If taking full control over your superannuation and retirement plans is important to you then a self-managed superannuation fund gives you the flexibility to manage your retirement savings the way you want.

Read our insights on the latest news, trends and changes related to SMSF advice.

October 2023 Economic & Market Review – Geopolitical Tensions and Economic Resilience

Talking points

  1. Geopolitical Tensions Impact Markets: A surprise attack by Hamas in Israel on October 7 led to the outbreak of war in the Middle East. Elevated geopolitical tensions contributed to further uncertainty in an environment where fast-rising bond yields already besieged financial markets. 
  2. Investment Markets Fall: It was a case of more of the same in October as investors endured further losses across most asset classes. Excluding dividends, the benchmark US S&P 500 was down 2.2% in October, the Dow Jones Industrial Average decreased 1.4%, while the tech-heavy Nasdaq Composite fell 2.8%. This weakness was also seen in various global indices across developed and emerging markets. In local shares, the ASX 200 lost 2.8% after accounting for dividends. Small caps and listed property were thumped once again as rising risk-free rates dented valuations and increased funding costs. Gold and Bitcoin were noteworthy positive performers as investors sought safety and diversification.
  3. Weak Australian Dollar Benefits Australian Investors: The Australian dollar traded lower throughout October, again insulating unhedged domestic investors holding international investments. 
  4. Fixed Interest and Bond Market Turbulence: The rout in fixed interest returns continued, where the US 10-year Treasury yield briefly touched 5% for the first time since 2007. The sell-off permeated the global government bond market (including Australia) and in credit, with wider spreads seen in investment grade and high-yield bonds.
  5. Economic Resilience and Data Trends: On the economic front, the United States saw strong data, including impressive job creation, resilient wage growth, and robust economic growth. In contrast, Australia’s economic indicators were mixed, with a declining unemployment rate but concerns about inflation. European economies showed mixed results, while China’s industrial production, GDP, and retail sales performed positively despite challenges in the real estate sector and potential export restrictions.


Market Commentary

Investor tensions were further heightened in October as war broke out between Hamas and Israel. Despite the conflict, oil prices declined by around 10% during the month, with most of the damage coming in the final trading week. Meanwhile, European gas prices rose on fears of global supply chain disruptions. Commodity prices were a relatively bright spot in October, particularly where safe-haven gold was concerned.

Impaired sentiment continued to impact major indices, including the infrastructure and REIT sectors. Higher real yields have continued to detract from property and infrastructure returns, with small-cap returns experiencing a similar fate. The weaker Australian dollar (AUD) was again welcomed by domestic investors with foreign asset exposures. Indeed, the depreciation of the AUD over the last decade has strongly benefited unhedged domestic investors, particularly in developed market equities, where the depreciation has been more pronounced. For example, the annualised return for the MSCI ACWI-ex Australia has been boosted by more than three percentage points compared to its performance in local currency terms (11.9% vs 8.8%).

In fixed interest, government bond returns were negative in most developed markets as yields rose to multi-year highs in October. In Australia, heightened concerns around the path of inflation and interest rates saw 10-year government bonds briefly touch 5% later in the month. Japanese government bonds were not spared from the sell-off, as investors questioned the sustainability of the Bank of Japan’s (BoJ) yield curve control policy. During its October meeting, the BoJ redefined the 1% upper limit on yields from a strict boundary to a more flexible “reference” point.


Economic Commentary

On the economic front, US data regularly printed stronger than expected. The September nonfarm payrolls report stunned economists with the creation of more than 300,000 jobs (double the consensus estimate). Wage growth remained resilient, and inflation data, while trending lower, remained too sticky in the minds of market analysts. The advance estimate for Q3 US economic growth also shot the lights out, with activity surging at an annualised rate of 4.9%. Consumer spending drove the increase, while residential investment rose for the first time in nearly two years.

In Australia, the September unemployment rate fell to a three-month low of 3.6%, driven by a decline in workforce participation. Meanwhile, the RBA paused official interest rates for the fourth consecutive month in October while retaining a hawkish stance in its commentary. Finally, the CPI inflation data for the September quarter delivered an upside surprise that left economists scrambling to raise estimates. A much stronger-than-expected retail sales print (triple the consensus estimate) added further impetus to the view that the cash rate would be hiked at the November meeting.

