1 00:00:10,240 --> 00:00:13,560 Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,640 --> 00:00:19,200 Speaker 1: James Kirky. Welcome aboard, everybody. The single biggest investment call 3 00:00:20,079 --> 00:00:25,840 Speaker 1: of the last decade at least has been around the US. 4 00:00:26,760 --> 00:00:29,159 Speaker 1: Were you in US stocks or were you not in 5 00:00:29,360 --> 00:00:34,040 Speaker 1: US stocks? And that really was dictating the outcome for 6 00:00:34,159 --> 00:00:37,839 Speaker 1: many people in terms of how their portfolio went and 7 00:00:37,880 --> 00:00:41,360 Speaker 1: same it you're super okay. Now, for the first time 8 00:00:41,440 --> 00:00:45,600 Speaker 1: in a long time, the situation of the US is 9 00:00:45,640 --> 00:00:49,879 Speaker 1: being questioned economically and financially. It is. It doesn't just 10 00:00:50,000 --> 00:00:52,960 Speaker 1: you know, dominate world stock markets. It is the world 11 00:00:53,040 --> 00:00:57,000 Speaker 1: stock market. It literally dominates the market cap of all 12 00:00:57,080 --> 00:01:00,960 Speaker 1: the global markets. It is the world bond market. And 13 00:01:01,040 --> 00:01:05,280 Speaker 1: for the first time in a long time this has 14 00:01:05,360 --> 00:01:08,920 Speaker 1: really been questioned now the pre eminence of the US. 15 00:01:09,000 --> 00:01:11,840 Speaker 1: I'm talking strictly financially here, the pre eminence of the 16 00:01:11,959 --> 00:01:15,640 Speaker 1: US market, the pre eminence of the US dollar in particular, 17 00:01:16,040 --> 00:01:20,600 Speaker 1: which has had its weakest opening period going all the 18 00:01:20,640 --> 00:01:25,160 Speaker 1: way back to Nixon basically this year. So serious investors, 19 00:01:25,920 --> 00:01:29,080 Speaker 1: professional investors, big investors around the world, they are casting 20 00:01:29,120 --> 00:01:33,800 Speaker 1: about to cover themselves in relation to what's going on 21 00:01:33,840 --> 00:01:36,800 Speaker 1: in the US. And they're buying everything else. They're buying gold, 22 00:01:37,720 --> 00:01:40,959 Speaker 1: some are buying crypto, they're buying European shares, they're buying 23 00:01:41,000 --> 00:01:44,520 Speaker 1: emergent marketing, emerging market shares, because there is an enormous 24 00:01:44,560 --> 00:01:47,280 Speaker 1: question about where it goes from here and will it 25 00:01:47,319 --> 00:01:49,240 Speaker 1: be as good as it used to be? Simple as that. 26 00:01:49,680 --> 00:01:52,680 Speaker 1: One of our favorite guests on the show is Win Hamilton, 27 00:01:52,800 --> 00:01:56,640 Speaker 1: Will Hamilton of Hamilton Wealth Partners, and once the year, 28 00:01:56,800 --> 00:01:59,680 Speaker 1: if you recall, Will goes on a world tour where 29 00:01:59,680 --> 00:02:02,840 Speaker 1: he goes to a number of key investment and wealth 30 00:02:02,920 --> 00:02:06,320 Speaker 1: management conferences around the world, and when he comes back, 31 00:02:06,680 --> 00:02:09,919 Speaker 1: I grill him on what we need to know if 32 00:02:09,960 --> 00:02:13,720 Speaker 1: we had the time or I suppose the money to 33 00:02:13,800 --> 00:02:15,560 Speaker 1: go to those conferences. How are you well? 34 00:02:16,600 --> 00:02:18,280 Speaker 2: Very well, James, Thank you for having me. 35 00:02:19,040 --> 00:02:21,400 Speaker 1: Great to have you on, and you know there is 36 00:02:21,440 --> 00:02:24,919 Speaker 1: so much we could cover, but I think we should 37 00:02:24,919 --> 00:02:29,000 Speaker 1: cut to the chase for the Australian investor and look 38 00:02:29,040 --> 00:02:31,840 Speaker 1: at this issue. I mean, first of all, do you 39 00:02:31,880 --> 00:02:33,919 Speaker 1: accept what I said in the preambum. 40 00:02:35,080 --> 00:02:37,640 Speaker 2: Look, yes, what you're saying is very right and it 41 00:02:37,720 --> 00:02:40,600 Speaker 2: was a major topic of discussion. But I'm just sort 42 00:02:40,600 --> 00:02:45,920 Speaker 2: of you cast some doubt on this is euphoria towards 43 00:02:45,919 --> 00:02:48,920 Speaker 2: European equities that I heard, and we can talk about 44 00:02:48,919 --> 00:02:50,720 Speaker 2: that in a little bit more detail. And I think 45 00:02:50,720 --> 00:02:53,040 Speaker 2: because the US is the US, and you know, you 46 00:02:53,520 --> 00:02:57,040 Speaker 2: canvas looking to IPO and that's going to list in 47 00:02:57,120 --> 00:02:58,960 Speaker 2: the US, it's not listing in Australia. 48 00:02:59,680 --> 00:03:03,680 Speaker 1: So you're not deep you're not deeply questioning the pre 49 00:03:03,720 --> 00:03:06,280 Speaker 1: eminence of the US, are you. 50 00:03:06,320 --> 00:03:10,200 Speaker 2: No. Look, there was the big debate from the perspective 51 00:03:10,240 --> 00:03:14,320 Speaker 2: of European investors has been the US risk premium. So 52 00:03:15,160 --> 00:03:18,560 Speaker 2: it is the US suddenly considered high risk? 53 00:03:18,760 --> 00:03:20,600 Speaker 1: Is it worth the prices on those markets? 54 00:03:20,680 --> 00:03:23,840 Speaker 2: Yeah? Okay, Yeah, And the consensus seemed to be there 55 00:03:23,880 --> 00:03:27,720 Speaker 2: is a high risk attributed to the US now. And 56 00:03:27,800 --> 00:03:30,440 Speaker 2: you're very right. With respect to the weaker US dollar, 57 00:03:30,720 --> 00:03:33,240 Speaker 2: that seemed to be a major focus and people were 58 00:03:33,240 --> 00:03:36,400 Speaker 2: still talking it down on the simple fact that the 59 00:03:36,480 --> 00:03:38,040 Speaker 2: US president wants it weaker. 60 00:03:39,800 --> 00:03:44,000 Speaker 1: Yeah, So we take it that they wanted to drop, 61 00:03:44,240 --> 00:03:46,600 Speaker 1: and the mechanics are there for them to use for 62 00:03:46,720 --> 00:03:49,480 Speaker 1: it to drop. So we can, to the extent that 63 00:03:49,520 --> 00:03:52,640 Speaker 1: you can safely assume anything in financial markets, We'll make 64 00:03:52,640 --> 00:03:55,200 Speaker 1: the assumption that the US donar will weaken through the 65 00:03:55,280 --> 00:03:56,839 Speaker 1: year yeap. 66 00:03:57,160 --> 00:03:59,120 Speaker 2: So what does that mean is the fact that the 67 00:03:59,200 --> 00:04:02,760 Speaker 2: US president. So for Australian investors, if you're having US 68 00:04:02,840 --> 00:04:05,600 Speaker 2: dollar holdings and you know you can either look to 69 00:04:05,840 --> 00:04:08,240 Speaker 2: take some hedging strategy and so like if you're invested 70 00:04:08,280 --> 00:04:11,440 Speaker 2: in managed funds, you can take a hedge class if 71 00:04:11,480 --> 00:04:15,720 Speaker 2: that exists, or you just realize that when coming back 72 00:04:15,760 --> 00:04:19,520 Speaker 2: to Australian dollars, you are if you're invested in US equities, 73 00:04:19,560 --> 00:04:21,920 Speaker 2: you're going to see you're going to see a currency 74 00:04:21,920 --> 00:04:25,479 Speaker 2: adjusted return which will be negatively impacted through a weaker 75 00:04:25,600 --> 00:04:26,119 Speaker 2: US dollar. 