00:09:52,720 Speaker 2: like to think, in any event, if you had sort 176 00:09:52,760 --> 00:09:55,960 Speaker 2: of ten to twenty percent of cash at most times, 177 00:09:56,280 --> 00:09:59,000 Speaker 2: you know, maybe that's useful to jump on things. Other 178 00:09:59,040 --> 00:10:01,800 Speaker 2: people like to be invested all the time. As long 179 00:10:01,840 --> 00:10:04,160 Speaker 2: as it's liquid, you can get money out and rotate 180 00:10:04,280 --> 00:10:06,920 Speaker 2: to something else. But I don't know if there's one 181 00:10:07,320 --> 00:10:10,640 Speaker 2: one better way than not, but there's Look, there's an 182 00:10:10,679 --> 00:10:15,160 Speaker 2: increasing number of securities that give you, i think, both 183 00:10:15,200 --> 00:10:20,800 Speaker 2: great diversification and some liquidity, so you can take advantage 184 00:10:20,840 --> 00:10:22,760 Speaker 2: of things. But it also, as I said before, it 185 00:10:22,800 --> 00:10:24,959 Speaker 2: depends very much on what stage you're at. If you've 186 00:10:25,000 --> 00:10:27,120 Speaker 2: got your own self managed super fund and you're a 187 00:10:27,160 --> 00:10:30,720 Speaker 2: retiree and you're drawing money off it each year, now, 188 00:10:30,800 --> 00:10:33,240 Speaker 2: so you know it's got to keep shrinking over time, 189 00:10:33,559 --> 00:10:35,880 Speaker 2: you'll probably have a higher amount of cash so you 190 00:10:35,880 --> 00:10:41,000 Speaker 2: don't have to sell down securities in volatile stressed times. 191 00:10:41,520 --> 00:10:46,360 Speaker 1: And these listed securities that give you liquidity and versification. 192 00:10:46,520 --> 00:10:47,560 Speaker 1: Are you thinking of ETFs. 193 00:10:49,440 --> 00:10:51,720 Speaker 2: It could be an ETF so, but it could be 194 00:10:51,800 --> 00:10:56,120 Speaker 2: there's plenty of ETFs. People often mix up a little 195 00:10:56,160 --> 00:11:00,400 Speaker 2: bit many ETFs. Most ETFs are what they call pass 196 00:11:00,600 --> 00:11:03,480 Speaker 2: as you've said many times on your show, they invest 197 00:11:03,520 --> 00:11:06,640 Speaker 2: in the index of whatever they're exposed to. But there's 198 00:11:06,679 --> 00:11:11,679 Speaker 2: also an increasing number of active ETFs. They're just happen 199 00:11:11,760 --> 00:11:15,560 Speaker 2: to be managed funds, managed by an active manager who's 200 00:11:15,679 --> 00:11:18,439 Speaker 2: trying to do better than the index, and they happen 201 00:11:18,520 --> 00:11:21,600 Speaker 2: to be listed on the stock market. You can get 202 00:11:21,640 --> 00:11:26,160 Speaker 2: in and out at nta net asset value, just like 203 00:11:26,320 --> 00:11:31,760 Speaker 2: you can for normal shares. And I have a preference myself. 204 00:11:32,240 --> 00:11:36,559 Speaker 2: Where a market is what I call thin, like Australia, 205 00:11:37,080 --> 00:11:40,240 Speaker 2: I have a preference to be in actively managed funds 206 00:11:40,280 --> 00:11:46,200 Speaker 2: because but in overseas, I'm very satisfied with ETFs as 207 00:11:46,200 --> 00:11:51,199 Speaker 2: well as active funds, simply because those markets offshore are 208 00:11:51,320 --> 00:11:55,720 Speaker 2: much wider, they're much bigger, they're well diversified. Whereas Australia, 209 00:11:55,920 --> 00:12:00,200 Speaker 2: as most people know, you the heavyweights. You're exposed a 210 00:12:00,240 --> 00:12:02,760 Speaker 2: handful of banks, a few miners, and a couple odds 211 00:12:02,760 --> 00:12:06,319 Speaker 2: and ends on the outside. So I find Australian ETFs 212 00:12:06,320 --> 00:12:07,920 Speaker 2: are a little bit risky for. 213 00:12:07,920 --> 00:12:12,280 Speaker 1: Me, okay, because half the market is banks and miners. Yeah, okay, 214 00:12:12,640 --> 00:12:15,040 Speaker 1: So we can't have you on without asking you the 215 00:12:15,360 --> 00:12:18,839 Speaker 1: conventional thinking. And that may not be what you're thinking, 216 00:12:18,880 --> 00:12:21,640 Speaker 1: of course, but convention I'm thinking is, you know, there's 217 00:12:21,640 --> 00:12:23,920 Speaker 1: a swing, there's a lot of fear in the market. 218 00:12:24,040 --> 00:12:27,560 Speaker 1: You know that's proven, and the vix is elevated, so 219 00:12:27,679 --> 00:12:31,480 Speaker 1: people are going back into like supermarket stocks went up 220 00:12:31,520 --> 00:12:34,880 Speaker 1: during those scary days a few days ago. The bank's 221 00:12:34,880 --> 00:12:37,920 Speaker 1: coming with bank I mean, is just basically unmoved. In 222 00:12:37,920 --> 00:12:41,520 Speaker 1: the middle of all this, gold is going steadily higher 223 00:12:41,800 --> 00:12:48,280 Speaker 1: and people are looking at those conventional, traditional defensive stocks. 224 00:12:48,400 --> 00:12:50,840 Speaker 1: Just now, what do you think of that approach? 225 00:12:52,000 --> 00:12:56,840 Speaker 2: Well, it's an interesting conundrum again listening, I'm a regular 226 00:12:56,920 --> 00:13:00,240 Speaker 2: listener to your show. There's always the issue that if 227 00:13:00,800 --> 00:13:03,559 Speaker 2: you look at the Commonwealth Bank, everybody says it's very 228 00:13:03,640 --> 00:13:06,520 Speaker 2: highly priced, has been for a long time. It's come 229 00:13:06,600 --> 00:13:09,520 Speaker 2: down a bit, but it's still at a healthy price. 230 00:13:10,040 --> 00:13:12,720 Speaker 2: And does that mean you should sell the thing and 231 00:13:12,800 --> 00:13:16,880 Speaker 2: rotate into something else. That's the difficult thing because you've 232 00:13:16,920 --> 00:13:19,920 Speaker 2: already been in the thing as opposed to if you've 233 00:13:19,960 --> 00:13:23,120 Speaker 2: got fresh money. So as you've made the point I 234 00:13:23,160 --> 00:13:25,000 Speaker 2: think last week or the week before, if you've been 235 00:13:25,000 --> 00:13:27,520 Speaker 2: in the Commonwealth Bank since it was say twenty dollars, 236 00:13:27,840 --> 00:13:32,200 Speaker 2: the dividend yield you're getting off that cost base is 237 00:13:32,240 --> 00:13:35,040 Speaker 2: magnificent and you might find it very hard to see 238 00:13:35,080 --> 00:13:37,720 Speaker 2: a reason why you'd want to sell it. And of 239 00:13:37,840 --> 00:13:41,480 Speaker 2: course there's always tax when you sell things. But if 240 00:13:41,520 --> 00:13:44,280 Speaker 2: you said if I was starting myself managed super fun 241 00:13:44,480 --> 00:13:49,920 Speaker 2: today with a fresh pile of cash, what would I do. 242 00:13:50,320 --> 00:13:54,480 Speaker 2: I certainly would be looking at the value of stocks. 243 00:13:54,800 --> 00:13:59,400 Speaker 2: I probably would not be investing big time in the banks, 244 00:13:59,480 --> 00:14:02,120 Speaker 2: just because they've gone up so much. But in my 245 00:14:02,200 --> 00:14:04,840 Speaker 2: starting point, as I've said a few times, I'd be 246 00:14:04,880 --> 00:14:09,800 Speaker 2: thinking of a diversified portfilo across local shares, international shares. 