Elsewhere, European activity was mixed, with soft German data prints pointing to further weakness. In contrast, the UK economy showed signs of moderate improvement. Turning to China, industrial production, GDP, and retail sales were positive surprises. However, continued weakness in the real estate sector and reports of further US restrictions on AI chip exports dampened investor sentiment.


Want to discuss the above information or your investments?

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Bring Forward Non-concessional Contributions explained

To maximise the non-concessional contribution (NCC) opportunity, you may consider using the bring-forward NCC cap of up to $330,000, provided your Total Superannuation Balance (TSB) allows you to do so. If you are eligible, the bring-forward is triggered automatically when your total annual NCCs exceed the annual cap (currently $110,000).

From 2022-23 onwards, you are required to be under the age 75 on 1 July of the financial year to be able to access the bring-forward NCC cap. While age may determine whether or not a person is eligible to make NCCs above the annual cap, additional eligibility rules apply.

The maximum amount available under the bring-forward, as well as whether you have a 3 or a 2 year bring-forward period, depends upon your TSB on 30 June prior to the financial year in which the bring-forward is triggered. See table below.


If you make an NCC that exceeds the allowable amount based on your TSB on the prior 30 June, the contribution is assessed as an excess NCC. 



Things to consider

  • If you turn 75 in the middle of the next financial year, the next year will be the last financial year that you are able to use the bring-forward NCCs cap, and the super contribution must be made on or before 28 days after the end of the month you turn 75. 
  • Before you trigger the bring-forward NCC cap, it is important to check whether you previously triggered it and are still in a bring-forward period. Your myGov account shows whether you are already in a bring-forward arrangement.
  • Once the bring-forward period has expired, you may make further contributions within the annual cap or even trigger the bring-forward provisions again. 


How we can help

If you’re considering putting more money into your super, let’s chat. Our experienced advisers can help you figure out which superannuation strategies make sense for you.




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Carry-forward (catch-up) concessional contributions explained

Successfully claiming a tax deduction for personal super contributions can reduce your taxable income and the income tax payable. The basic concessional contributions cap for the 2023–24 financial year is $27,500. However, it is important to understand that you may be able to claim more than the annual concessional contribution cap in some cases by accessing the carry-forward concessional contribution cap.


What is the carry-forward concessional contribution cap?

You will have a higher available concessional contributions cap (than the basic cap) in the current financial year if you can carry forward and apply available unused concessional cap amounts from previous financial years.

From July 2023, individuals can look back and carry-forward their unused concessional contributions for the previous five financial years. As the measure started on 1 July 2018, individuals could only look back to the ‘start’ and carry forward one previous year from FY2020, then two years from FY2021 and so on.

You are eligible to carry forward unused concessional cap amounts from previous years, and effectively increase your contribution caps in later years, if you have a total superannuation balance of less than $500,000 at 30 June of the previous financial year, and have unused concessional contributions cap amounts from up to five previous years.


Important note for the 2024FY

Any unused cap amounts are available for five years and expire after this time. If an individual has an unused cap amount from the financial year ending 2019 and does not use that amount by the end of June 2024 it will expire.

Quick tips

  1. If you are not eligible in the current year due to exceeding the $500,000 total super balance threshold on 30 June 2023, you may be eligible next year if your total super balance on 30 June 2024 is reduced to less than $500,000.   
  2. Your total super balance and their unused carry-forward CCs can be found through your myGov account.  


How we can help

If you’re considering putting more money into your super, let’s chat. Our experienced advisers can help you figure out which superannuation strategies make sense for you.