76 00:04:26,480 --> 00:04:29,680 Speaker 1: So you're existing if you had existing holdings in US 77 00:04:29,839 --> 00:04:32,560 Speaker 1: dollar as well, if you had most people and on 78 00:04:32,760 --> 00:04:34,920 Speaker 1: listening to the show, they're explosure to US is through 79 00:04:34,960 --> 00:04:38,760 Speaker 1: funds mostly tfs or perhaps managed funds. Wouldn't the existing 80 00:04:38,760 --> 00:04:40,320 Speaker 1: holdings call open value? 81 00:04:41,440 --> 00:04:43,960 Speaker 2: Well, what you what you can see in if you've 82 00:04:43,960 --> 00:04:46,840 Speaker 2: got a weaker US dollar? No, you're you're seeing a 83 00:04:46,880 --> 00:04:50,840 Speaker 2: weaker US dollar impact. Now you can't hedge that. You 84 00:04:50,839 --> 00:04:53,880 Speaker 2: can't hedge that. If you're in some of the funds, 85 00:04:53,880 --> 00:04:59,560 Speaker 2: they do have a hedge class and that can give 86 00:04:59,600 --> 00:05:01,279 Speaker 2: you and impact their. 87 00:05:01,279 --> 00:05:04,039 Speaker 1: So are you recommending that people if they're going in 88 00:05:04,120 --> 00:05:06,400 Speaker 1: fresh and they hadn't been in before, so they don't 89 00:05:06,440 --> 00:05:09,760 Speaker 1: get the advantage perhaps of what's happened so far. If 90 00:05:09,760 --> 00:05:14,240 Speaker 1: you're buying today US stocks, US funds, managed funds, ETFs, 91 00:05:14,839 --> 00:05:18,240 Speaker 1: then are you saying, whereas in the past we didn't 92 00:05:18,320 --> 00:05:21,839 Speaker 1: really have to consider it, that we should consider hedged options, 93 00:05:21,880 --> 00:05:24,400 Speaker 1: and all those ones tend to have hedged around hedged options. 94 00:05:25,200 --> 00:05:27,119 Speaker 2: Yeah, I'd be looking at a hedged option at the moment. 95 00:05:27,160 --> 00:05:30,200 Speaker 1: Correct, Okay, right, that's very interesting. That's a fresh sort 96 00:05:30,200 --> 00:05:31,000 Speaker 1: of perspective. 97 00:05:31,279 --> 00:05:31,520 Speaker 2: Now. 98 00:05:32,400 --> 00:05:35,880 Speaker 1: The big question I suppose is that investors are also 99 00:05:36,720 --> 00:05:39,520 Speaker 1: looking beyond the US, aren't they. They're looking elsewhere, and 100 00:05:40,080 --> 00:05:47,560 Speaker 1: gold seems to be the alternative of choice. And though 101 00:05:47,560 --> 00:05:51,440 Speaker 1: golds had a good run, all the conditions would seem 102 00:05:51,480 --> 00:05:52,960 Speaker 1: to be in place for it to keep running. What 103 00:05:53,000 --> 00:05:53,520 Speaker 1: do you think. 104 00:05:54,640 --> 00:05:56,800 Speaker 2: I was just saying yesterday when I was talking to 105 00:05:56,920 --> 00:05:59,599 Speaker 2: staff here internally, that when you talk to other managers, 106 00:05:59,600 --> 00:06:01,480 Speaker 2: they always to you the good stories and never tell 107 00:06:01,520 --> 00:06:06,080 Speaker 2: you the bad stories. And I didn't meet anybody that 108 00:06:06,279 --> 00:06:11,080 Speaker 2: wasn't long gold and one of the big Swiss banks, 109 00:06:11,120 --> 00:06:14,120 Speaker 2: for instance, I was shocked by the extent of the 110 00:06:14,120 --> 00:06:15,880 Speaker 2: holding that the god and gold, and they were talking 111 00:06:15,880 --> 00:06:17,479 Speaker 2: about the fact that in the first quarter of this 112 00:06:17,560 --> 00:06:22,280 Speaker 2: year more slow went when you're looking at what they 113 00:06:22,360 --> 00:06:25,640 Speaker 2: considered exits out of US dollars, more went into gold 114 00:06:25,839 --> 00:06:28,320 Speaker 2: than the euro. So they're seeing gold as the proxy 115 00:06:28,680 --> 00:06:32,520 Speaker 2: to the US dollar as opposed to the euro, and 116 00:06:32,720 --> 00:06:37,880 Speaker 2: they saw still considerable downside in the US dollar and 117 00:06:37,880 --> 00:06:41,279 Speaker 2: therefore they were still very bullish on gold. To the 118 00:06:41,320 --> 00:06:43,560 Speaker 2: extent some of the figures they were throwing around, I'm 119 00:06:43,560 --> 00:06:46,320 Speaker 2: sort of going, wow, this is It was one firm 120 00:06:47,160 --> 00:06:49,400 Speaker 2: and I spoke then one to one of the portfolio 121 00:06:49,400 --> 00:06:52,800 Speaker 2: managers in this Swiss private bank and he said, yeah, 122 00:06:52,839 --> 00:06:55,799 Speaker 2: but we've always held gold, and he said for years 123 00:06:56,279 --> 00:06:58,360 Speaker 2: we had at least a two percent holding, and it 124 00:06:58,360 --> 00:07:00,800 Speaker 2: was one of those things that you was that was 125 00:07:00,839 --> 00:07:03,000 Speaker 2: where the bad discussion came about. And he said, yes, 126 00:07:03,160 --> 00:07:05,520 Speaker 2: it's about five percent now our holdings in gold. But 127 00:07:05,560 --> 00:07:06,880 Speaker 2: he said, you know, for the first time in a 128 00:07:06,880 --> 00:07:08,800 Speaker 2: long time, we're having positive discussions on it. 129 00:07:09,680 --> 00:07:12,880 Speaker 1: So you've got Swiss private Swiss banks being a sort 130 00:07:12,880 --> 00:07:16,720 Speaker 1: of proxy for what very wealthy investors are thinking. Doubling 131 00:07:16,760 --> 00:07:21,800 Speaker 1: there holding in gold and more than that actively discussing 132 00:07:22,360 --> 00:07:23,400 Speaker 1: what buying more. 133 00:07:25,040 --> 00:07:29,480 Speaker 2: Yeah, and further upside in the goal price. Their whole 134 00:07:29,560 --> 00:07:32,520 Speaker 2: logic seems to be, you know a lot of people 135 00:07:32,560 --> 00:07:35,440 Speaker 2: saying central banks, et cetera. They're saying, no, it's seen 136 00:07:35,480 --> 00:07:39,720 Speaker 2: as the proxy to the US dollar, which was a 137 00:07:39,720 --> 00:07:41,240 Speaker 2: different perspective from Bloodhead. 138 00:07:42,200 --> 00:07:47,560 Speaker 1: Yeah, so global money uncomfortable with the trajectory and what's 139 00:07:47,600 --> 00:07:51,840 Speaker 1: going on around the US donor they're only alternative, perhaps 140 00:07:51,880 --> 00:07:55,360 Speaker 1: as a global currency proxy is gold. 141 00:07:55,800 --> 00:07:58,920 Speaker 2: Yep. Yeah, that's what they're saying, and they claim more 142 00:07:58,960 --> 00:08:01,600 Speaker 2: money's gone into gold the neuros. 143 00:08:01,680 --> 00:08:04,960 Speaker 1: Yes, explain why that's important to to the general listener. 