247 00:14:09,920 --> 00:14:12,959 Speaker 2: I always like a bit of private equity. I always 248 00:14:12,960 --> 00:14:15,640 Speaker 2: have plenty of private credit. I really do believe in 249 00:14:15,679 --> 00:14:19,960 Speaker 2: that sector. And there are other weird and wonderful investments 250 00:14:19,960 --> 00:14:23,440 Speaker 2: out there that I like to give me a great 251 00:14:23,480 --> 00:14:24,640 Speaker 2: way to sleep at night. 252 00:14:25,640 --> 00:14:29,000 Speaker 1: Okay, actually I have in front of me a pigraph 253 00:14:29,440 --> 00:14:34,440 Speaker 1: of the accid allocation of your main of your flagship operation. 254 00:14:34,640 --> 00:14:37,760 Speaker 1: Really the aps Foundation. We'll take a break, we'll come back, 255 00:14:37,800 --> 00:14:40,040 Speaker 1: we'll pick up on this theme, but we'll also give 256 00:14:40,160 --> 00:14:42,320 Speaker 1: Chris the opportunity to talk about what he wants to 257 00:14:42,360 --> 00:14:44,840 Speaker 1: talk about more than anting as, which is this land 258 00:14:44,920 --> 00:14:59,800 Speaker 1: to pick fund. Okay, back in a moment. Hello, Welcome 259 00:14:59,800 --> 00:15:03,000 Speaker 1: back to The Australian's Money Puzzle podcast Easter a special 260 00:15:03,160 --> 00:15:05,920 Speaker 1: James Kirby here with Chris Kuff. It's a great time 261 00:15:05,960 --> 00:15:08,480 Speaker 1: to have Chris on, one of the best known fund 262 00:15:08,520 --> 00:15:12,200 Speaker 1: managers in the land. Now, Chris, I've mentioned that the 263 00:15:12,280 --> 00:15:14,880 Speaker 1: investors listening to the show will know UNI Super and 264 00:15:14,920 --> 00:15:18,600 Speaker 1: they'll know Argo et cetera. They listed investment company and 265 00:15:18,680 --> 00:15:22,520 Speaker 1: other operations you're involved in more recently and more recentimes, 266 00:15:22,520 --> 00:15:25,479 Speaker 1: you got a lot of time to philanthropy, active philanthropy, 267 00:15:25,840 --> 00:15:28,880 Speaker 1: and there's two we've talked about the Third Link Fund 268 00:15:29,040 --> 00:15:32,640 Speaker 1: on the before, which is an unlisted fund that you're 269 00:15:32,680 --> 00:15:36,000 Speaker 1: involved with that the retail investor can pay, maybe getting 270 00:15:36,040 --> 00:15:38,400 Speaker 1: them for about twenty thousand I think is the minimum. 271 00:15:38,440 --> 00:15:42,320 Speaker 1: And that's a fund where there is a strong philanthropic 272 00:15:42,400 --> 00:15:45,080 Speaker 1: element to it. And then separately, tell me if this 273 00:15:45,120 --> 00:15:49,520 Speaker 1: is wrong. You were involved with the Australian Philanthropic Services Group, 274 00:15:49,560 --> 00:15:52,320 Speaker 1: and they have a very big fund which is pretty 275 00:15:52,320 --> 00:15:55,240 Speaker 1: close to becoming the biggest fund charitable fund in the country. 276 00:15:55,800 --> 00:16:00,480 Speaker 1: It's called the Australian the APS Fund. And how much 277 00:16:00,560 --> 00:16:01,560 Speaker 1: is under management there? 278 00:16:01,640 --> 00:16:05,000 Speaker 2: Chris Well, okay, if I just run through quickly how 279 00:16:05,040 --> 00:16:07,760 Speaker 2: each works. A Third Link Growth fund, it's been going 280 00:16:07,840 --> 00:16:12,320 Speaker 2: for about sixteen years. It's an Australian equity fund. All 281 00:16:12,360 --> 00:16:16,440 Speaker 2: the fees go to charity. It is a what's called 282 00:16:16,480 --> 00:16:19,520 Speaker 2: a fund of funds. So my job is to choose 283 00:16:19,680 --> 00:16:24,960 Speaker 2: fund managers underneath the fund who are managing Australian equities 284 00:16:25,160 --> 00:16:28,800 Speaker 2: who I think are best in breed. That's my opinion 285 00:16:28,880 --> 00:16:32,560 Speaker 2: of best in breed, and they manage the money. We 286 00:16:32,640 --> 00:16:35,640 Speaker 2: try to get our investors an excellent return. We do 287 00:16:35,680 --> 00:16:38,320 Speaker 2: the best we can. I think the returns on the 288 00:16:38,400 --> 00:16:41,800 Speaker 2: Third Link website it's been slightly better than the Australian 289 00:16:41,800 --> 00:16:46,040 Speaker 2: share market since this inception, and so far we've given 290 00:16:46,480 --> 00:16:50,680 Speaker 2: twenty three million dollars to charity over the sixteen years. 291 00:16:50,760 --> 00:16:53,280 Speaker 2: It's been a lot of fun. And all those fund 292 00:16:53,280 --> 00:16:55,480 Speaker 2: managers do it for free. I do it for free, 293 00:16:55,720 --> 00:16:58,280 Speaker 2: and our investors I think like the fact that they're 294 00:16:58,320 --> 00:17:02,080 Speaker 2: both making money and their fees they're paying. They've still 295 00:17:02,120 --> 00:17:04,920 Speaker 2: got to pay a fee, but that fee is going 296 00:17:04,960 --> 00:17:08,840 Speaker 2: to charity. So that's the third Link Growth Fund, which 297 00:17:08,920 --> 00:17:12,560 Speaker 2: is a minimum of twenty thousand dollars Australian equity fun 298 00:17:12,800 --> 00:17:15,480 Speaker 2: very specific and it's an active fund, so it's out 299 00:17:15,520 --> 00:17:19,680 Speaker 2: there trying to beat the index. Okay. The second organization 300 00:17:19,840 --> 00:17:24,680 Speaker 2: you mentioned is fairly unique, so it's called Australian Philanthropic Services. 301 00:17:25,400 --> 00:17:29,440 Speaker 2: It's actually a charity I set up about fourteen years 302 00:17:29,440 --> 00:17:34,800 Speaker 2: ago to help people do philanthropy better. And it's a 303 00:17:34,840 --> 00:17:38,399 Speaker 2: big word, but philanthropy is an increasing part of the 304 00:17:38,400 --> 00:17:45,320 Speaker 2: Australian wealth management landscape, particularly with the massive intergenerational wealth 305 00:17:45,400 --> 00:17:49,160 Speaker 2: transfer that's going on in the trillions of dollars. Philanesbury 306 00:17:49,200 --> 00:17:53,040 Speaker 2: is really growing. Anyhow, I decided fourteen years ago it's 307 00:17:53,040 --> 00:17:57,840 Speaker 2: set up an organization where you could really do engage 308 00:17:57,840 --> 00:18:01,679 Speaker 2: in philanthropy with the help of experts and do it 309 00:18:01,800 --> 00:18:05,480 Speaker 2: hopefully in a much better way. So we run products. 310 00:18:05,520 --> 00:18:07,560 Speaker 2: We have a couple of products, so we set up 311 00:18:07,960 --> 00:18:14,159 Speaker 2: and administer what's called ancillary funds and they're just like superannuation. 