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September 2023 Economic & market review – Fed Higher for Longer and Economic Contrasts

Talking Points

  1. Global shares decline amid fed’s ‘higher for longer’ stance: Global stock markets saw a downturn in September as the Federal Reserve’s commitment to holding interest rates higher disappointed investors.
  2. Market malaise and increased volatility: Market sentiment soured, leading to widespread declines in major indices and increased market volatility. This trend was marked by a decline in trading volumes and prominent short positioning across financial markets.
  3. Challenges in key sectors: Several sectors, including listed property, global REITs, and infrastructure stocks, faced challenges and underperformance due to changing market conditions, with energy and value sectors offering limited respite.
  4. Fixed-interest markets and concerns over bond bear market: The sell-off in US Treasuries and rising yields had a ripple effect on other sovereign bonds, including Australian bonds. This situation raised concerns about a potential bond bear market, causing losses in composite bond indices and affecting the gold sector.
  5. Global economic contrasts: The US experienced robust growth on the economic front despite challenges such as rising unemployment rates and inflation. In contrast, Europe grappled with higher oil prices and unexpected interest rate hikes. Key economic indicators from China also showed signs of improvement, indicating a potential shift in the manufacturing sector.




Financial markets took another leg down in September as investors came to grips with the narrative that the US Federal Reserve (the Fed) would need to keep interest rates higher for longer. Excluding dividends and share buybacks, the benchmark S&P 500 was down 4.9% in September, the Dow Jones Industrial Average decreased 3.5%, while the tech-heavy Nasdaq slumped 5.8%. This weakness was not limited to the US, as global indices across developed and emerging markets fell. However, a silver lining for unhedged Australian investors was the Australian dollar trading lower throughout September, partly insulating them from the losses.

In local shares, the ASX could not maintain its momentum from a rally in late August, with the S&P/ASX 200 index falling 2.8% after accounting for dividends. Small caps fared comparatively worse, posting a 4% decline. However, these moves paled compared to the 8.6% drop in listed property stocks, where rising risk-free rates revived valuation concerns and detracted from the impressive rally in A-REITs at the beginning of the financial year.

Fixed interest returns disappointed defensive investors, where exposures to safe-haven cash and high-grade credit continue outperforming government bonds. The ongoing large quantum of debt issuance by the US Treasury is proving to be an overhang. Finally, an extension of cuts in oil production by Saudi Arabia and Russia reignited inflation concerns and drove the price of crude above US$90/bbl.


Market Commentary

Global shares accelerated their downward trend in September as the Fed’s ‘higher for longer’ theme rang more loudly in the aftermath of the September FOMC meeting. Upwardly revised economic projections by Fed officials were a case of ‘good news is bad news’, with investors disappointed a further rate hike could occur in 2023 before making way for potentially just two rate cuts in 2024. The Fed’s ongoing resolve to tame inflation was not well received by investors, with matters exacerbated by another lift in oil prices as Russia and Saudi Arabia coordinated their efforts to extend restrictions on output. As a result, transport-related costs were higher during the month.

The malaise in sentiment saw broad declines across major indices, often characterised by poor market breadth as decliners easily outnumbered gainers, culminating in most sectors finishing in the red. Trading volumes decreased significantly, while increased volatility and short positioning became prominent features across financial markets. 

Our domestic sharemarket was not spared, as a jump in real yields put listed property to the sword, completely wiping the momentum seen in the sector since mid-July. Global REITs and infrastructure stocks similarly underperformed, with minimal respite to be found outside of energy and value plays.

In fixed-interest markets, the sell-off in US Treasurys continued in earnest, dragging other sovereigns along for the ride, including Australian bonds. Yields at the longer end of the maturity spectrum were particularly hard hit, imposing losses on composite bond indices and stoking anxiety that the bond bear market, which commenced in late 2021 had further to play out. Furthermore, the increase in yields and accompanying strength in the US dollar ensured that the gold sector underperformed.


Economic Commentary

On the economic front, data releases provided support that the US economy was experiencing a period of robust growth in the September quarter. In contrast, Europe was struggling with higher oil prices and an unexpected lift in official interest rates. 

In the US, jobs market data remained strong despite a rise in the unemployment rate from 3.8%. Nonfarm payrolls exceeded expectations, and wage growth remained firm while job openings continued to outpace the available workers. Underlying inflation showed further signs of stickiness, and there was a reversal in the favourable base effects seen earlier this year. Notably, the US national debt reached US$33 trillion for the first time in September, while “excess” savings by households from the pandemic had now been depleted. This resulted in growing credit card balances, especially among poorer cohorts.