144 00:08:06,320 --> 00:08:10,640 Speaker 2: Well, I think that the I think there's this enormous 145 00:08:11,640 --> 00:08:14,400 Speaker 2: excitement about Europe at the moment. I think it might 146 00:08:14,440 --> 00:08:17,280 Speaker 2: be a bit overdone, but you know, there's this tail 147 00:08:17,360 --> 00:08:21,440 Speaker 2: wind from the amount of spense, defense spending and infrastructure spending, 148 00:08:22,120 --> 00:08:28,480 Speaker 2: and therefore everyone's getting very excited. But is this in reality, 149 00:08:28,560 --> 00:08:30,400 Speaker 2: I don't, I don't know. I think this. You can 150 00:08:30,440 --> 00:08:34,920 Speaker 2: see it's not necessarily going into the euro people buying 151 00:08:35,080 --> 00:08:40,360 Speaker 2: therefore European stocks, and I think the Euros stock index 152 00:08:40,600 --> 00:08:43,320 Speaker 2: is a very old index like Australia but it doesn't 153 00:08:43,320 --> 00:08:45,920 Speaker 2: have the cyclicality that Australia has. So we've got some 154 00:08:45,960 --> 00:08:54,640 Speaker 2: cyclical stocks which at times is therefore very worthwhile'ts. 155 00:08:53,240 --> 00:08:56,200 Speaker 1: And it's it's a dopey old market, I would say, 156 00:08:56,400 --> 00:08:59,040 Speaker 1: And it's been dopy for years. Do you do you 157 00:08:59,040 --> 00:09:02,920 Speaker 1: see anything to me people think they should reconsider European 158 00:09:02,960 --> 00:09:05,920 Speaker 1: stocks apart from the fact that Trump has made them 159 00:09:05,960 --> 00:09:08,160 Speaker 1: spend more on defense. Do you see any other sort 160 00:09:08,160 --> 00:09:11,040 Speaker 1: of structural reason to be attracted to it that wasn't 161 00:09:11,040 --> 00:09:11,679 Speaker 1: there before? 162 00:09:13,480 --> 00:09:17,199 Speaker 2: No, Well, that everyone was talking up Europe, and they're 163 00:09:17,240 --> 00:09:22,599 Speaker 2: Europeans and UK citizens talking up Europe. But let you know, 164 00:09:22,679 --> 00:09:25,240 Speaker 2: when you sort of take a deep breath and look back, 165 00:09:25,280 --> 00:09:28,240 Speaker 2: you go, well, what do you invest in? Okay, So 166 00:09:28,320 --> 00:09:33,160 Speaker 2: they're talking about infrastructure, defense spending and the government is 167 00:09:33,200 --> 00:09:35,680 Speaker 2: not going to this is self fulfilling for the US 168 00:09:35,720 --> 00:09:39,320 Speaker 2: because most of the armaments are US companies, that's the 169 00:09:39,360 --> 00:09:42,800 Speaker 2: other thing. And you just you look at it and 170 00:09:42,840 --> 00:09:44,760 Speaker 2: you go, well, I just don't understand what they're going 171 00:09:44,800 --> 00:09:46,640 Speaker 2: to invest in. I think that things are just getting 172 00:09:46,679 --> 00:09:49,120 Speaker 2: a little bit ahead of themselves over there. It's done well. 173 00:09:49,200 --> 00:09:52,960 Speaker 2: And one manager, as you pointed out to me, Europe 174 00:09:52,960 --> 00:09:58,880 Speaker 2: has not outperformed the US this century, this century, right 175 00:09:59,320 --> 00:10:01,599 Speaker 2: this century, so in the last twenty five years, and 176 00:10:01,640 --> 00:10:02,120 Speaker 2: I thought. 177 00:10:02,120 --> 00:10:04,200 Speaker 1: And it's had so many four starts. 178 00:10:04,280 --> 00:10:07,000 Speaker 2: Yes, and also and the other one thing is which 179 00:10:07,040 --> 00:10:09,880 Speaker 2: I think is really important is GDP growth. As Capital 180 00:10:09,920 --> 00:10:12,360 Speaker 2: Economics said to me, GDP growth in Europe and the 181 00:10:12,440 --> 00:10:15,120 Speaker 2: US twenty twenty five is going to be about even. 182 00:10:15,280 --> 00:10:18,319 Speaker 2: But next year you're looking at one full percentage point. 183 00:10:18,520 --> 00:10:21,960 Speaker 2: So you're looking approximately two point five percent in GDP 184 00:10:22,080 --> 00:10:24,240 Speaker 2: growth in the US and one point five percent in Europe. 185 00:10:24,360 --> 00:10:26,440 Speaker 2: And that's that I think is a very that's something 186 00:10:26,440 --> 00:10:27,679 Speaker 2: you have to take into consideration. 187 00:10:28,280 --> 00:10:32,200 Speaker 1: Okay, just turning it all back in terms of portfolio 188 00:10:33,000 --> 00:10:37,960 Speaker 1: construction and portfolio allocation for private investors in Australia, what 189 00:10:38,040 --> 00:10:40,440 Speaker 1: did you take when you came back? What did you 190 00:10:40,520 --> 00:10:42,959 Speaker 1: think that you should do that you haven't been doing 191 00:10:43,000 --> 00:10:49,439 Speaker 1: before In terms of gold or US donor exposure, we. 192 00:10:49,520 --> 00:10:52,960 Speaker 2: Or are already hedged. So yeah, but at some point 193 00:10:53,040 --> 00:10:56,160 Speaker 2: we will if we've got some strength in the Australian dollar, 194 00:10:56,200 --> 00:10:58,520 Speaker 2: we would look to reverse that some of that, not 195 00:10:58,600 --> 00:10:59,960 Speaker 2: all of it, but some of it. At this point 196 00:11:00,080 --> 00:11:03,160 Speaker 2: time on gold, would I be going in again at 197 00:11:03,200 --> 00:11:05,400 Speaker 2: those levels. It's run so hard. But yeah, for those 198 00:11:05,440 --> 00:11:07,319 Speaker 2: that have got gold in their portfolios, you know, I 199 00:11:07,360 --> 00:11:11,000 Speaker 2: would be sticking with it, and on US, I would 200 00:11:11,000 --> 00:11:14,040 Speaker 2: be sticking with the US market. I think that, yes, 201 00:11:14,120 --> 00:11:18,600 Speaker 2: Europe's had a run. Let's just be sensible about things. 202 00:11:18,800 --> 00:11:20,960 Speaker 2: I still struggle on what to buy in Europe. 203 00:11:21,480 --> 00:11:26,240 Speaker 1: Okay, Okay, all right, very interesting and obviously if possible 204 00:11:26,240 --> 00:11:29,960 Speaker 1: that's hedged obviously the US exposure, okay, which is not 205 00:11:30,040 --> 00:11:33,360 Speaker 1: normally the case right from many investors. All Right, I 206 00:11:33,400 --> 00:11:35,200 Speaker 1: think we'll take a short break. We'll be back in 207 00:11:35,240 --> 00:11:37,400 Speaker 1: a moment. There's a couple of really key aspects of 208 00:11:37,440 --> 00:11:48,400 Speaker 1: this I want to talk to Will about. Hello and 209 00:11:48,480 --> 00:11:52,040 Speaker 1: welcome back to the Australians Money Puzzle Podcast. James Kirby 210 00:11:52,080 --> 00:11:56,160 Speaker 1: talking to win Will Hamilton of Hamilton Wealth Managers, regular 211 00:11:56,240 --> 00:11:59,960 Speaker 1: on the show Hamilton Wealth Partners. Tell me Will, Okay, 212 00:11:59,800 --> 00:12:02,320 Speaker 1: so let's take it that from the first segment we've 213 00:12:02,320 --> 00:12:07,040 Speaker 1: got a sort of updated picture of the risks and 214 00:12:07,080 --> 00:12:11,520 Speaker 1: opportunities and the changing risks and opportunities around the weaker 215 00:12:11,640 --> 00:12:16,320 Speaker 1: US donor potentially de dollarization of markets. As you see 216 00:12:16,760 --> 00:12:19,599 Speaker 1: that strength of gold which is happening there. So in 217 00:12:19,720 --> 00:12:21,800 Speaker 1: terms of what people are looking at in terms of 218 00:12:21,880 --> 00:12:24,160 Speaker 1: where they put their money, is it stick with the 219 00:12:24,280 --> 00:12:28,559 Speaker 1: US which is very interesting? How about emerging markets? Because 220 00:12:29,920 --> 00:12:33,840 Speaker 1: if the US donor is weakening and continue to is 221 00:12:33,960 --> 00:12:37,520 Speaker 1: that a tailwind for emerging markets? 222 00:12:37,559 --> 00:12:39,840 Speaker 2: Not just that seventy percent of global growth in the 223 00:12:39,840 --> 00:12:42,080 Speaker 2: next twenty years is going to come from emerging markets. 