312 00:18:14,480 --> 00:18:18,159 Speaker 2: Your listeners will know in superannuation there's two types of 313 00:18:18,200 --> 00:18:21,240 Speaker 2: superannuation funds in the market. You can have a self 314 00:18:21,280 --> 00:18:25,320 Speaker 2: managed super fund that's a private super fund, or most 315 00:18:25,320 --> 00:18:28,119 Speaker 2: of the population are in public offer fund whether it's 316 00:18:28,160 --> 00:18:31,679 Speaker 2: an industry fund or whatever. It's exactly the same. In 317 00:18:31,720 --> 00:18:36,560 Speaker 2: the philanthropy industry, we have these vehicles called ancillary funds, 318 00:18:36,880 --> 00:18:41,320 Speaker 2: and you can set up a private ancillary fund just 319 00:18:41,440 --> 00:18:45,160 Speaker 2: like self meaning super very similar structure, or you hit 320 00:18:45,280 --> 00:18:50,359 Speaker 2: your car to an existing public ancillary fund and hold 321 00:18:50,400 --> 00:18:53,760 Speaker 2: an account within that fund. And so we are the 322 00:18:53,880 --> 00:18:58,800 Speaker 2: leading organization in Australia that helps people go into those 323 00:18:58,920 --> 00:19:02,000 Speaker 2: vehicles and help them with their general giving. And between 324 00:19:02,200 --> 00:19:06,280 Speaker 2: those things, those ancillary funds we ad minister about two 325 00:19:06,359 --> 00:19:10,560 Speaker 2: and a half billion dollars and our clients give currently 326 00:19:10,600 --> 00:19:13,679 Speaker 2: around one hundred and sixty million dollars per annum to 327 00:19:13,880 --> 00:19:18,440 Speaker 2: charity out of those funds. So it's been an enormously 328 00:19:19,440 --> 00:19:23,159 Speaker 2: beneficial business to set up again as a charity for 329 00:19:23,200 --> 00:19:24,480 Speaker 2: the Australian public. 330 00:19:24,680 --> 00:19:27,440 Speaker 1: So I'm an investor and I'd like to be involved 331 00:19:27,480 --> 00:19:31,159 Speaker 1: in philanthropy, and I say there's two ways in here. 332 00:19:31,200 --> 00:19:33,159 Speaker 1: There's a third link fund, which is just a straight 333 00:19:33,160 --> 00:19:37,360 Speaker 1: fund that's a twenty grand minimum for the average retail investor. 334 00:19:37,400 --> 00:19:39,760 Speaker 1: Anyone can do it, no strings attached, and that fund 335 00:19:39,760 --> 00:19:43,480 Speaker 1: has done okay, it seems to me you're this bigger fund, 336 00:19:43,840 --> 00:19:46,840 Speaker 1: which unfortunately is higher up the scale to get into 337 00:19:46,920 --> 00:19:51,600 Speaker 1: as doing better. That is, its returns against its benchmarks 338 00:19:51,640 --> 00:19:53,040 Speaker 1: has been better. And we'll talk about that in the 339 00:19:53,040 --> 00:19:55,560 Speaker 1: moment as to why. But in any event, so if 340 00:19:55,600 --> 00:19:57,760 Speaker 1: I wanted to, if I wanted to get involved in this, 341 00:19:58,359 --> 00:20:00,680 Speaker 1: what is the rough bottom minimum in which I can 342 00:20:00,920 --> 00:20:04,760 Speaker 1: part play here in this particular sandpit. How much would 343 00:20:04,760 --> 00:20:06,239 Speaker 1: I need to put in? 344 00:20:06,400 --> 00:20:09,639 Speaker 2: So let's just back off one slight bit here. With 345 00:20:09,840 --> 00:20:15,760 Speaker 2: Australian Philanthropic Services Foundation, the big public ancillary fund I run. 346 00:20:17,080 --> 00:20:20,040 Speaker 2: We don't necessarily call them investors that come in. It's 347 00:20:20,040 --> 00:20:23,400 Speaker 2: more philanthropists. So if you would like to be involved 348 00:20:23,400 --> 00:20:27,320 Speaker 2: with philanthropy, you can open an account in the APS 349 00:20:27,440 --> 00:20:31,600 Speaker 2: Foundation for a minimum of forty thousand dollars. You get 350 00:20:31,640 --> 00:20:35,000 Speaker 2: one hundred percent tax deduction for that forty thousand dollars 351 00:20:35,359 --> 00:20:37,240 Speaker 2: in the year in which you put the money in, 352 00:20:37,760 --> 00:20:40,240 Speaker 2: or indeed you could spread the tax deduction over five 353 00:20:40,320 --> 00:20:43,280 Speaker 2: years if that's better for you. So you put your 354 00:20:43,320 --> 00:20:46,960 Speaker 2: money in the foundation, and you are then attached to 355 00:20:47,040 --> 00:20:51,520 Speaker 2: a big pool of assets and those assets are invested 356 00:20:51,920 --> 00:20:55,800 Speaker 2: tax free. There's no tax payable by the foundation. And 357 00:20:55,840 --> 00:21:00,640 Speaker 2: then each year we write out to our people clients 358 00:21:00,680 --> 00:21:04,240 Speaker 2: in there and say you need to now here's your 359 00:21:04,320 --> 00:21:07,920 Speaker 2: proportionate balance of this big pool. You need to give 360 00:21:07,920 --> 00:21:11,600 Speaker 2: away four percent of that to charity. So you just 361 00:21:11,720 --> 00:21:14,520 Speaker 2: tell us which charity you want to give the money 362 00:21:14,560 --> 00:21:18,119 Speaker 2: to and the way it goes. So the magic that 363 00:21:18,160 --> 00:21:22,320 Speaker 2: it's the very simply stated, it's quite a unique vehicle 364 00:21:22,359 --> 00:21:26,280 Speaker 2: these it's broken the nexus between the timing of the 365 00:21:26,320 --> 00:21:30,399 Speaker 2: tax deduction and the timing of giving to charity. You 366 00:21:30,480 --> 00:21:33,439 Speaker 2: get the tax reduction all up front. The giving to 367 00:21:33,560 --> 00:21:36,639 Speaker 2: charity happens over many years, or you can do it 368 00:21:36,720 --> 00:21:39,200 Speaker 2: quicker if you want, but you can take your time. 369 00:21:39,520 --> 00:21:42,480 Speaker 2: You can because often when you give to get a 370 00:21:42,560 --> 00:21:45,520 Speaker 2: tax deduction for giving to charity. It'd be smart if 371 00:21:45,560 --> 00:21:48,720 Speaker 2: you could time that with events which might cause you 372 00:21:48,800 --> 00:21:52,840 Speaker 2: tax like selling your business or selling your CBA shares, 373 00:21:53,640 --> 00:21:56,119 Speaker 2: or getting a bonus from your employer or something you 374 00:21:56,240 --> 00:21:58,880 Speaker 2: get a taxable of anything. Chee, I wouldn't mind off 375 00:21:58,920 --> 00:22:01,520 Speaker 2: setting that TAXI. You could perhaps put a lump sum 376 00:22:01,600 --> 00:22:05,080 Speaker 2: over in the philanthropic vehicle, and then take your time 377 00:22:05,160 --> 00:22:07,640 Speaker 2: to think about what charities you want to give too. 378 00:22:07,720 --> 00:22:11,399 Speaker 2: Over time, we've seen wonderful growth in this area, and 379 00:22:11,480 --> 00:22:14,920 Speaker 2: it's really changed the dynamics of a lot of families 380 00:22:14,960 --> 00:22:17,280 Speaker 2: as well, because they involve their children in giving. 381 00:22:17,840 --> 00:22:20,080 Speaker 1: Whereas once upon a time someone might have said, oh, 382 00:22:20,080 --> 00:22:22,040 Speaker 1: we should really give something to charity, and they'd pick 383 00:22:22,080 --> 00:22:23,720 Speaker 1: two or three they like and they'd hand it over 384 00:22:23,840 --> 00:22:26,560 Speaker 1: and it would be tax deductible, but it would be 385 00:22:26,720 --> 00:22:29,399 Speaker 1: unformed as such. What you've done is much more sophisticated 386 00:22:29,400 --> 00:22:31,879 Speaker 1: thing where the person says, okay, let's think long term. 387 00:22:32,119 --> 00:22:37,320 Speaker 1: We go into this fund aps and then the management 388 00:22:37,440 --> 00:22:41,879 Speaker 1: of that fund is you and your colleagues, and it 389 00:22:42,000 --> 00:22:45,440 Speaker 1: goes it has been doing very well, and you're able 390 00:22:45,480 --> 00:22:49,480 Speaker 1: to donate then on an ongoing basis on what you're 391 00:22:49,520 --> 00:22:52,480 Speaker 1: making on your initially depositive you like in that fund, 392 00:22:52,720 --> 00:22:55,639 Speaker 1: and it must be four percent each year. This is 393 00:22:55,680 --> 00:22:58,520 Speaker 1: probably