On the domestic front, the RBA again paused the official cash rate at 4.10% at its September meeting, with the minutes revealing that the central bank was concerned with the impact strong population growth was having on rents and house prices. The monthly CPI indicator for August jumped to 5.2%, as rising fuel and utility prices led to a rebound in inflation from a 4.9% gain in July. It was the first increase in annual inflation since April.

In China, the manufacturing sector finally stopped contracting in September, with key indicators pointing to a slight expansion. Another positive sign was that August retail sales exceeded expectations and accelerated from the previous month, posting the largest increase since May.


How can we help

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August 2023 Economic & market review – Market turbulence and emerging market challenges

Talking Points:

  1. Market Volatility in August: August witnessed significant market volatility driven by rising yields and negative developments in China. This turbulence had an impact on investor returns and raised concerns.
  2. Emerging Markets’ Struggles: Emerging market equities, in particular, faced substantial challenges during the month due to China’s faltering property market and its measured approach to stimulus measures. This highlighted the vulnerability of these markets.
  3. US Stock Performance: US stock indices, such as the S&P 500, Dow Jones, and Nasdaq Composite, experienced a roller coaster ride in August. They initially declined substantially but partially recovered by the month’s end, signalling market uncertainty.
  4. Bond Market Headwinds: Global bond indices encountered difficulties as a sell-off resumed, partly triggered by Fitch’s controversial downgrade of the US Government’s credit rating. Additionally, increased bond issuance by the US Treasury added to the selling pressure, impacting bond markets.
  5. Economic Outlook and Central Bank Actions: The economic outlook highlighted concerns about inflation, particularly in the US, where strong economic data raised the possibility of more rate hikes. The Reserve Bank of Australia (RBA) maintained a cautious stance on its cash rate, indicating its data-dependent approach and the uncertainties in the economic landscape.



Investors endured a difficult August as a combination of rising yields and negative news flow out of China weighed on returns. Weakness in the Australian dollar also attracted increasing attention but helped insulate unhedged domestic investors from the full brunt of the sell-down. 

Developed market equities were generally lower in local currency terms. However, China’s faltering property market and piecemeal approach to stimulus meant that emerging market equities fared far worse. Increased volatility also impacted small caps as investors sought the safety of many blue-chip names. 

Despite a market rally at the end of August, the benchmark US S&P 500 index closed the month 1.8% lower, while the Dow Jones and Nasdaq Composite were more than 2% lower. The S&P ASX 200 finished August in the red but was well off its lows. However, Australia’s listed property sector staged a strong rebound in the latter half of the month as corporate earnings and asset valuation downgrades came in better than many had expected.

Global bond indices struggled as a sell-off recommenced following Fitch’s controversial downgrade to the US Government’s credit rating from AAA to AA+. Strong bond issuance by the US treasury added to the selling pressure as the Biden administration continued its hefty spending program. Domestic bond markets recovered throughout the month, but this was due to signs that the economy was weakening.


Market Commentary

August was a difficult month for global stocks, with the MSCI All Country World ex-Australia Index moving lower in local currency terms. However, the 3.6% decline in the Australian dollar ultimately delivered positive returns to domestic investors with no (or minimal) currency hedging. The first three weeks of the month were particularly brutal for sharemarkets, with the S&P 500 down more than 3% before a partial recovery in the final week. It was a similar story for the Dow Jones Industrial Average and the Nasdaq Composite, with the latter more than 5% lower before the late upswing. These pullbacks are in stark contrast to the market rally seen earlier this year, as the Nasdaq Composite delivered its best first-half performance in forty years.

On domestic markets, disappointing China data and numerous earnings downgrades announced during the August reporting season led to widespread weakness. On a brighter note, the consumer discretionary sector bucked the trend, as retailers often printed much stronger-than-expected profits. Over the first eight months of the year, most sectors remain in the green, with Technology leading the way. Gold has also been a strong performer, but small resources stay firmly in the red. 

In fixed interest markets, the sell-off in US Treasurys saw 10-year bond yields briefly exceed 4.36% (its highest level since 2007) before ending August at 4.11%. The yield curve remains inverted across large segments, with 2-year Treasury Notes briefly exceeding 5.10% and ended the month at 4.86%. The key driver behind these moves was US economic data strength, leading to concerns that the Federal Reserve (the Fed) would keep its benchmark lending rates higher for longer than anticipated. 