224 00:12:42,120 --> 00:12:44,640 Speaker 2: So yeah, I think it's a combination of what you 225 00:12:44,679 --> 00:12:48,040 Speaker 2: just said, which is positive, combined with the fact that 226 00:12:48,600 --> 00:12:51,520 Speaker 2: emerging markets do have real growth and superior growth to 227 00:12:51,559 --> 00:12:54,520 Speaker 2: the rest of the world, so they performed well year 228 00:12:54,600 --> 00:12:57,360 Speaker 2: to date and also rolling on a twelve month basis, 229 00:12:57,400 --> 00:13:00,920 Speaker 2: and I can I see that continuing. The only area 230 00:13:01,000 --> 00:13:03,640 Speaker 2: in emerging markets where people seem to be hesitant, and 231 00:13:04,200 --> 00:13:06,080 Speaker 2: it's probably one of the cheapest stock markets in the 232 00:13:06,080 --> 00:13:09,000 Speaker 2: world is China, which is a big. 233 00:13:09,000 --> 00:13:11,240 Speaker 1: Chunk of emerging markets, isn't it if you're going into 234 00:13:11,280 --> 00:13:13,680 Speaker 1: a fund or an ETF yep. 235 00:13:13,800 --> 00:13:16,000 Speaker 2: And but interestingly I hear that a lot of the 236 00:13:16,040 --> 00:13:20,960 Speaker 2: industry funds now are looking at em x China, and 237 00:13:21,000 --> 00:13:23,800 Speaker 2: so a lot of and a lot of professional managers 238 00:13:23,840 --> 00:13:26,480 Speaker 2: are looking x China. In the way they approach this 239 00:13:26,600 --> 00:13:31,559 Speaker 2: part of this asset class, and likewise in internationally that 240 00:13:31,880 --> 00:13:34,640 Speaker 2: seems to be the case as well. So because of 241 00:13:34,679 --> 00:13:35,400 Speaker 2: political risk? 242 00:13:35,679 --> 00:13:37,920 Speaker 1: Is that because emerging markets x China has been the 243 00:13:37,920 --> 00:13:40,240 Speaker 1: best component of the index? 244 00:13:41,320 --> 00:13:43,720 Speaker 2: Yeah that is yeah, yeah, right. 245 00:13:44,280 --> 00:13:46,440 Speaker 1: One thing, what about tariffs? You would have thought actually 246 00:13:46,440 --> 00:13:49,360 Speaker 1: that the tariffs would be negative for that area. 247 00:13:51,840 --> 00:13:54,559 Speaker 2: You would, But the simple fact is it seemed to 248 00:13:55,080 --> 00:13:58,319 Speaker 2: have growth. And I think that the world is looking 249 00:13:58,360 --> 00:14:00,839 Speaker 2: outside of the US in many respects as well. Look 250 00:14:00,840 --> 00:14:04,800 Speaker 2: at Australia's looking at FTA with free Trade Agreement with Europe, 251 00:14:04,920 --> 00:14:08,600 Speaker 2: and so it seems to be an x US sort 252 00:14:08,600 --> 00:14:13,120 Speaker 2: of equation that people are looking at tariffs. I think 253 00:14:13,200 --> 00:14:15,840 Speaker 2: the whole debate on tariffs has raised its ugly head 254 00:14:15,840 --> 00:14:18,200 Speaker 2: again in the last week or two. But when I 255 00:14:18,280 --> 00:14:21,720 Speaker 2: was away, I think people were looking at a more 256 00:14:21,760 --> 00:14:23,920 Speaker 2: at that ten percent level. But a few other figures 257 00:14:23,920 --> 00:14:26,840 Speaker 2: have been thrown out since. But it's a geopolitical risk. 258 00:14:27,720 --> 00:14:33,600 Speaker 2: Whereas we've been always told geopolitical risks provide buying opportunities. 259 00:14:33,640 --> 00:14:36,720 Speaker 2: Now it seemed to be on geopolitical risks that you 260 00:14:36,760 --> 00:14:40,800 Speaker 2: look at scenario analysis around it. So what is you know, 261 00:14:40,920 --> 00:14:42,760 Speaker 2: we're looking at a base case of ten percent, What 262 00:14:42,840 --> 00:14:45,280 Speaker 2: if it was higher, what if it was lower? 263 00:14:46,720 --> 00:14:49,080 Speaker 1: What do you mean by base case of ten percent there. 264 00:14:49,600 --> 00:14:52,360 Speaker 2: On tariffs that the US is going to inflict on 265 00:14:52,480 --> 00:14:54,840 Speaker 2: them the rest of the world. So correct, So people 266 00:14:54,840 --> 00:14:57,400 Speaker 2: are looking at geopolitical risks now as something that you 267 00:14:57,440 --> 00:15:01,400 Speaker 2: do have to adjust for, but on taking into cat 268 00:15:01,480 --> 00:15:04,800 Speaker 2: scenario scenario analysis. 269 00:15:04,640 --> 00:15:09,480 Speaker 1: So put simply, gold and emerging markets would seem to 270 00:15:09,520 --> 00:15:17,200 Speaker 1: be the hot ticket five for investors. Yeah, okay, very interesting. Okay, 271 00:15:17,360 --> 00:15:20,080 Speaker 1: that's very I've wanted to get across that for some time. 272 00:15:20,880 --> 00:15:23,680 Speaker 1: One thing for our listeners who may not be that 273 00:15:24,000 --> 00:15:26,640 Speaker 1: may be all new to them, emerging markets. Gold is 274 00:15:26,640 --> 00:15:28,480 Speaker 1: pretty obvious what you can do. I mean, gold is 275 00:15:28,480 --> 00:15:31,720 Speaker 1: not complicated. It's a commodity that goes up or it 276 00:15:31,720 --> 00:15:35,160 Speaker 1: doesn't go up. Emerging markets are terribly complicated. A bit 277 00:15:35,200 --> 00:15:37,960 Speaker 1: of a bit of nonsense, really. I mean it's because 278 00:15:38,160 --> 00:15:40,080 Speaker 1: someone in London or New York said, let's put them 279 00:15:40,080 --> 00:15:43,560 Speaker 1: all into a basket. That Russia, China, Indonesia, and Mexico. 280 00:15:43,920 --> 00:15:49,400 Speaker 1: These countries have nothing in common except this classification. So 281 00:15:49,440 --> 00:15:50,280 Speaker 1: what I'm driving out. 282 00:15:50,240 --> 00:15:53,360 Speaker 2: Is many of the amount emerging markets, like seth career 283 00:15:53,360 --> 00:15:53,880 Speaker 2: in Taiwan. 284 00:15:54,400 --> 00:15:57,680 Speaker 1: Yeah sure, yeah, sure, so so what and you go 285 00:15:57,720 --> 00:16:00,080 Speaker 1: in and you see time in the semiconductor is like 286 00:16:00,160 --> 00:16:02,840 Speaker 1: a major holding, but that's not an emerging market stuff. 287 00:16:04,040 --> 00:16:06,120 Speaker 1: What I want to ask you, Will is how does 288 00:16:06,160 --> 00:16:09,400 Speaker 1: the everyday investor get at this area? 289 00:16:11,200 --> 00:16:13,880 Speaker 2: Well through you know, there's some very good managers out there, 290 00:16:13,960 --> 00:16:17,600 Speaker 2: and all I would suggest in approaching it is have 291 00:16:17,680 --> 00:16:20,880 Speaker 2: a look at the downside participation when things go tough 292 00:16:20,880 --> 00:16:24,040 Speaker 2: in emerging markets in selecting a manager, and make sure 293 00:16:24,600 --> 00:16:28,120 Speaker 2: you're comfortable with a downside participation. There are managers that 294 00:16:28,160 --> 00:16:30,600 Speaker 2: have less and that's what we always look at. So 295 00:16:30,640 --> 00:16:33,720 Speaker 2: I'm not going to mention names. There's some very good 296 00:16:33,720 --> 00:16:34,720 Speaker 2: managers out there. 297 00:16:35,280 --> 00:16:38,000 Speaker 1: And it sounds like you don't like ETFs on this one. 298 00:16:40,400 --> 00:16:42,560 Speaker 2: I know, I think that you've this is something you 299 00:16:42,680 --> 00:16:46,360 Speaker 2: do definitely need an active manager out like we actually 300 00:16:46,480 --> 00:16:49,760 Speaker 2: use managers that don't like China. 