why you need a minimum of forty thousand dicpresum 394 00:22:59,200 --> 00:23:01,080 Speaker 1: because you need to have a four percent is going 395 00:23:01,119 --> 00:23:03,479 Speaker 1: to go out to do it every year anyway, And 396 00:23:03,520 --> 00:23:06,159 Speaker 1: you didn't say you want you stop me calling it 397 00:23:06,200 --> 00:23:08,760 Speaker 1: investors for the simple reason that it's not it's it's 398 00:23:08,800 --> 00:23:12,560 Speaker 1: philanthropic in nature. And that means, Chris, if I've got 399 00:23:12,600 --> 00:23:15,560 Speaker 1: it right, that if listeners, you are interested in this 400 00:23:15,640 --> 00:23:18,040 Speaker 1: and you have the capacity to do so. It's ideal 401 00:23:18,080 --> 00:23:20,679 Speaker 1: of course, when people as you see liquidity event as 402 00:23:20,680 --> 00:23:22,560 Speaker 1: they call it in the trade. If you were about 403 00:23:22,560 --> 00:23:24,800 Speaker 1: to sell a business, if you're about to inherit your 404 00:23:24,840 --> 00:23:28,720 Speaker 1: uncle's house or whatever. But you can't, for instance, use 405 00:23:28,880 --> 00:23:30,760 Speaker 1: you can't take forty grand out of your or one 406 00:23:30,840 --> 00:23:32,560 Speaker 1: hundred and forty grand out of your super and put 407 00:23:32,560 --> 00:23:35,080 Speaker 1: it in Chris, can you, because that crunches up against 408 00:23:35,280 --> 00:23:38,560 Speaker 1: the best interest duty in super? If I've got that right, you. 409 00:23:38,560 --> 00:23:41,040 Speaker 2: Can in a way in the sense of if you're 410 00:23:41,080 --> 00:23:46,040 Speaker 2: able to access your super so you'll pass your preservation age. Yes, 411 00:23:46,119 --> 00:23:48,520 Speaker 2: and you're able to access your super so you can 412 00:23:48,560 --> 00:23:50,680 Speaker 2: freely take your super into your own name. And then 413 00:23:50,720 --> 00:23:53,000 Speaker 2: you might think, I've got enough money now that I'd 414 00:23:53,040 --> 00:23:56,280 Speaker 2: like to put some money. I'd like to get involved 415 00:23:56,320 --> 00:24:01,160 Speaker 2: in philanthropy, particularly while you're alive. This is the most 416 00:24:01,200 --> 00:24:02,879 Speaker 2: important thing in these vehicles. 417 00:24:03,800 --> 00:24:05,600 Speaker 1: You could be alive, but you just have to be retired. 418 00:24:05,760 --> 00:24:06,919 Speaker 1: You couldn't be an accumulation. 419 00:24:07,480 --> 00:24:11,760 Speaker 2: Please, Oh no, it's not something that you can just 420 00:24:11,840 --> 00:24:13,960 Speaker 2: tell you super fund, put some money over here. The 421 00:24:14,000 --> 00:24:18,040 Speaker 2: two are quite very separate, but sort of the type 422 00:24:18,040 --> 00:24:21,760 Speaker 2: of person who might go into this tends to be 423 00:24:22,240 --> 00:24:27,120 Speaker 2: later in life. They tend to be financially secure. They 424 00:24:27,200 --> 00:24:30,320 Speaker 2: want to help society, they want to do it while 425 00:24:30,320 --> 00:24:34,400 Speaker 2: they're alive. Putting money into this sort of holding pattern 426 00:24:34,480 --> 00:24:37,720 Speaker 2: of a fund called an ancillary fund is a great way. 427 00:24:37,800 --> 00:24:40,879 Speaker 2: As we said, they can time their tax deduction, but 428 00:24:40,920 --> 00:24:44,040 Speaker 2: then the giving can go on for many many years later. 429 00:24:44,359 --> 00:24:48,080 Speaker 2: And in fact people often use it upon their passing, 430 00:24:48,600 --> 00:24:51,560 Speaker 2: which there's a thing in the way tax works is 431 00:24:51,680 --> 00:24:55,120 Speaker 2: quite interesting. If you were lucky enough to buy your 432 00:24:55,160 --> 00:24:58,480 Speaker 2: Common Warf Bank shares at five dollars. We always pick 433 00:24:58,520 --> 00:25:01,159 Speaker 2: on the Common Warf Bank as such well run institution, 434 00:25:01,280 --> 00:25:05,520 Speaker 2: I should say. And if on your passing your state 435 00:25:05,760 --> 00:25:09,879 Speaker 2: was then holding those shares, then all things being equal, 436 00:25:09,960 --> 00:25:13,399 Speaker 2: if your a state sold those shares, there would be 437 00:25:13,600 --> 00:25:18,440 Speaker 2: a massive capital gain that the state would have to pay. However, 438 00:25:18,680 --> 00:25:22,560 Speaker 2: if you had donated, if you donate those shares through 439 00:25:22,640 --> 00:25:28,639 Speaker 2: your will to a foundation, say that was in existence already, 440 00:25:29,320 --> 00:25:32,639 Speaker 2: then there's no tax to the state at all, and 441 00:25:32,680 --> 00:25:36,520 Speaker 2: the foundation then will not pay tax because the foundation 442 00:25:36,760 --> 00:25:40,280 Speaker 2: is a tax free vehicle. So it's a magnificent way 443 00:25:40,400 --> 00:25:44,200 Speaker 2: for people who have stored wealth beyond their needs, beyond 444 00:25:44,280 --> 00:25:47,280 Speaker 2: what they want to provide for their children, and still 445 00:25:47,320 --> 00:25:49,720 Speaker 2: don't want to pay tax. I love the idea of 446 00:25:49,760 --> 00:25:51,800 Speaker 2: not paying tax even when I die. 447 00:25:53,000 --> 00:25:57,159 Speaker 1: Yes, no, I imagine many people would aspire to do that, Chris. 448 00:25:57,480 --> 00:26:00,520 Speaker 1: And it's a terrific It's a terrific structure. And it's 449 00:26:00,560 --> 00:26:02,840 Speaker 1: not an accident. Folks that I've I have that have 450 00:26:03,040 --> 00:26:05,359 Speaker 1: had at least once or twice a year brought up 451 00:26:05,400 --> 00:26:08,720 Speaker 1: this because to me, as a with an investor's mind, 452 00:26:09,080 --> 00:26:11,640 Speaker 1: this structure and by the way, to be fair, APS 453 00:26:11,680 --> 00:26:14,520 Speaker 1: is of course not the only operation in this area, 454 00:26:14,680 --> 00:26:17,480 Speaker 1: but it is one of the biggest, and it's a 455 00:26:17,640 --> 00:26:22,399 Speaker 1: very smart way, a kind of professional way to approach 456 00:26:22,480 --> 00:26:26,040 Speaker 1: philanthropy in a more strategic and tax effective manner. Why 457 00:26:26,359 --> 00:26:28,520 Speaker 1: why not do that if you do that in every 458 00:26:28,520 --> 00:26:32,320 Speaker 1: other area of life. Just briefly, Chris, So, the big fund, 459 00:26:32,440 --> 00:26:35,360 Speaker 1: the APS Fund, what was how much did you say 460 00:26:35,400 --> 00:26:36,360 Speaker 1: it has under management? 461 00:26:36,440 --> 00:26:41,200 Speaker 2: Now? Okay, So the APS Foundation, the public ansigtery fund 462 00:26:41,240 --> 00:26:45,040 Speaker 2: we run is around about the four hundred million dollar mark, 463 00:26:45,160 --> 00:26:47,840 Speaker 2: so it's large. I think by the end of this 464 00:26:47,960 --> 00:26:51,320 Speaker 2: decade it'll be a billion dollars probably, So it's a 465 00:26:51,480 --> 00:26:54,359 Speaker 2: large and growing investor. 