Economic Commentary

Despite weakening inflation data in the US, Fed Minutes from the July meeting noted that central bank officials still see “upside risks” to inflation, which could lead to more rate hikes. Specifically, the Fed expressed concern about the tight labour market and the impact solid wage growth could have on spending. July retail sales were robust (almost double expectations), and a measure of personal spending also printed stronger than expected. And despite 30-year mortgage rates exceeding 7%, US house prices continued to rise due to severely constrained supply. Many Americans have previously borrowed at ultra-low fixed rates and prefer to retain and renovate their homes rather than purchase another home and incur much higher financing costs. 

On the domestic front, the RBA again paused the official cash rate in August, with the economy breathing a further sigh of relief. The RBA’s cash rate is now 4.10%. The base case is that they raise rates once more, but the RBA is highly data-dependent and taking small steps to the edge as they can’t quite see where they are yet. 

NAB business confidence improved to its highest level since January, as leading indicators strengthened slightly. There was more positive news in late August when the monthly CPI indicator increased by 4.9% in the year to July 2023, below the market consensus of a 5.2% rise. This was the lowest inflation rate since February 2022, mainly due to a slowdown in housing costs and food prices. However, investor attention in August was laser-focused on China, which reported much weaker-than-expected retail sales and industrial production growth. Concerns over another real estate crisis continued to rise as the heavily indebted Country Garden Holdings fell to a record low and was removed from the Hang Seng stock index in Hong Kong. Meanwhile, Evergrande (another Chinese real estate giant) filed for bankruptcy protection in the US.

We now focus on the path for 2024 and the likely easing cycle. We estimate this commences in mid-2024, but there are myriad speedbumps along the way. 


How can we help

Our experienced financial planners provide tailored investment strategies and guidance to suit your unique needs and financial goals. If you’re seeking expert investment advicebook a chat with a Pekada financial planner today.


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What is the government super co-contribution?

If you’re making less than $58,445 in the 2023/24 financial year, and at least 10% of that comes from your job or a business, consider putting extra money into your super after taxes. 

If you do and meet specific criteria, the Government might chip in with up to $500 into your super account—which is a fantastic percentage return on investment! 


How the super co-contribution works

You get the full co-contribution if you make a voluntary non-concessional (after-tax) super contribution of $1,000 and earn $43,445 a year or less. If you put in less than $1,000 or earn between $43,445 and $58,445 a year, you might still get something, but only part of the amount. 

Just remember that what you earn, including regular income, certain benefits, and employer super contributions, counts here. 


Things to consider

  • Remember, once you put money into your super fund, you can’t take it out until you reach a certain age or meet specific conditions. 
  • If you claim a tax deduction for your contributions, you won’t get the government co-contribution, so confirm which is a better outcome for for you.
  • For more details, check out the ATO website at 


How can we help

If you’re considering putting more money into your super, let’s chat. Our experienced advisers can help you figure out which superannuation strategies make sense for you.


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July 2023 Economic & market review – Market resilience thanks to tech strength and central bank moves

Talking Points:

  1. Market Rebound After Initial Weakness: Despite a weak start to the month, the markets regained their composure and staged a strong rally in July.
  2. Tech Sector Dominance in US Markets: The tech sector in the US continued its strong performance, with the Nasdaq Composite posting its fifth straight monthly gain. 
  3. Global Economic Data and Bond Market Reactions: Resilient GDP prints and improved inflationary data were well received by bond markets following a sharp sell-off in the first half of July. The US Fed’s rate hike and the expectation of limited additional tightening provided investors with increased comfort, leading to relatively flat global bond performance.
  4. Recovery in Global Stocks and Commodity Prices: Global stocks rebounded in the second half of July, with emerging market equities and small caps leading the way. Commodity prices also saw a recovery, with the Bloomberg Commodity Index lifting by 6.3% over the month. 
  5. Central Bank Actions and Interest Rate Expectations: Central bank actions played a significant role in market dynamics. The RBA paused its official cash rate after consecutive rate hikes, citing concerns about low labour productivity. The European Central Bank (ECB) raised rates in July, but weak economic activity in Europe led to expectations of a pause in September. In the UK, strong wage data fueled expectations of further interest rate hikes by the Bank of England.