301 00:16:50,400 --> 00:16:52,800 Speaker 1: Okay, or maybe you will at at very least perhaps 302 00:16:52,840 --> 00:16:55,480 Speaker 1: an ETF X China are such a thing which are 303 00:16:55,560 --> 00:16:57,960 Speaker 1: not aware of. But if you see, we're not there 304 00:16:57,960 --> 00:17:00,240 Speaker 1: to let us know. Okay. I have some really good 305 00:17:00,280 --> 00:17:01,680 Speaker 1: questions I want to talk to Will about. But I 306 00:17:01,760 --> 00:17:03,440 Speaker 1: want to there's something else I want to ask in 307 00:17:03,520 --> 00:17:08,159 Speaker 1: which is not on the broad theme today about the 308 00:17:08,280 --> 00:17:12,159 Speaker 1: US and what it means for you. It's about the 309 00:17:12,200 --> 00:17:14,880 Speaker 1: sixty to forty rule. And I've been reading some very 310 00:17:14,880 --> 00:17:19,119 Speaker 1: interesting things. A really terrific piece last weekend. It was 311 00:17:19,119 --> 00:17:21,560 Speaker 1: about the sixty forty rule, which I'm sure most of 312 00:17:21,600 --> 00:17:23,879 Speaker 1: our listeners are familiar with. This idea that you have 313 00:17:23,920 --> 00:17:26,119 Speaker 1: sixty percent of your money at risk and you have 314 00:17:26,160 --> 00:17:30,640 Speaker 1: forty percent of your money in safer investments. And traditionally 315 00:17:30,880 --> 00:17:33,840 Speaker 1: globally that was sixty percent in shares or risk assets 316 00:17:33,880 --> 00:17:36,800 Speaker 1: that are listed, forty percent in what they call fixed 317 00:17:36,840 --> 00:17:41,280 Speaker 1: income traditionally bonds. This has really changed in recent times. 318 00:17:41,480 --> 00:17:45,720 Speaker 1: Bonds have been disappointing for years and years, and there 319 00:17:45,720 --> 00:17:48,600 Speaker 1: has been new areas that have mushroomed before our eyes, 320 00:17:48,880 --> 00:17:52,280 Speaker 1: private equity, private credit. I just want to ask you Will, 321 00:17:52,320 --> 00:17:56,199 Speaker 1: for this whole sixty to forty rule, what do you 322 00:17:56,520 --> 00:17:59,920 Speaker 1: what in your eyes the forty percent that people should 323 00:17:59,920 --> 00:18:03,760 Speaker 1: have that isn't that is a fixed rather than ash risk. 324 00:18:05,119 --> 00:18:07,600 Speaker 1: What does it comprise of these days? 325 00:18:08,280 --> 00:18:12,240 Speaker 2: Well, for growth portfolio, where approximately seventy thirty we do have. 326 00:18:12,520 --> 00:18:14,880 Speaker 2: It all depends on the client how much money they've got, 327 00:18:15,840 --> 00:18:19,840 Speaker 2: how comfortable they are holding a degree of ill liquidity 328 00:18:19,880 --> 00:18:23,000 Speaker 2: and their portfolios. So for a decade now we've invested 329 00:18:23,040 --> 00:18:27,960 Speaker 2: in private equity, infrastructure, diverse FOI credit and direct real estate. 330 00:18:28,200 --> 00:18:32,639 Speaker 2: But this is something that clients have to be comfortable 331 00:18:32,680 --> 00:18:36,320 Speaker 2: with illiquidity and their portfolio. Now there are what's called 332 00:18:36,400 --> 00:18:39,840 Speaker 2: these evergreen funds which have come about and you know 333 00:18:39,880 --> 00:18:43,240 Speaker 2: they're in at you in particular and infrastructure and private equity. 334 00:18:43,960 --> 00:18:46,479 Speaker 2: They some people call them semi liquid which I think 335 00:18:46,560 --> 00:18:50,000 Speaker 2: is a terrible term. I'd like to ren think of 336 00:18:50,040 --> 00:18:54,960 Speaker 2: it as variable liquidity. In other words, you can get 337 00:18:55,000 --> 00:18:59,720 Speaker 2: your money out in normal environment with you that there's 338 00:18:59,760 --> 00:19:05,760 Speaker 2: out slow caps et cetera. However, if things were to 339 00:19:05,840 --> 00:19:09,560 Speaker 2: go bad, these things have the right to lock up 340 00:19:10,280 --> 00:19:10,960 Speaker 2: two seconds. 341 00:19:11,160 --> 00:19:13,080 Speaker 1: Yes, sorry, what I was driving out. 342 00:19:12,960 --> 00:19:15,520 Speaker 2: Was that's why it's use the term variable. 343 00:19:16,040 --> 00:19:17,880 Speaker 1: You didn't see the word bonds when you listed out 344 00:19:17,880 --> 00:19:21,920 Speaker 1: the four key elements of the of the your fortunate bond. 345 00:19:21,960 --> 00:19:24,320 Speaker 2: But that's what we put all of these in the 346 00:19:24,400 --> 00:19:29,200 Speaker 2: risk base. But we have reduced a defensive allocation. Now, 347 00:19:29,200 --> 00:19:31,919 Speaker 2: this was a big debate and to what extent you 348 00:19:32,040 --> 00:19:37,680 Speaker 2: go into what is your waiting in these private market assets. Yeah, 349 00:19:37,760 --> 00:19:39,600 Speaker 2: and as I said, it's very dependent on a client 350 00:19:39,600 --> 00:19:44,480 Speaker 2: by client basis and the comfort with illiquidity. And I 351 00:19:44,520 --> 00:19:47,640 Speaker 2: think that's that is the number one question you've got 352 00:19:47,640 --> 00:19:49,960 Speaker 2: to take. You take into account and how do you 353 00:19:50,000 --> 00:19:52,480 Speaker 2: how do you categorize an asset as being a liquid 354 00:19:52,560 --> 00:19:55,159 Speaker 2: So we're quite conservative on that. We say it's monthly liquidity. 355 00:19:56,160 --> 00:20:00,440 Speaker 2: So it's very conservative on an approach. And there's some 356 00:20:00,520 --> 00:20:03,920 Speaker 2: firms out there that recommend very high ratings. Yeah, thirty 357 00:20:03,920 --> 00:20:08,000 Speaker 2: percent plus. We're not anywhere near that, but we think, yes, 358 00:20:08,040 --> 00:20:13,000 Speaker 2: somewhere between fifteen and twenty if if it's a big 359 00:20:13,080 --> 00:20:17,119 Speaker 2: if the client is comfortable, and if they're not, well, 360 00:20:17,640 --> 00:20:18,439 Speaker 2: it goes lower. 361 00:20:18,640 --> 00:20:20,640 Speaker 1: And so if you want to go into these areas 362 00:20:20,800 --> 00:20:25,640 Speaker 1: private equity, you mentioned infrastructure, what were the other there's 363 00:20:25,680 --> 00:20:26,360 Speaker 1: two more you. 364 00:20:26,320 --> 00:20:28,879 Speaker 2: Mentioned diversified credit and direct real estate. 365 00:20:29,080 --> 00:20:31,720 Speaker 1: Divers boy credit and direct real estate. What you're saying is, 366 00:20:32,160 --> 00:20:34,480 Speaker 1: as a guide, you should be able to get your 367 00:20:34,520 --> 00:20:35,400 Speaker 1: money up once a month. 368 00:20:37,600 --> 00:20:41,159 Speaker 2: We define something as a liquid as monthly or greater. 369 00:20:43,480 --> 00:20:46,680 Speaker 2: So in some cases these windows are quarterly, sometimes they're annually. 370 00:20:47,280 --> 00:20:50,359 Speaker 2: But you're weere conservative in the way we classify that 371 00:20:50,480 --> 00:20:52,680 Speaker 2: some other firms classified as quarterly or greater. 