466 00:26:54,480 --> 00:26:56,399 Speaker 1: So I want to tell the listeners what's in it. 467 00:26:56,560 --> 00:26:58,200 Speaker 1: You know, what you do, so they get a picture 468 00:26:58,200 --> 00:27:00,040 Speaker 1: of what goes on with the money. So the so 469 00:27:00,160 --> 00:27:02,480 Speaker 1: the allocation folks inside this one's really interesting. It's a 470 00:27:02,520 --> 00:27:04,359 Speaker 1: bit like when you can look into the future fund. 471 00:27:04,440 --> 00:27:06,879 Speaker 1: You know, it's very useful. So how it works is 472 00:27:06,920 --> 00:27:11,800 Speaker 1: twenty two percent in shares local, seventeen percent in shares international, 473 00:27:12,440 --> 00:27:17,639 Speaker 1: a pretty chunky seventeen percent in private equity, then thirteen 474 00:27:17,680 --> 00:27:20,920 Speaker 1: percent in what they call interest bearing securities. The rest 475 00:27:20,960 --> 00:27:25,440 Speaker 1: then is scattered between property, venture capital, and what they 476 00:27:25,480 --> 00:27:30,400 Speaker 1: call miscellaneous growth assets and liquid's been seven percent. Okay now, Chris, 477 00:27:30,600 --> 00:27:34,199 Speaker 1: seventeen percent of this fund is private equity. Can I 478 00:27:34,320 --> 00:27:35,920 Speaker 1: just ask you, a lot of people on the shore 479 00:27:36,080 --> 00:27:38,480 Speaker 1: are every day investors are only getting to know private equity, 480 00:27:38,520 --> 00:27:39,840 Speaker 1: and it's been put in front of them for the 481 00:27:39,880 --> 00:27:42,439 Speaker 1: first time. It's been put in front of them at 482 00:27:42,480 --> 00:27:46,840 Speaker 1: this time for a variety of reasons. This sense that 483 00:27:46,880 --> 00:27:49,840 Speaker 1: the banks are withdrawing. I don't know if that's completely true. 484 00:27:50,119 --> 00:27:52,639 Speaker 1: There's a sense that the hybrid market has been is 485 00:27:52,680 --> 00:27:55,040 Speaker 1: being wound up, and so people are looking for income 486 00:27:55,200 --> 00:27:57,600 Speaker 1: and they're putting private equity funds have been put in 487 00:27:57,600 --> 00:28:01,200 Speaker 1: front of people in a listed form. How do you 488 00:28:01,240 --> 00:28:05,600 Speaker 1: think the uninitiated should approach this very important area that 489 00:28:05,640 --> 00:28:08,840 Speaker 1: takes like seventeen percent of your successful fund, which, by 490 00:28:08,880 --> 00:28:11,160 Speaker 1: the way, folks, is just to give you an idea 491 00:28:11,200 --> 00:28:14,480 Speaker 1: of how it's going. It has a target return, very 492 00:28:14,640 --> 00:28:17,000 Speaker 1: like at the future fund to see inflation plus four 493 00:28:17,040 --> 00:28:19,760 Speaker 1: percent is what it looks for. And for instance, like 494 00:28:19,840 --> 00:28:23,160 Speaker 1: last year the one year did thirteen. But private equity, right, 495 00:28:23,160 --> 00:28:27,040 Speaker 1: we'd all love to be in it in a successful manner. 496 00:28:27,040 --> 00:28:29,159 Speaker 1: But I worry Chris, that kind of lead to the 497 00:28:29,160 --> 00:28:31,200 Speaker 1: party for a lot of everyday investors and they're going 498 00:28:31,240 --> 00:28:32,520 Speaker 1: to go into second red stuff. 499 00:28:34,280 --> 00:28:36,880 Speaker 2: Yes, there's a couple of things you said that James, 500 00:28:37,000 --> 00:28:39,840 Speaker 2: which I'll pick up on. First of all, you said 501 00:28:39,960 --> 00:28:42,840 Speaker 2: it's a bit like a major superannuation fund the way 502 00:28:42,880 --> 00:28:46,080 Speaker 2: we've we sort of have a target return. So for 503 00:28:46,120 --> 00:28:49,959 Speaker 2: this big portfolio, I'm trying to get a return of 504 00:28:50,440 --> 00:28:55,360 Speaker 2: inflation plus four percent per annum measured over rolling seventy 505 00:28:55,400 --> 00:28:58,240 Speaker 2: year periods. You won't get that every year. Some years 506 00:28:58,280 --> 00:29:00,480 Speaker 2: will be negative, some years will be twice as much. 507 00:29:00,520 --> 00:29:04,120 Speaker 2: But I'm trying to do it over rolling seven year periods, 508 00:29:04,160 --> 00:29:08,600 Speaker 2: and so far that's been successful. So if you're trying 509 00:29:08,600 --> 00:29:11,160 Speaker 2: to get inflation plus four percent, you're not going to 510 00:29:11,200 --> 00:29:14,560 Speaker 2: get that by investing in term deposits. You have to 511 00:29:14,640 --> 00:29:18,719 Speaker 2: take a growth approach and you have to have time 512 00:29:18,800 --> 00:29:21,560 Speaker 2: on your side. So this pool of money is a 513 00:29:21,600 --> 00:29:25,880 Speaker 2: growing pool. People have parted with their money already into 514 00:29:25,960 --> 00:29:28,760 Speaker 2: it to get the tax duction and to give to charity. 515 00:29:28,880 --> 00:29:31,640 Speaker 2: They can't take the money back, so we know it's 516 00:29:31,680 --> 00:29:35,720 Speaker 2: a long term growing pool. So that means with a 517 00:29:35,880 --> 00:29:40,040 Speaker 2: rolling a target of rolling seven year periods and very 518 00:29:40,160 --> 00:29:43,600 Speaker 2: patient capital. On the other side, I can be very 519 00:29:43,680 --> 00:29:47,479 Speaker 2: patient in the way I invest. Now you talked about 520 00:29:47,640 --> 00:29:51,560 Speaker 2: private equity. There, I think in the portfolio you'll see 521 00:29:51,560 --> 00:29:55,560 Speaker 2: two segments that are reasonably large. You'll see private credit 522 00:29:56,280 --> 00:30:01,760 Speaker 2: and private equity. Private credit I might mention quickly first 523 00:30:01,760 --> 00:30:04,040 Speaker 2: and then come on to the equity because I know 524 00:30:04,120 --> 00:30:06,840 Speaker 2: you talk about private credit a bit on your show. 525 00:30:07,800 --> 00:30:11,480 Speaker 2: Private credit is a very important sector now. I think 526 00:30:11,520 --> 00:30:13,840 Speaker 2: it's sort of had a bad name at the start 527 00:30:13,960 --> 00:30:17,800 Speaker 2: a bit that. Of course, it really evolved from property 528 00:30:17,880 --> 00:30:21,600 Speaker 2: development and construction, which is risky the best of times, 529 00:30:21,600 --> 00:30:24,640 Speaker 2: but can be very risky when interest rates arising and 530 00:30:24,920 --> 00:30:27,800 Speaker 2: the economy is not doing well. But private credit is 531 00:30:27,960 --> 00:30:31,840 Speaker 2: very wide now across very white array of sectors. There's 532 00:30:32,000 --> 00:30:35,760 Speaker 2: many managers in Australia there as well over one hundred managers. 533 00:30:35,920 --> 00:30:38,040 Speaker 2: And you've got to understand if you looked at the 534 00:30:38,080 --> 00:30:43,560 Speaker 2: banks twenty years ago, two thirds of their borrowing book 535 00:30:43,600 --> 00:30:46,200 Speaker 2: the money they lend were to businesses and one third 536 00:30:46,320 --> 00:30:50,200 Speaker 2: to home owners. These days it's the reverse they like. 537 00:30:50,480 --> 00:30:52,840 Speaker 1: So they really have with drawn Chris, they really. 538 00:30:52,640 --> 00:30:57,520 Speaker 2: Have drawn out of the market and the appet yeah, 539 00:30:57,760 --> 00:31:01,080 Speaker 2: but the appetite for a business to borrow doesn't change. 