Despite a weak start to the month as bond yields surged and equities sold off, markets regained their composure and staged a strong rally in July. Emerging market equities led the way, as China’s authorities gave the strongest indication yet that stimulatory measures would be implemented to ensure this year’s growth target would not be missed. Oil markets were a beneficiary of the news, as previously announced production cuts also took effect. Elsewhere, global and domestic shares were led higher by small caps and property stocks – areas of the market that have underperformed over the last year.

Meanwhile, in the US, it was more of the same as the tech sector went from strength to strength. The Nasdaq Composite posted its fifth straight monthly gain, with artificial intelligence once again the primary driver. The benchmark S&P 500 and Dow Jones Industrial indices also performed strongly but failed to match their tech counterparts.

Bond markets welcomed resilient GDP prints and improved inflationary data following a sharp sell-off in the first half of July. Along with a further hike in the US Fed Funds Rate to 5.5%, in line with expectations, investors gained increased comfort that additional tightening would be unlikely. Global bonds finished the month broadly flat, while credit markets held firm as signs of distress were contained to known areas, such as commercial real estate.


Market Commentary

Global stocks rebounded in the second half of July, with the MSCI All Country World ex Australia Index up 2.4% in Australian dollar terms. While the US led developed markets higher, small caps and emerging market equities stole the show, with the latter finishing up 5% over the month. Australian investors enjoyed a 10% return from China, partly reversing double-digit losses that have been incurred in the first half of 2023. Some policy easing by China’s authorities and hopes for significant new stimulus were behind the gains.

 Japanese equities remain the top-performing regional market in 2023 but underperformed in July. The TOPIX gained a more modest 1.5% in local currency terms as the Bank of Japan loosened its yield curve control framework. Some investors fear that the stage is now set for further adjustments that would push discount rates higher. On the ASX, a broad-based rally was underpinned by a rebound in the banks and consumer-facing sectors as interest rates remained on pause at the RBA’s July Board Meeting. Utilities performed strongly, while Healthcare was again weaker.


Global fixed income was volatile throughout July but finished the month largely unchanged as weakness in US Treasuries and European government bonds was offset by upward moves in most other regions, including Australia. Credit spreads tightened on improved economic data, thereby boosting returns and reducing losses incurred over the previous three-month period. It was a similar story for commodity prices, with some year-to-date losses being reversed in July. The broad Bloomberg Commodity Index lifted by 6.3% over the month. Higher oil prices and Russia’s cancellation of the Black Sea grain export deal buoyed the prices of certain soft commodities.

The Australian Dollar rallied against the US Dollar in early July, rising 3.8% due to momentum and lower-than-expected US CPI data. This rally faded in the second half of July to finish the month up 0.8%.


Economic Commentary

Despite data that showed US manufacturing was continuing to contract, the world’s largest economy strengthened on a booming services sector. First quarter growth was revised upward and slightly faster growth was revealed in the advanced estimate for second quarter GDP. This came despite the signs of slowing in the jobs market as June nonfarm payrolls missed expectations for the first time in over a year. The key data print for the month was the June CPI, which fell by more than expected. While core CPI remained stickier downward, US Fed Chair Powell’s current preferred inflation measure (core services ex housing) fell to just below 4% over the year.

 On the domestic front, the RBA paused the official cash rate in July, having raised rates in May and June. The move came hot on the heels of weaker monthly inflation data. The RBA reiterated its concerns around low levels of labour productivity, but noted that wage growth currently remained consistent with its long term inflation target. A stronger than expected jobs market report for June led to expectations of further rate hikes by markets and economists alike. However, markets reversed course when the June quarter consumer inflation figures came in below consensus.

 Finally, the European Central Bank (ECB) raised rates in July to 3.75%, in line with its guidance. Weak economic activity throughout key parts of Europe saw markets increase bets that the ECB would pause in September. Meanwhile, UK wage data remained strong and further interest rate hikes by the Bank of England were priced in by money markets. The peak is now expected to reach 6% in 2023.