372 00:20:53,000 --> 00:20:54,840 Speaker 1: But be aware of folks. If you are going into 373 00:20:54,840 --> 00:20:56,240 Speaker 1: one of these funds for the first time and it 374 00:20:56,320 --> 00:21:00,919 Speaker 1: says you can take your money out monthly, watch the 375 00:21:01,000 --> 00:21:04,560 Speaker 1: fine print that they will invariably say unless we change 376 00:21:04,600 --> 00:21:09,520 Speaker 1: our minds, and that can happen, So you must bear 377 00:21:09,600 --> 00:21:11,840 Speaker 1: that in mind. It's not the stock market. There's always 378 00:21:11,840 --> 00:21:14,320 Speaker 1: a liquidity in the stock market. You can always get 379 00:21:14,560 --> 00:21:17,159 Speaker 1: your money out of shares nine times out of ten, 380 00:21:17,240 --> 00:21:19,560 Speaker 1: especially large caps or mid caps. I mean occasionally you 381 00:21:19,600 --> 00:21:21,200 Speaker 1: might get a squeeze on a small cap, but that's 382 00:21:21,320 --> 00:21:25,159 Speaker 1: very rare. And ETFs even more so that they're exceptionally liquid. 383 00:21:25,160 --> 00:21:27,520 Speaker 1: That is there, that is their advantage. Only so much 384 00:21:27,600 --> 00:21:31,000 Speaker 1: we can cover. Very interesting. Okay, well, just while before 385 00:21:31,040 --> 00:21:33,160 Speaker 1: we go to the break, in terms of anything else, 386 00:21:33,200 --> 00:21:36,040 Speaker 1: you discovered that perhaps we are not right up to 387 00:21:36,080 --> 00:21:39,160 Speaker 1: speed on global markets. In terms of trends, we didn't 388 00:21:39,160 --> 00:21:45,560 Speaker 1: talk about crypto. I detect a serious change in attitude 389 00:21:45,800 --> 00:21:49,320 Speaker 1: from our listeners on the money pustle towards crypto in 390 00:21:49,400 --> 00:21:52,880 Speaker 1: the space of a year. I think in terms of 391 00:21:53,880 --> 00:21:55,280 Speaker 1: the Grand Tour, you had. 392 00:21:57,119 --> 00:22:01,280 Speaker 2: Well, the same Swiss private bank that was talking about 393 00:22:01,280 --> 00:22:03,440 Speaker 2: gold Is said to us, said to me that they're 394 00:22:03,480 --> 00:22:07,800 Speaker 2: about to bring crypto into their portfolios and a very 395 00:22:07,840 --> 00:22:12,560 Speaker 2: small waiting, tiny waiting, but there that's it. I was 396 00:22:12,600 --> 00:22:14,960 Speaker 2: shocked when I heard that. I sort of why were 397 00:22:15,000 --> 00:22:15,359 Speaker 2: you shocked? 398 00:22:15,400 --> 00:22:18,080 Speaker 1: I mean AMP has done a GP, Morgan has done. 399 00:22:19,760 --> 00:22:23,840 Speaker 2: Well. I think that when you look at, in particular, 400 00:22:24,240 --> 00:22:27,119 Speaker 2: some of the UK investors, Yeah, they're waiting in private 401 00:22:27,160 --> 00:22:30,240 Speaker 2: markets is so low and they won't even debate putting 402 00:22:30,280 --> 00:22:35,639 Speaker 2: something like crypto in They really are conservative, whereas you 403 00:22:35,680 --> 00:22:39,199 Speaker 2: know these some of these more European institutions such as 404 00:22:39,200 --> 00:22:42,080 Speaker 2: this West Private Bank. Yeah, they are saying, well, start 405 00:22:42,080 --> 00:22:45,119 Speaker 2: to put a small holding. So it's a very different 406 00:22:45,119 --> 00:22:46,040 Speaker 2: approach from the UK. 407 00:22:46,840 --> 00:22:50,640 Speaker 1: Yeah, and it's growing right, the acceptance. 408 00:22:50,600 --> 00:22:52,720 Speaker 2: Absolutely yeah, yeah. 409 00:22:52,640 --> 00:22:56,600 Speaker 1: Throughout institution and investment investors around the world. Okay, or 410 00:22:56,720 --> 00:22:59,040 Speaker 1: I wanted to cover that because we've had some lively 411 00:22:59,080 --> 00:23:03,440 Speaker 1: discussion on bitcoin and crypto in recent times on the show, 412 00:23:03,680 --> 00:23:08,360 Speaker 1: and we had Jackie Clark who was completely against it 413 00:23:08,480 --> 00:23:11,560 Speaker 1: and had a lot of criticism from our listeners. And 414 00:23:11,560 --> 00:23:14,119 Speaker 1: then I said, okay, well let's get Shane Oliver on 415 00:23:14,160 --> 00:23:17,399 Speaker 1: from AMP. Since the AMP is you know, the definitive 416 00:23:17,440 --> 00:23:20,200 Speaker 1: institutional investment in Australia. And they've put twenty seven million 417 00:23:20,280 --> 00:23:22,639 Speaker 1: into crypto, which is, you know, not a lot, but 418 00:23:22,680 --> 00:23:25,720 Speaker 1: it's also twenty seven million into crypto for AMP. And 419 00:23:25,800 --> 00:23:28,480 Speaker 1: he explained their side, and it was a bit like 420 00:23:28,560 --> 00:23:31,520 Speaker 1: you were saying, it was, by no means an enthusiastic. 421 00:23:32,440 --> 00:23:34,879 Speaker 1: I didn't think it was an enthusiastic I think it 422 00:23:34,920 --> 00:23:38,280 Speaker 1: was more a sort of acceptance that this acid class 423 00:23:38,359 --> 00:23:40,560 Speaker 1: is here to stay. All right, we'll be back on 424 00:23:40,600 --> 00:23:42,679 Speaker 1: that one. Of course, Let's have some questions. We'll be 425 00:23:42,720 --> 00:23:50,480 Speaker 1: back in a moment. Hello, Welcome back to the Australians 426 00:23:50,520 --> 00:23:53,600 Speaker 1: Money Puzzle podcast. James Kirby here, I've been keeping some 427 00:23:53,760 --> 00:23:57,760 Speaker 1: questions for Will Hamilton of Hamilton Wealth Partners and they 428 00:23:57,800 --> 00:24:01,640 Speaker 1: are rather the difficult, but always interesting as you can 429 00:24:01,680 --> 00:24:03,920 Speaker 1: imagine the difficult ones. Can you see them? 430 00:24:03,960 --> 00:24:06,639 Speaker 2: Will? I can? Would you like me to read the 431 00:24:06,640 --> 00:24:12,280 Speaker 2: first one? Yeah? Okay, so Bernie. I'm an experienced investor 432 00:24:12,280 --> 00:24:15,520 Speaker 2: in shares, residential and commercial property, but almost always pick 433 00:24:15,600 --> 00:24:18,479 Speaker 2: up something new or inspiring. So some comments from your 434 00:24:18,520 --> 00:24:21,200 Speaker 2: guests this week were a little disheartening. I don't hold 435 00:24:21,240 --> 00:24:24,119 Speaker 2: Lockheed Mark Martin directly, but the inference seemed to be 436 00:24:24,480 --> 00:24:27,199 Speaker 2: that investors in it may not be moral people, as 437 00:24:27,240 --> 00:24:29,959 Speaker 2: they drop bombs on families. A bit extreme, But this 438 00:24:30,080 --> 00:24:32,840 Speaker 2: does raise a great point. How do how do the 439 00:24:32,840 --> 00:24:38,080 Speaker 2: top investors now establish guardrails on ethical considerations? So Lockheed US, 440 00:24:38,160 --> 00:24:42,440 Speaker 2: both Amazon and Microsoft extensively across their businesses, yet both 441 00:24:42,480 --> 00:24:47,679 Speaker 2: companies were picks for your guest. So look, values is 442 00:24:47,720 --> 00:24:49,240 Speaker 2: the way I like to look at it. I won't 443 00:24:49,320 --> 00:24:51,960 Speaker 2: use the word ethics because what's ethical to one person 444 00:24:52,040 --> 00:24:55,239 Speaker 2: is not to another. But values, Yeah, that's something that 445 00:24:55,440 --> 00:24:57,800 Speaker 2: a lot of investors like to take into account. And 446 00:24:57,880 --> 00:25:01,000 Speaker 2: when it comes to armaments, it's a very big consideration 447 00:25:01,119 --> 00:25:05,119 Speaker 2: which you don't generally exist on the ASX, but you 448 00:25:05,160 --> 00:25:09,040 Speaker 2: can get exposure to in global equity markets, and it's 449 00:25:09,080 --> 00:25:12,960 Speaker 2: something that's most investors we find actually it's something they 450 00:25:12,960 --> 00:25:15,600 Speaker 2: do want to exclude. However, where do you draw the line? 451 00:25:15,600 --> 00:25:18,160 Speaker 2: It's like alcohol. You know, when some people take alcohol 452 00:25:18,200 --> 00:25:21,879 Speaker 2: into consideration, did you then go and ban coals because 453 00:25:21,880 --> 00:25:23,800 Speaker 2: they sell it? And where to what extent do you 454 00:25:23,920 --> 00:25:27,320 Speaker 2: draw that line? So do you and the alcohol companies, 455 00:25:27,359 --> 00:25:30,840 Speaker 2: But do you then know when it's a smaller percentage 456 00:25:30,840 --> 00:25:33,119 Speaker 2: of their total revenue do you ban those companies? So 457 00:25:34,720 --> 00:25:38,560 Speaker 2: Bernie is right Locke to use both Amazon and Microsoft. 