540 00:31:01,280 --> 00:31:03,680 Speaker 2: They just have to go to a different group and 541 00:31:03,800 --> 00:31:06,880 Speaker 2: probably pay a bit more to be able to access 542 00:31:06,920 --> 00:31:10,840 Speaker 2: the capital they need to expand. So private credit very 543 00:31:10,840 --> 00:31:15,600 Speaker 2: important sector, very important to be to understand what the 544 00:31:15,640 --> 00:31:19,240 Speaker 2: fund is invested in, and the experience of the investment 545 00:31:19,720 --> 00:31:24,680 Speaker 2: team is really vital, and including how many securities they 546 00:31:24,720 --> 00:31:29,440 Speaker 2: have in their portfilo is very vital. These inevitably, some 547 00:31:29,640 --> 00:31:32,280 Speaker 2: loans will go bad, just like they do in banks. 548 00:31:32,320 --> 00:31:35,440 Speaker 2: That's why banks provided for loans, so they do go 549 00:31:35,600 --> 00:31:37,880 Speaker 2: Some of them do go bad, but good. A well 550 00:31:37,920 --> 00:31:44,000 Speaker 2: run private equity fund is a cornerstone in my portfilo always, 551 00:31:44,640 --> 00:31:47,760 Speaker 2: and you can't catch your normally in those things. They're 552 00:31:47,800 --> 00:31:51,040 Speaker 2: not liquid like money in the bank. You know, if 553 00:31:51,040 --> 00:31:52,960 Speaker 2: you want to get your money out of a private 554 00:31:53,000 --> 00:31:57,040 Speaker 2: equity fund, it's at best you could do it quarterly. 555 00:31:57,520 --> 00:32:00,080 Speaker 2: Maybe some of it, maybe not all of it. We 556 00:32:00,080 --> 00:32:03,360 Speaker 2: shouldn't think of it as highly liquid, but it's somewhat liquid. 557 00:32:04,240 --> 00:32:08,280 Speaker 2: The position is very different with private equity, so to 558 00:32:08,320 --> 00:32:11,400 Speaker 2: be clear to those listeners of yours that don't know 559 00:32:11,560 --> 00:32:15,440 Speaker 2: private equity by its nature. Instead of buying shares on 560 00:32:15,480 --> 00:32:19,240 Speaker 2: the stock market, these are shares in companies that don't 561 00:32:19,280 --> 00:32:22,840 Speaker 2: trade on the stock market. And generally speaking I do 562 00:32:22,920 --> 00:32:27,120 Speaker 2: that through managers who specialize in that area. But the 563 00:32:27,200 --> 00:32:30,000 Speaker 2: general way they will go about it is that they 564 00:32:30,040 --> 00:32:33,440 Speaker 2: will launch a fund and they'll lock your money up. 565 00:32:33,520 --> 00:32:36,440 Speaker 2: You commit to it, they'll lock it up for about 566 00:32:36,480 --> 00:32:39,680 Speaker 2: ten years, could be less, and they spend half their 567 00:32:39,720 --> 00:32:43,000 Speaker 2: time investing the money and the other half selling it down. 568 00:32:43,280 --> 00:32:45,960 Speaker 2: But what we do see in the numbers all the 569 00:32:46,040 --> 00:32:49,960 Speaker 2: time is that private equity isn't that good on average. 570 00:32:50,520 --> 00:32:53,880 Speaker 2: You have to be with the top quartile manager to 571 00:32:54,520 --> 00:32:57,800 Speaker 2: make good returns there. And the trouble with that for 572 00:32:57,880 --> 00:33:01,200 Speaker 2: most on the street people, if I call it, is 573 00:33:01,400 --> 00:33:04,600 Speaker 2: that the minimums are too high so they can't get 574 00:33:04,720 --> 00:33:07,520 Speaker 2: in those funds. But the minimums have been coming down. 575 00:33:07,840 --> 00:33:10,040 Speaker 1: Yes, I've been waiting for someone to I take Olipse 576 00:33:10,480 --> 00:33:14,400 Speaker 1: that on the show and that is it. That is it, 577 00:33:14,600 --> 00:33:16,800 Speaker 1: And I said, led to the party at the start forks, 578 00:33:16,800 --> 00:33:19,680 Speaker 1: but I met. What I meant was that that everyone 579 00:33:19,720 --> 00:33:21,920 Speaker 1: will stand up and they'll give presentations and how terrific 580 00:33:21,960 --> 00:33:25,280 Speaker 1: private equity has been, And of course it has if 581 00:33:25,320 --> 00:33:27,560 Speaker 1: you happen to be, you know, a multi millionaire that 582 00:33:27,720 --> 00:33:31,520 Speaker 1: was with an extremely expensive financial advisory who got you 583 00:33:31,520 --> 00:33:33,320 Speaker 1: in the early days to the best ones. But as 584 00:33:33,360 --> 00:33:36,960 Speaker 1: Chris says, outside that top quarter, different business altogether. 585 00:33:37,200 --> 00:33:40,320 Speaker 2: Very hard. We hope, you know, we were lucky in 586 00:33:40,360 --> 00:33:43,640 Speaker 2: this fund. You hope every now and then, in these 587 00:33:43,800 --> 00:33:47,760 Speaker 2: private companies you own, you might hit a little gold mine. 588 00:33:48,160 --> 00:33:50,840 Speaker 2: You know, you might hit a canber. You might hit 589 00:33:50,840 --> 00:33:54,320 Speaker 2: a canber. If your listeners know it a great Australian 590 00:33:54,520 --> 00:33:58,800 Speaker 2: success story. It's already up two hundred and fifty times 591 00:33:58,840 --> 00:34:01,080 Speaker 2: what we paid for it. I wish we had a 592 00:34:01,080 --> 00:34:01,560 Speaker 2: lot more. 593 00:34:02,000 --> 00:34:04,360 Speaker 1: Yeah, but I bet you there was two hundred and 594 00:34:04,440 --> 00:34:05,600 Speaker 1: forty nine that didn't do. 595 00:34:05,600 --> 00:34:11,080 Speaker 2: It exactly right. Private credit is very liquid and as 596 00:34:11,160 --> 00:34:13,360 Speaker 2: just a repeat again, you really do have to be 597 00:34:13,520 --> 00:34:18,360 Speaker 2: with a well regarded manager, and you know, the style 598 00:34:18,440 --> 00:34:20,120 Speaker 2: of how they invest is very important. And a lot 599 00:34:20,120 --> 00:34:23,680 Speaker 2: of these private equity groups they've got almost too big, 600 00:34:24,080 --> 00:34:28,000 Speaker 2: so they keep investing bigger and bigger amounts. You know. 601 00:34:28,040 --> 00:34:30,720 Speaker 2: That might suit some of them, but I prefer those 602 00:34:31,360 --> 00:34:33,880 Speaker 2: that are more in what I call the mid market, 603 00:34:34,239 --> 00:34:37,239 Speaker 2: where I think you can actually add a lot of 604 00:34:37,320 --> 00:34:42,280 Speaker 2: value and not just value with leverage. Often private credit 605 00:34:42,840 --> 00:34:47,480 Speaker 2: is criticized quite rightly that they often will invest in 606 00:34:47,520 --> 00:34:51,200 Speaker 2: a business that's got good cash flows and they'll leverage 607 00:34:51,280 --> 00:34:54,800 Speaker 2: up the business, which is fine until it's not fine. 608 00:34:55,200 --> 00:34:58,440 Speaker 2: It's not fine when interest rates are eyes interesting. 609 00:34:58,480 --> 00:34:59,879 Speaker 1: All right, folks, we're going to take a short break. 610 00:35:00,200 --> 00:35:01,600 Speaker 1: We are running out of time, but because it was 611 00:35:01,600 --> 00:35:04,040 Speaker 1: an easter, I thought we could go a little bit longer. 