Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
ASX 200 hits 7,000 points for the first time in 13 months
ASX breaches 7,000, record highs all around, Westpac hit with ASIC case
The ASX200 (ASX:XJO) delivered another positive day, finishing 1.0% higher spurred on by an improving global economic outlook.
Market sentiment is overcoming growing issues with the vaccine rollout and risk of mutations, with materials the biggest beneficiary jumping 1.8% behind BHP (ASX:BHP) and Rio Tinto (ASX:RIO) both of which finished more than 2% higher.
As mentioned, the ASX200 is now nearing an all-time high closer to 7,200 points but it is clearly a stock pickers market.
A growing list of companies are now trading at record highs including lithium and iron ore miner Mineral Resources (ASX:MIN), plumbing supplies distributor Reece Ltd (ASX:REH), metal detector Codan (ASX:CDA), and conglomerate Washington H Soul Pattinson (ASX:SOL).
There are clear reasons for many of these companies to be reaching record highs, including commodity prices, but the valuation of many may seem excessive to traditional ‘value’ focused investors.
Scentre gets a strike, McPherson’s rejects takeover, coal reaches two year high
Scentre Group (ASX:SCG) received a first strike against the remuneration of its board members, with proxy groups clearly disappointed with the amount of ‘pain’ they shared with their retail tenants during the pandemic.
On the positive side, management confirmed some $600 million in rental collections and a continuation of the foot traffic strength in late 2020, the result being a minimum dividend of at least 14 cents per share.
The share price was flat by competitor Vicinity (ASX:VCX) jumping 0.3% on the news.
Westpac (ASX:WBC) is facing more court action with ASIC launching civil proceedings relating to the sale of consumer credit insurance, this time to just 384 customers.
The proceedings allege that these customers may not have requested or agreed to acquire the product.
Health and wellness product distributor McPherson’s (ASX:MCP) including Multix kitchen products have rejected an offer from a Raphael Geminder backed group, suggesting the 9.8% premium to the share price undervalued the company; shares jumped 1.4%.
Records continue to fall, Brazil’s deadliest day, unemployment higher
The US market continues to deliver, the S&P500 testing new record highs and ultimately 0.4% as the technology sector reasserts its dominance.
The Nasdaq was the standout, jumping over 1% with the Dow Jones a more pedestrian 0.2% gain.
Companies ranging from digital payments, including PayPal (NYSE:PYPL) to social networks, Twitter Inc. (NYSE:TWTR), are all benefiting from what is termed ‘dovish’ statements from the central bank and a pause in the recent spike in bond yields that had triggered concerns about inflated valuations.
Unemployment claims were unexpectedly higher adding 16,000 to 744,000, well above the 694,000 economists expected.
This suggests the slow opening up and growing concerns with the Astra Zeneca vaccine may result in a less smooth economic recovery than predicted.
This is highlighted by what has been deemed the deadliest days of the pandemic for the likes of Brazil and India, struggling with huge population centres and virus mutations, a long way from our almost normal way of life in Australia.