458 00:25:38,920 --> 00:25:40,800 Speaker 2: You know, it's where do you draw that line? 459 00:25:41,040 --> 00:25:42,920 Speaker 1: It's very difficult, Bernie, and it's one of the reasons 460 00:25:42,960 --> 00:25:48,119 Speaker 1: that the wholes swing away from ESG has been that 461 00:25:48,240 --> 00:25:50,280 Speaker 1: the lack of definition, and perhaps in some way it's 462 00:25:50,280 --> 00:25:53,480 Speaker 1: the difficulty of definition. A serious ethical investor would pull 463 00:25:53,520 --> 00:25:55,640 Speaker 1: this sort of toll very quickly and say listen cot 464 00:25:55,680 --> 00:25:57,879 Speaker 1: to the chase, you can do it. I think the 465 00:25:57,920 --> 00:26:00,840 Speaker 1: only way, in Bernie, this is not advice, never is information, 466 00:26:00,920 --> 00:26:04,440 Speaker 1: only is to look at the more pure play ethical 467 00:26:04,960 --> 00:26:09,040 Speaker 1: investment groups, the oldest, probably best known as Australian Ethical Investments, 468 00:26:09,440 --> 00:26:11,480 Speaker 1: and you would like to think that their benchmarks are 469 00:26:11,600 --> 00:26:14,280 Speaker 1: as good as you will find if you're very interested 470 00:26:14,359 --> 00:26:17,320 Speaker 1: in that area. But there is always, as Will says, 471 00:26:17,400 --> 00:26:21,439 Speaker 1: there is always. It's just really hard to cut it. 472 00:26:21,480 --> 00:26:23,840 Speaker 1: To cut it. So you say, okay, I'm not going 473 00:26:23,880 --> 00:26:26,000 Speaker 1: to buy Lockheed Martin. I don't want to buy Lockheed Martin. 474 00:26:26,040 --> 00:26:29,040 Speaker 1: They make bombs, okay, fine, or they make fighter bombers 475 00:26:29,119 --> 00:26:32,280 Speaker 1: or whatever. Then do you say you don't buy Amazon 476 00:26:32,320 --> 00:26:34,760 Speaker 1: because they use Amazon? Do you say you won't buy 477 00:26:34,800 --> 00:26:37,760 Speaker 1: a standard four x nine ETF on the US market 478 00:26:37,800 --> 00:26:40,680 Speaker 1: because Lockheed Martin will be in there, so you can see. 479 00:26:40,720 --> 00:26:42,520 Speaker 1: It's up to you. You've got to design your own 480 00:26:42,920 --> 00:26:46,520 Speaker 1: portfolio to a large extent, I believe, all right, but 481 00:26:46,600 --> 00:26:50,920 Speaker 1: thank you, Bernie, really good question, Charles. A common misconception 482 00:26:51,119 --> 00:26:54,720 Speaker 1: that came up on your shoe on exchange traded funds 483 00:26:54,880 --> 00:26:57,239 Speaker 1: was the idea that these funds need to buy more 484 00:26:57,280 --> 00:26:59,439 Speaker 1: of a company when it performs well and sell it 485 00:26:59,480 --> 00:27:04,000 Speaker 1: when it performed poorly. In reality, ETFs or index funds 486 00:27:04,040 --> 00:27:07,360 Speaker 1: passively reflect the composition of the index. They don't need 487 00:27:07,400 --> 00:27:11,800 Speaker 1: to make those active trades. The only time index funds 488 00:27:11,880 --> 00:27:14,240 Speaker 1: actively buy our sell is when money flows in or 489 00:27:14,280 --> 00:27:17,159 Speaker 1: out of the fund, or when a stock enters or 490 00:27:17,240 --> 00:27:23,080 Speaker 1: exits the index. So Charles is saying that my contention, 491 00:27:23,160 --> 00:27:25,200 Speaker 1: if you like here in the show when in print, 492 00:27:25,640 --> 00:27:29,000 Speaker 1: has been that the ETFs are now at a point 493 00:27:29,040 --> 00:27:34,359 Speaker 1: where they are driving markets to a degree, and certain 494 00:27:34,440 --> 00:27:39,240 Speaker 1: stocks to a degree. And the outstanding example was common 495 00:27:39,280 --> 00:27:41,879 Speaker 1: Wealth Bank, where the part I was making was the 496 00:27:41,920 --> 00:27:44,119 Speaker 1: higher it goes, the more they must buy it, and 497 00:27:44,160 --> 00:27:46,880 Speaker 1: so to some extent they self perpetuated. Charles is saying, no, 498 00:27:47,160 --> 00:27:49,399 Speaker 1: that's not right. That's not how it works. He's just 499 00:27:49,480 --> 00:27:52,400 Speaker 1: explained how it works technically. What do you think, well, 500 00:27:52,520 --> 00:27:58,000 Speaker 1: is our ETF's then neutral in the market in terms. 501 00:27:57,840 --> 00:28:01,680 Speaker 2: Of that they are and momentum. It's all about momentum. 502 00:28:01,720 --> 00:28:05,280 Speaker 2: And as money comes in, and there's money that goes 503 00:28:05,280 --> 00:28:08,159 Speaker 2: into your twelve percent of people salaries going to in 504 00:28:08,240 --> 00:28:13,120 Speaker 2: a superannuation every month, and people are buying the index, 505 00:28:13,560 --> 00:28:16,400 Speaker 2: and as such they're buying a large percentage of when 506 00:28:16,400 --> 00:28:20,720 Speaker 2: they're buyingn ETF, they're buying a large percentage of CBA. Likewise, 507 00:28:21,080 --> 00:28:24,680 Speaker 2: as waitings change, those ETFs have to chase those waiting 508 00:28:24,760 --> 00:28:26,680 Speaker 2: changes as well, up or down. 509 00:28:27,200 --> 00:28:31,120 Speaker 1: So they they pushed the momentum down. 510 00:28:32,200 --> 00:28:34,679 Speaker 2: Correct, And I don't think it's just as simplistic as 511 00:28:34,720 --> 00:28:37,920 Speaker 2: saying everything static and therefore it just moves up or 512 00:28:37,960 --> 00:28:41,200 Speaker 2: down because there is the cash that chases these markets. 513 00:28:41,520 --> 00:28:45,120 Speaker 1: Okay, okay, I hope that's a I hope that's a 514 00:28:45,640 --> 00:28:48,560 Speaker 1: useful explanation to everybody. Childs might like it, but but 515 00:28:48,680 --> 00:28:50,760 Speaker 1: there you are, Childs, I would agree with well on that. 516 00:28:51,120 --> 00:28:53,240 Speaker 1: All right, Why don't you read the last question there 517 00:28:53,480 --> 00:28:56,520 Speaker 1: are from Bruce, which is probably the sort of thing 518 00:28:56,560 --> 00:28:58,120 Speaker 1: you get in your office sometimes. 