612 00:35:04,160 --> 00:35:06,239 Speaker 1: We'll be back with Chris. We're just going to have 613 00:35:06,280 --> 00:35:08,200 Speaker 1: one or two questions which I'd really like to hear 614 00:35:08,239 --> 00:35:21,080 Speaker 1: what he has to say back in the moment. Hello, 615 00:35:21,200 --> 00:35:24,520 Speaker 1: Welcome back to the Money Puzzle podcast. James Kirby here 616 00:35:24,560 --> 00:35:28,560 Speaker 1: with Chris Cuff. All right, now a couple of co questions, Chris, 617 00:35:28,640 --> 00:35:32,040 Speaker 1: just to hear what your instinctive reaction to these, So 618 00:35:32,200 --> 00:35:37,000 Speaker 1: Raymond asks. Basically, he says, we had talked about how 619 00:35:37,040 --> 00:35:39,800 Speaker 1: it was good not to be hedged. It was certainly 620 00:35:39,800 --> 00:35:42,640 Speaker 1: not good not to be hedged during the most recent 621 00:35:43,000 --> 00:35:47,680 Speaker 1: American drop where they had that desperate day where they 622 00:35:47,719 --> 00:35:50,120 Speaker 1: had the worst day since twenty twenty because of the 623 00:35:50,160 --> 00:35:54,080 Speaker 1: weaker Australian dollar. But as he makes the point that 624 00:35:54,600 --> 00:35:59,360 Speaker 1: when things turn around, an on hedged position exposes Australians 625 00:35:59,360 --> 00:36:03,480 Speaker 1: to a strength Australian dollar, even when market sentiment improves 626 00:36:04,040 --> 00:36:09,000 Speaker 1: and you have increasing international equities across the board, both 627 00:36:09,080 --> 00:36:12,839 Speaker 1: private investors and institutional vestors. So he says, hedging isn't perfect, 628 00:36:13,200 --> 00:36:16,640 Speaker 1: but it reduces exposure to currency fluctuations. I imagine you 629 00:36:16,640 --> 00:36:19,200 Speaker 1: don't have anything to disagree with that. We've more or 630 00:36:19,239 --> 00:36:21,120 Speaker 1: less covered that at the start of the show. There, 631 00:36:21,560 --> 00:36:24,480 Speaker 1: all right, Andrew has two really good questions. The first one, 632 00:36:24,480 --> 00:36:28,160 Speaker 1: he says, Chris, is at the beginning of a global 633 00:36:28,360 --> 00:36:32,000 Speaker 1: at the beginning of a global market meltdown, before the 634 00:36:32,120 --> 00:36:35,960 Speaker 1: interest rates have been cut, is it broadly a good 635 00:36:36,239 --> 00:36:40,239 Speaker 1: or bad time to consider bonds or bond dtfs? WHOA Now, 636 00:36:40,280 --> 00:36:43,000 Speaker 1: you see when people like you talk about bonds, you're 637 00:36:43,040 --> 00:36:46,680 Speaker 1: talking about bonds in this sense of buying them one 638 00:36:46,680 --> 00:36:50,600 Speaker 1: by one and selecting them. But for everyday investors, their 639 00:36:50,640 --> 00:36:55,040 Speaker 1: way into bonds really as bond dtfs and bond dtfs 640 00:36:55,040 --> 00:36:58,000 Speaker 1: have not been great really in this market for a 641 00:36:58,080 --> 00:37:02,399 Speaker 1: variety of reasons, for most years of recent years. What's 642 00:37:02,480 --> 00:37:05,239 Speaker 1: your What do you say to everyday investors wh'll see 643 00:37:05,239 --> 00:37:07,680 Speaker 1: I should have bonds on my way in as ETFs? 644 00:37:08,800 --> 00:37:11,600 Speaker 2: Well, I guess the first thing was interesting that Andrews says, 645 00:37:11,600 --> 00:37:14,520 Speaker 2: at the beginning of a global market meltdown, would it 646 00:37:14,520 --> 00:37:17,160 Speaker 2: be good to do this stuff? If someone could ring 647 00:37:17,200 --> 00:37:22,160 Speaker 2: the bell we know when the beginning is story about 648 00:37:22,520 --> 00:37:25,640 Speaker 2: all the mice gathering round and saying if we just 649 00:37:26,120 --> 00:37:28,799 Speaker 2: tie the bell to the cat's neck will know when 650 00:37:28,840 --> 00:37:32,319 Speaker 2: it's coming. Of course, no mouse is going to be 651 00:37:32,360 --> 00:37:36,040 Speaker 2: game to do that, so I look, I'm not a 652 00:37:36,080 --> 00:37:42,799 Speaker 2: fan at all of pulled vehicles for bonds, which include ETFs. 653 00:37:43,200 --> 00:37:46,880 Speaker 2: Now others may think differently. I'm just not a fan 654 00:37:47,320 --> 00:37:51,799 Speaker 2: because I feel in those areas you your health is 655 00:37:51,920 --> 00:37:54,600 Speaker 2: very dependent on the other people in the fund with you. 656 00:37:55,160 --> 00:37:57,560 Speaker 2: If they start to panic and want to come out 657 00:37:57,560 --> 00:38:01,000 Speaker 2: of the farm, there could be unintended cap gains because 658 00:38:01,080 --> 00:38:03,600 Speaker 2: the manager of the fund might have to sell bonds 659 00:38:04,080 --> 00:38:08,359 Speaker 2: and that might realize losses as well as gains. I 660 00:38:08,440 --> 00:38:11,960 Speaker 2: just don't like the idea of holding hands in these things, 661 00:38:11,960 --> 00:38:15,480 Speaker 2: so I always prefer to buy. If I want to 662 00:38:15,520 --> 00:38:20,080 Speaker 2: be in fixed intra securities down in this sort of area, 663 00:38:20,239 --> 00:38:24,160 Speaker 2: I like to buy them individually and own them individually, 664 00:38:24,480 --> 00:38:28,840 Speaker 2: and probably in the main think about holding them until 665 00:38:28,880 --> 00:38:32,719 Speaker 2: they mature, so I don't have to worry about the 666 00:38:33,200 --> 00:38:35,640 Speaker 2: you know, the market value of these things going up 667 00:38:35,719 --> 00:38:38,680 Speaker 2: and down. But of course, so your. 668 00:38:38,360 --> 00:38:41,600 Speaker 1: First approach is to buy it as for its running yield. 669 00:38:41,520 --> 00:38:46,080 Speaker 2: Yes, that's definitely right. But Australia has a very immature 670 00:38:46,239 --> 00:38:49,080 Speaker 2: market in this sense, so it's very hard to sort 671 00:38:49,120 --> 00:38:53,520 Speaker 2: of do that, particularly for investors with smaller amounts. If 672 00:38:53,520 --> 00:38:57,280 Speaker 2: you're a large investor like UNI Super or Australian Super, 673 00:38:57,719 --> 00:39:00,720 Speaker 2: you can go into the market, buy Australia in bonds 674 00:39:00,800 --> 00:39:04,680 Speaker 2: or international bonds one by one and tuck them away 675 00:39:04,760 --> 00:39:09,080 Speaker 2: and just enjoy receiving the coupon every quarter or six 676 00:39:09,160 --> 00:39:12,719 Speaker 2: months or whatever it is. But for Australia based Australian investors, 677 00:39:13,040 --> 00:39:16,160 Speaker 2: I think the better thing, or easier in my mind 678 00:39:16,200 --> 00:39:20,719 Speaker 2: at least, is probably just lock into some term deposits 679 00:39:20,719 --> 00:39:22,800 Speaker 2: if you really want to be in that area, because 680 00:39:22,920 --> 00:39:26,640 Speaker 2: you'll understand the term deposit. They're not traded on the market, 681 00:39:26,680 --> 00:39:29,400 Speaker 2: you don't see their value going up and down, and 682 00:39:29,440 --> 00:39:32,560 Speaker 2: you're generally forced to keep them until they mature. It's 683 00:39:32,640 --> 00:39:34,879 Speaker 2: very hard. You can break a term deposit, but there's 684 00:39:34,960 --> 00:39:39,160 Speaker 2: usually a break fee, so we don't. Particularly, and particularly 685 00:39:39,160 --> 00:39:43,440 Speaker 2: with the hybrid market disappearing, it's quite hard to find 686 00:39:43,800 --> 00:39:47,720 Speaker 2: securities around that you can just sort of buy and hold. 687 00:39:47,880 --> 00:39:50,360 Speaker 2: There are some, but it's not easy to find. 688 00:39:50,719 --> 00:39:52,839 Speaker 1: That's terrific answer, thank you, And I think folks, that's 689 00:39:52,880 --> 00:39:54,799 Speaker 1: worth's hearing from someone who's actually on the board of 690 00:39:54,800 --> 00:39:57,160 Speaker 1: a big super fund. It really is okay because it's 691 00:39:57,280 --> 00:40:00,319 Speaker 1: because it's that helicopter view. So I think that is 692 00:40:00,320 --> 00:40:04,000 Speaker 1: a very interesting point and it never ends right about 693 00:40:04,000 --> 00:40:05,840 Speaker 1: the whole thing about bonds and should you have bonds? 