How can we help

We hope you find the information useful, and if you want to discuss any details further or discuss your personal investment strategy, then please book a chat here.


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June 2023 Economic & market review – Mixed Results for Investors as AI Boom Drives Equity Returns and Bonds Falter

Talking points

  1. Mixed results for investors in June: Bond markets lost ground due to underlying inflation, while the AI boom drove returns in equity markets.
  2. Strong performance of US stocks: For the quarter, the benchmark S&P 500 added 8.3%, the Dow Jones rose 3.4%.
  3. Notable performance of tech stocks: The Nasdaq jumped 12.8% for the half, registering its strongest first-half performance in forty years. Apple surged 50% and surpassed $3 trillion in market cap, while Meta (Facebook) and Tesla more than doubled. 
  4. The Fed hits the pause button: Improving inflation data allowed the Federal Reserve (the Fed) to finally hit the pause button on official interest rates at the June FOMC meeting. This was the first such move in fifteen months.
  5. Cash returns and interest rates: Australian cash returns continued to grind higher as the Reserve Bank raised the cash rate to 4.1% in June, with economists forecasting a peak rate of 4.6%.



Investors experienced mixed results in June as bond markets lost ground on sticky underlying inflation while the AI boom continued to drive returns across equity markets. For the quarter, the benchmark US S&P 500 added 8.3%, while the Dow Jones rose 3.4%. The Nasdaq jumped 12.8% to register its strongest first-half performance in forty years, soaring more than 30%. Notably, Apple leapt 50% in the first half and surpassed $3 trillion in market cap, while Meta (i.e., Facebook) and Tesla both more than doubled.

Closer to home, the S&P/ASX 200 returned 1.8% inclusive of dividends, easily outperforming its domestic small-cap peers. While global property and infrastructure stocks produced a solid monthly gain, the same could not be said for A-REITs as valuation concerns continued to permeate the sector. Over the quarter, domestic shares underperformed global peers on banking and resource sector weakness. Nearly two-thirds of the quarterly 1% total return came from dividends. For the financial year, domestic shares delivered a 14.8% return to investors, including income of 5.1% (plus ~1.5% in franking credits).

Cash returns continued to grind higher as the Reserve Bank raised the cash rate in June to 4.1%. This prompted economists to raise their forecasts for the peak rate to 4.6%, with money markets behaving in a similar fashion. Meanwhile, surging tax receipts have swollen the Federal Government’s budget surplus to $19 billion and boosted the prospect of a second straight surplus being delivered next year.



Market Commentary

Global shares enjoyed a solid first half to 2023, with the MSCI AC World ex-Aus index delivering over 16% to Australian investors, led primarily by gains in the US and Japan. Most notable was the AI-led rally in a handful of tech names. The so-called “Magnificent Seven” mega-tech stocks staged a strong reversal of the weakness experienced at the end of 2022, in which the Nasdaq lost a third of its value, with the focus on cost-cutting and efficiency. Chipmaker Nvidia led the way, riding the AI boom to a 190% rally and a $1 trillion market cap. Not since 1983 have tech stocks performed so strongly in an opening half to a year. For context, Apple was then touting its Lisa desktop computer, IBM was the most valuable tech company in the US, and Microsoft had yet to list on the sharemarket.

In local markets, the ASX 200 began the year 4.5% higher, with nearly half of that return coming as dividends. Banks and materials stocks comprise about half of the ASX 200 and traded sideways in 2023. For the banks, investors feared that steepling interest rates would sharply increase debt provisioning. At the same time, the resource-heavy materials sector stalled on a failure for China’s recovery to gain more substantial traction. The latter also led to more muted returns in emerging markets. This year, the tech and gold sectors have been the clear standouts, delivering double-digit returns.

In the more defensive asset classes, 2023 has seen cash outperform the domestic bond sector due to sticky underlying inflation. However, traditional fixed interest has had a solid year overall and has recouped some of its steep losses from the previous calendar year. Elsewhere Bitcoin had an astonishing start to 2023, gaining more than 80% in USD terms. The rebound in the Nasdaq and the regional banking crisis saw risk-loving investors re-enter the crypto space after a shocking 2022.