519 00:28:59,360 --> 00:29:02,720 Speaker 2: Yeah, so can you provide some clarification on the tax 520 00:29:02,840 --> 00:29:05,400 Speaker 2: on inherited super? So I used to be under the 521 00:29:05,440 --> 00:29:08,160 Speaker 2: impression that if super was left to your estate then 522 00:29:08,200 --> 00:29:11,720 Speaker 2: it would be passed on untaxed. However, recent podcasts have 523 00:29:11,880 --> 00:29:16,160 Speaker 2: led me to doubt this. He asked his his accountant 524 00:29:16,200 --> 00:29:18,160 Speaker 2: and ended up more confused than ever. So can you 525 00:29:18,240 --> 00:29:21,400 Speaker 2: get someone to explain the situation and the various components 526 00:29:21,440 --> 00:29:25,760 Speaker 2: tax free, untaxed, taxable. Look, let's just have if we 527 00:29:25,840 --> 00:29:28,520 Speaker 2: don't have time, we don't have another ran. 528 00:29:28,400 --> 00:29:33,040 Speaker 1: Bruce, We'll just tell you one thing which with stands unchallenged. 529 00:29:33,400 --> 00:29:38,840 Speaker 1: There is tax uninherited super, isn't there? And you might explain, 530 00:29:39,640 --> 00:29:44,400 Speaker 1: let's say I inherit Let's say if my dad had 531 00:29:44,440 --> 00:29:47,280 Speaker 1: lived in Australia. Un let's say he had super. Unless 532 00:29:47,280 --> 00:29:49,720 Speaker 1: say he left me two hundred thousand dollars and it 533 00:29:49,840 --> 00:29:52,840 Speaker 1: was his whole super, how would that be taxed? 534 00:29:55,080 --> 00:29:59,000 Speaker 2: So you're we're making an assumption here that it's that 535 00:29:59,160 --> 00:30:01,720 Speaker 2: there is some There are quite a number of things 536 00:30:01,760 --> 00:30:03,800 Speaker 2: you've got to take into account and I'm not going 537 00:30:03,880 --> 00:30:05,640 Speaker 2: to go into this in any detail. And this is 538 00:30:05,680 --> 00:30:07,840 Speaker 2: why you do need to get You know, this is 539 00:30:07,920 --> 00:30:10,440 Speaker 2: not advice, and you need to get specific advice. So 540 00:30:10,760 --> 00:30:13,720 Speaker 2: were you a dependent? Is it paid as a lump 541 00:30:13,760 --> 00:30:16,360 Speaker 2: sum or an income stream? The income stream is it 542 00:30:16,400 --> 00:30:19,880 Speaker 2: account based or capped? Yeah? The super tax is it 543 00:30:20,000 --> 00:30:23,000 Speaker 2: taxable or tax free? And so if you look basically, 544 00:30:23,000 --> 00:30:25,680 Speaker 2: the bottom line is it's sevente and a percent, but 545 00:30:26,440 --> 00:30:28,440 Speaker 2: or your age and the age of the deceased person 546 00:30:28,480 --> 00:30:30,400 Speaker 2: when they die. So there's a lot of things that 547 00:30:30,560 --> 00:30:32,840 Speaker 2: have to be taken in account. There is no clear, simple, 548 00:30:33,240 --> 00:30:37,160 Speaker 2: one answer across the board, and that's why you ended 549 00:30:37,240 --> 00:30:39,200 Speaker 2: up confused and wanted to know, well, what are the 550 00:30:40,080 --> 00:30:42,040 Speaker 2: various answers? There are many answers. 551 00:30:42,120 --> 00:30:44,200 Speaker 1: There are many, and you need to talk to as 552 00:30:44,240 --> 00:30:48,560 Speaker 1: well as unfortunately you need If it's individual and it's substantial, 553 00:30:48,680 --> 00:30:50,960 Speaker 1: it's probably worth paying an advisor. But there's a couple 554 00:30:51,040 --> 00:30:55,400 Speaker 1: of core things that are true. Bruce, adults, dependents being 555 00:30:55,520 --> 00:31:00,840 Speaker 1: adults who inherit super, the super they inherent the person 556 00:31:00,880 --> 00:31:04,240 Speaker 1: who had the super. To make it simple, we'll assume 557 00:31:04,320 --> 00:31:09,040 Speaker 1: that they never voluntarily contributed to super. It was all mandated. 558 00:31:09,120 --> 00:31:12,479 Speaker 1: There was all their SGC. That means that was tax. 559 00:31:13,080 --> 00:31:15,720 Speaker 1: That that means that there was tax pre component in 560 00:31:15,840 --> 00:31:18,080 Speaker 1: all that. That means there's tax to be paid, and 561 00:31:18,160 --> 00:31:21,240 Speaker 1: that tax works out at seventeen percent. This is what 562 00:31:21,320 --> 00:31:23,680 Speaker 1: the seventeen percent figure that we'll mention it. There's also 563 00:31:23,800 --> 00:31:26,240 Speaker 1: some complications with the new division two nine six, but 564 00:31:26,320 --> 00:31:28,720 Speaker 1: we won't go there because we don't have two hours. 565 00:31:29,200 --> 00:31:32,320 Speaker 1: But basically, don't think that you're super coming through has 566 00:31:32,400 --> 00:31:36,760 Speaker 1: no tax on it. Unfortunately, but most people don't realize this. 567 00:31:36,840 --> 00:31:39,720 Speaker 1: When Paul Keaton created the supersystem and when he created 568 00:31:39,760 --> 00:31:44,400 Speaker 1: the concession for super whereby the bit that goes in 569 00:31:44,480 --> 00:31:47,040 Speaker 1: from your employer which is now twelve percent, believe it 570 00:31:47,160 --> 00:31:49,560 Speaker 1: or not, when that comes out the other side as 571 00:31:49,560 --> 00:31:53,520 Speaker 1: an inheritance to you, they want to recover the tax 572 00:31:53,600 --> 00:31:58,880 Speaker 1: concession and that works out at seventeen percent of that figure. Simple, 573 00:31:59,080 --> 00:32:00,760 Speaker 1: simplified answer. But that's it. 574 00:32:01,960 --> 00:32:04,400 Speaker 2: We have a site Texas in Australia and that's three souper. 575 00:32:05,000 --> 00:32:07,320 Speaker 1: That's right. So it's funny people said, is there an 576 00:32:07,360 --> 00:32:10,800 Speaker 1: inheritance tax and people say, no, there's no inheritance tax 577 00:32:10,840 --> 00:32:14,160 Speaker 1: in Australia. Well, if you inherit super there is. But 578 00:32:14,400 --> 00:32:18,160 Speaker 1: technically that's a super tax, not an inheritance tax. You 579 00:32:18,240 --> 00:32:21,680 Speaker 1: cant have a whole show about debating that one. Okay, terrific, terrific, 580 00:32:22,000 --> 00:32:24,320 Speaker 1: Thanks very much, Will Hamilton, well partner's great to have 581 00:32:24,400 --> 00:32:25,080 Speaker 1: you on the show again. 582 00:32:26,520 --> 00:32:27,720 Speaker 2: Thank you for having me, appreciate it. 583 00:32:28,240 --> 00:32:30,640 Speaker 1: Nice to have you back on land and we'll talk 584 00:32:30,680 --> 00:32:34,200 Speaker 1: to you again. Okay, terrific. Great questions Today a number 585 00:32:34,240 --> 00:32:37,440 Speaker 1: of people have done the clever thing of batching questions 586 00:32:37,480 --> 00:32:39,840 Speaker 1: together and sending two or three questions in at the 587 00:32:39,920 --> 00:32:42,880 Speaker 1: same time. That's great. Keep it up. Why not if 588 00:32:42,920 --> 00:32:44,560 Speaker 1: you're going to make the effort to send in a question, 589 00:32:44,720 --> 00:32:47,080 Speaker 1: send in two or three. I will try and cover 590 00:32:47,200 --> 00:32:49,840 Speaker 1: them all and we do get to cover them on 591 00:32:50,000 --> 00:32:53,960 Speaker 1: the show. The addresses the money Puzzle at the Australian 592 00:32:54,040 --> 00:32:56,160 Speaker 1: dot com dot au talk to you soon. 593 00:33:00,120 --> 00:33:18,400 Speaker 2: At the pad, the h