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 recovers from early dive, finishes flat again
Late comeback delivers, energy in the red, dividends hit real estate, CKF falls on earnings
The ASX 200 (ASX: XJO) staged a remarkable recovery, managing a flat day despite falling as much as 0.9% on Tuesday morning.
Energy, materials, and utilities were amongst the weakest performers, with a raft of dividend payments pulling the real estate sector lower as 30 June approaches.
Unibail-Rodamco-Westfield (ASX: URW) fell 5.2% and Growthpoint Properties Australia Ltd (ASX: GOZ) 1.9% as dividend payments reduced their values overnight.
Healthcare and IT topped the sectors, up 0.5% and 0.6% respectively whilst Metcash’s (ASX: MTS) renaissance continued, jumping another 5.7% as investors digest full-year results.
Collins Food Ltd (ASX: CKF), the owner of the KFC and Taco Bell franchises, fell 5.7% despite reporting record revenue of $1.06 billion.
This was the first result above $1 billion and represented a 12% increase on 2020’s levels.
Profit was 17% higher at $37 million, driven by record same-store sales growth at KFC.
That said, management warned that momentum had slowed since May, with Taco Bell sales down 14% in the first seven weeks and KFC down 1.5%.
Elsewhere, Santos Ltd (ASX: STO) appears to be pushing ahead with a US$2 billion project in WA despite mounting concerns of its climate impact.
Genworth smashed, WAM merging with Templeton Growth, Medibank returning money to members
2021 will mark the end of the Templeton Global Growth Fund (ASX: TGG) LIC on the ASX, with the fund set to merge with Geoff Wilson’s WAM Global Ltd (ASX: WGB).
The strategy had been somewhat of a lone wolf in the Australian market, with little support and a persistent discount.
The deal will be funded by WGB issuing new shares, taking the trust to over $940 million in assets, whilst also offering to buy back shares at the after-tax NTA; a solid result for all involved which sent the TGG share price 4% higher.
Genworth Mortgage Insurance Australia Ltd (ASX: GMA) fell 15.7% after it was advised by the Commonwealth Bank that it would be forced to retender for its exclusive mortgage insurance contract that expires in 2022.
Whilst the contract may well be won again, it puts a significant amount of revenue at risk.
Medibank Private Ltd (ASX: MPL) shares added 0.3% after announcing it would return $105 million to customers in the form of premium ‘relief’.
The decision comes after costs were significantly lower than expected during the pandemic.
US markets higher, Intel suffers again, bank dividend frenzy
US markets managed another double record with all three benchmarks eking out small gains.
This time the Nasdaq led the way, up 0.2%, with both the Dow Jones and S&P 500 adding just a few points.
Intel Corporation (NYSE: INTC) was the biggest detractor on Tuesday after the company announced that its latest data centre chip ‘Sapphire Rapids’ would be delayed for the foreseeable future. A bad sign for the company seeking to regain its global relevance.
Elsewhere, all eyes were on the banking sector after five of the largest six banks delivered significant dividend increases following last week’s stress test results.
Morgan Stanley (NYSE: MS) doubled its quarterly dividend, as did Wells Fargo & Co (NYSE: WFC) with Citigroup Inc (NYSE: CITI), Bank of America (NYSE: BAC), and JP Morgan (NYSE: JPM) all joining the dividend party.