Economic Commentary

Improving inflation data allowed the Federal Reserve (the Fed) to finally hit the pause button on official interest rates at the June FOMC meeting. This was the first such move in fifteen months. Fed officials, on average, now expect two more rate rises in 2023 and upgraded their estimates for the economy’s growth prospects. Official data later in the month revealed large upward revisions for first quarter GDP on stronger household spending. Meanwhile, Fed chairman Jerome Powell reiterated that interest rates will need to move higher to contain price pressures over the medium term.

On the domestic front, the Reserve Bank of Australia (RBA) raised the official cash rate by 25 basis points in June for the second consecutive month, having paused in April. The RBA remains concerned about the negative impact of high inflation on the economy, family budgets and savings, as well as business planning and investment. Poor labour productivity was again highlighted by the RBA, with strong rises in labour costs per-unit-of-output an ongoing risk to the inflation outlook. Elsewhere, March quarter GDP slowed significantly and missed expectations. GDP also contracted on a per capita basis due to Australia’s surging population. Both discretionary consumption spending and household savings also contracted due to the impact of rising debt repayments on disposable income.

In Europe, Germany moved into recession as its industrial sector contracted and, notably, its lower import spending flowed through to weaker exports from China, where the reopening continues to miss expectations. China remains one of the few large economies where inflation is close to zero.

Our experienced financial planners provide tailored strategies and guidance to suit your unique needs and financial goals. If you’re seeking expert investment advice and managementbook a chat with a Pekada financial planner today.


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Winding Up Your SMSF – Key Considerations

While running an SMSF seemed like an obvious choice when you initially set it up, situations change, and it is a good thing to review this regularly to assess whether this is still the best option. If it remains the best option, then play on, and you rest easy knowing you have the right structure and strategy. 

On the other hand, if you assess that there are more appropriate options that are a better fit for your current circumstances, it makes sense to take action promptly. 


Is an SMSF still right for you?

Some of the most common reasons we see from Trustees deciding to wind up an SMSF include the following:

  • Aging and Capacity Concerns
  • The time and administrative burden has become too much
  • The balance of the fund has dropped to a level where the cost economics do not stack up anymore
  • Life events such as relationship breakdown or death
  • Trustees wish to move overseas


Considerations before winding up your SMSF

While there may be genuine reasons to wind up your SMSF, there are some important considerations before taking action.

  • Centrelink: Are there any Centrelink implications of wind up? For example, you may have a more favourable income test applied to any pensions within the fund, and winding up may mean a loss or reduction in Centrelink entitlements.
  • Capital Gains Tax: Are there any capital gains tax implications of selling assets within the fund to facilitate wind up? Are you going to lose carried-forward capital losses?
  • Trust Deed: Your fund trust deed. Your deed may contain specific wind up instructions on how to wind up the fund.
  • Life insurance: Are there insurance policies in the fund that need to be retained, and can you transfer these to your new fund without triggering medical underwriting?
  • Illiquid assets: Does the fund hold assets such as real property, unlisted shares, or private equity? 
  • Reserves: Has your SMSF been maintaining reserves? If so, these unallocated amounts would need to be allocated before closing the SMSF.


Action items and steps to wind up your SMSF

So if you have done your due diligence and decided to wind up your SMSF, here are some essential things to action. This list is not exhaustive, and it is worth getting professional advice and support to complete an SMSF wind up.

  • Engage professionals to guide you through the process, including your accountant and/or financial planner.
  • Check your Trust Deed to understand your requirements.
  • Confirm with members how they would like payment of their existing benefits.
  • Finalise outstanding tax and compliance obligations.
  • Arrange for the preparation of a final audit and draft financial statements.
  • Transfer assets out of the fund.
  • Lodge the final tax return for the fund
  • Notify the ATO in writing of the wind-up 
  • Make provision for post wind-up expenses and tax refund 


How can Pekada help?

We know that financial matters can sometimes feel overwhelming, especially when winding up your SMSF. That’s why our experienced team is here to guide you through the entire process, providing clear explanations and support for every part of the process. 

Please book a chat with one of our advisers if you want to discuss your needs. 


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