694 00:40:05,840 --> 00:40:07,680 Speaker 1: But we've had more than one person on the show, 695 00:40:08,360 --> 00:40:11,400 Speaker 1: from financial advisors who are just dealing with their clients 696 00:40:12,280 --> 00:40:14,879 Speaker 1: to people who manage very large amounts of money saying 697 00:40:14,920 --> 00:40:18,880 Speaker 1: that at TDS that is term deposits. You know, government 698 00:40:18,920 --> 00:40:23,359 Speaker 1: guaranteed may serve that purpose more for most people most 699 00:40:23,360 --> 00:40:23,799 Speaker 1: of the time. 700 00:40:23,880 --> 00:40:24,200 Speaker 2: Okay. 701 00:40:24,320 --> 00:40:27,000 Speaker 1: And finally, Andrew asks, when the market has a meltdown, 702 00:40:27,239 --> 00:40:29,719 Speaker 1: isn't that just another way of saying that there is 703 00:40:29,760 --> 00:40:32,960 Speaker 1: now a stack of cash and liquidity waiting to invest 704 00:40:33,040 --> 00:40:37,799 Speaker 1: at a later stage. Yeah, yeah, sure, Andrew. A thing 705 00:40:37,920 --> 00:40:41,680 Speaker 1: is when? Okay, because in two o eight they didn't 706 00:40:41,680 --> 00:40:45,239 Speaker 1: come back for a long time into what they came 707 00:40:45,280 --> 00:40:46,320 Speaker 1: back pretty fast in COVID. 708 00:40:46,400 --> 00:40:49,600 Speaker 2: What do you think of that one, Chris Well, I 709 00:40:49,680 --> 00:40:54,080 Speaker 2: have to smile too when I heard that question earlier, 710 00:40:54,680 --> 00:40:57,680 Speaker 2: because again, we never know when the meltdowns kind of start. 711 00:40:58,360 --> 00:41:01,359 Speaker 2: And people, you know, sun men, I have to say, 712 00:41:02,120 --> 00:41:05,480 Speaker 2: although I've mixed with them for many years that they're 713 00:41:05,600 --> 00:41:08,759 Speaker 2: very good marketers. I say, now's a buying opportunity. But 714 00:41:08,880 --> 00:41:11,680 Speaker 2: of course we don't all just have cash sitting on 715 00:41:11,719 --> 00:41:14,680 Speaker 2: the side waiting. I mean, you can It's like a 716 00:41:14,760 --> 00:41:18,640 Speaker 2: clock that's broken, you know, but it's actually right twice 717 00:41:18,680 --> 00:41:20,719 Speaker 2: a day if you think about it. You know, the 718 00:41:20,760 --> 00:41:23,840 Speaker 2: clock's stall, but it's right twice a day. And sometimes 719 00:41:23,880 --> 00:41:27,280 Speaker 2: people will sit there with a lot of cash waiting 720 00:41:27,280 --> 00:41:31,000 Speaker 2: for something to happen and miss out on the opportunities 721 00:41:31,120 --> 00:41:34,200 Speaker 2: or the good days in the more risky markets, so 722 00:41:34,320 --> 00:41:38,719 Speaker 2: to speak. So I never quite understand the buying opportunity 723 00:41:38,760 --> 00:41:42,160 Speaker 2: type of logic unless you do, you know, have cash, 724 00:41:42,200 --> 00:41:45,879 Speaker 2: and you've got some fantastic way of knowing that this 725 00:41:46,360 --> 00:41:48,960 Speaker 2: you're at the end of the meltdown. Because you know 726 00:41:49,040 --> 00:41:52,759 Speaker 2: that adage about trying to catch a falling knife. It's 727 00:41:53,040 --> 00:41:57,000 Speaker 2: very hard to know when things are going to stop 728 00:41:57,280 --> 00:42:01,480 Speaker 2: going down. And I remember in the glow or financial crisis, 729 00:42:01,560 --> 00:42:05,840 Speaker 2: where things ground on for ages down month after month 730 00:42:06,200 --> 00:42:09,399 Speaker 2: for a long time, and I remember after about three months, 731 00:42:09,440 --> 00:42:11,399 Speaker 2: I thought, I'm smart. Now I'm going to put money 732 00:42:11,440 --> 00:42:13,720 Speaker 2: in the market. And you know, I tried to catch 733 00:42:13,960 --> 00:42:15,960 Speaker 2: what I can now look back at. So it was 734 00:42:16,040 --> 00:42:18,839 Speaker 2: definitely a falling knife and cut a few fingers off 735 00:42:18,840 --> 00:42:22,120 Speaker 2: along the way. So it's not easy. I prefer a 736 00:42:22,160 --> 00:42:26,320 Speaker 2: strategy that says set yourself for an all weather market 737 00:42:26,880 --> 00:42:30,560 Speaker 2: upsow downs. That's you know, sit with a good advisor, 738 00:42:30,760 --> 00:42:35,640 Speaker 2: work out how you want your money placed across different sectors, 739 00:42:35,840 --> 00:42:39,640 Speaker 2: well diversified portfolio, enough cash to live on if you're 740 00:42:39,680 --> 00:42:43,320 Speaker 2: drawing it down, and just gritch your teeth and stay 741 00:42:43,360 --> 00:42:47,879 Speaker 2: away from knee jerk reactions, which we're all prone to do. That's, 742 00:42:48,120 --> 00:42:50,440 Speaker 2: you know, if I had my time again as an 743 00:42:50,520 --> 00:42:54,080 Speaker 2: investment professional, the first thing I should should have studied 744 00:42:54,080 --> 00:42:59,840 Speaker 2: at university is behavioral science, not financial science, because people 745 00:43:00,239 --> 00:43:04,960 Speaker 2: react in the investment markets with emotion first. The best 746 00:43:05,000 --> 00:43:08,480 Speaker 2: investment managers in my career I've seen are often those 747 00:43:08,520 --> 00:43:12,320 Speaker 2: who are slightly on the spectrum. They can be completely emotionless. 748 00:43:14,120 --> 00:43:17,160 Speaker 1: Terrific. I imagine that is exactly true. That they all 749 00:43:17,239 --> 00:43:20,279 Speaker 1: understand the finance. Everyone understands the finance, right, So all 750 00:43:20,320 --> 00:43:23,600 Speaker 1: these people with the qualified they're all qualified. They understand 751 00:43:23,600 --> 00:43:26,680 Speaker 1: the finance. But who understands human emotion? All right, we 752 00:43:26,840 --> 00:43:29,319 Speaker 1: leave it there. That was terrific, Chris, Thank you very much, 753 00:43:29,360 --> 00:43:29,880 Speaker 1: Chris Coff. 754 00:43:30,040 --> 00:43:32,680 Speaker 2: Love it to have you on My pleasure. I love 755 00:43:32,760 --> 00:43:33,600 Speaker 2: being on James. 756 00:43:33,880 --> 00:43:36,320 Speaker 1: Great to have Chris Coff on the show. Folks, Okay, 757 00:43:36,360 --> 00:43:38,160 Speaker 1: have a good break, have a good easter. We will 758 00:43:38,239 --> 00:43:40,880 Speaker 1: be back very quickly. We're not taking a break. We 759 00:43:41,000 --> 00:43:45,800 Speaker 1: motor on. Keep the questions Commons ruling the money puzzle 760 00:43:45,840 --> 00:43:48,440 Speaker 1: at the Australian dot Com dot Au. Today's show was 761 00:43:48,480 --> 00:43:50,759 Speaker 1: produced by Leah Sam mcglue and she's not taking a 762 00:43:50,760 --> 00:44:02,520 Speaker 1: break either. Don't you soon, fo,