7 February 2014


“Be fearful when others are greedy...” – Warren Buffett

A few weeks into 2014, there is an air of cautious optimism around investment circles. Many market commentators and participants are beginning to point to signs of ‘better days ahead.’ AMP Chief Economist, Dr Shane Oliver, is one such commentator. He forecasts increasing rates of growth, both in Australia and globally, driving strong returns in most markets. On the back of such predictions, groups such as Standard Life are predicting that investors will increase exposures to ‘risk’ assets, such as equities.

It is nice to see such optimism emerging. But a wise investor will be wary of following the pack too closely. As Dr Oliver himself states, the primary risk for investors today is that of over-exuberance. After all, risks still abound. It is by no means clear that Australia will be successful in managing the transition out of the mining infrastructure boom. We face low productivity growth, increasing unemployment (off an admittedly low base), significant budgetary challenges and, more recently, surging inflation. This is an extremely complex picture for an investor to analyse.

In that context, it is extremely important that investors be fully aware of all the risks that they take on in their portfolios. Blindly following the prevailing ‘consensus view’ could be a recipe for disaster. We have previously discussed work by Dalbar & Blackrock, which showed that the average US investor actually underperformed all asset classes including inflation, because they ‘buy high and sell low’ (graph below). In other words – they fall victim to the ‘fear and greed cycle’.

So how can a wise investor avoid falling victim to the fear and greed cycle?

First, and as we discussed last month, know your investment philosophy. Do not be spooked into investing in markets or products that you do not understand because of the dreaded FOMO (fear of missing out).

Second, know your investment objectives and risk tolerances. Investors in their 50s and 60s simply do not have the investment time horizon to withstand the same portfolio risks that investors in their 30s can. Remember that market falls can take a very long time to recover. The ASX 200 is still – almost seven years later – a remarkable 20% below its 2007 peak – and that’s before inflation is taken into account.

Third, do not put all your eggs in one basket. Every time a particular market heats up, investors throw money at it. It is remarkable and counter-intuitive (why would more people want to buy something when it becomes more expensive?), but it happens again and again. If you understand a market and believe that it will produce good returns for you, by all means take a position. Just don’t ‘bet the house on it’.

We’ll leave the final word to Dr Oliver:

“Avoid the crowd because, at extremes, the crowd is invariably wrong.”

A specialist to assist with your aged care needs

Many of our investors have been in the position of placing a loved one into an Aged Care Facility. It can often be a stressful time – a minefield of information to sort through, potential urgency depending on the medical circumstances and the burden of knowing a family member’s welfare is relying on your decisions. Yet you are making these decisions without having all the facts available.

Many people are not even aware that the accommodation bond and care fees are negotiable.

Furthermore, changes to legislation taking effect 1 July 2014 will make Aged Care rules more complex than ever and could mean that for some they will be worse off than if they were placed before this date.

To assist our investors, La Trobe Financial has partnered with Equity Trustees. They offer the following services:

  1. Selection of a facility – matching the aged care facility with the care needs of the individual including geographic location preferences. A forward looking approach is taken to ensure the individual’s current as well as future care needs are considered. Their consultants have extensive backgrounds in aged care and their in-depth knowledge of facilities is nationwide, catering for interstate relocations;

  2. Accommodation bond and fee negotiation;

  3. Assistance in the completion of all paperwork;

  4. Coordinating the move and thereby removing any stress for the family; and

  5. Proven, deep relationships with facilities to be able to cut through waiting times.

For more information, please contact Equity Trustees’ Aged Care team on
(03) 8623 5227 or (03) 8623 5262.

STOP PRESS: La Trobe Financial Quarterly Investment Teleconference

Scheduled: 25 February 2014 - 12:00pm AEST

Invest 30 minutes of your time to hear from our quarterly investor teleconference.

We will discuss the domestic and international economy, with our “headwinds and tailwinds” overview. We will also update you on developments for the manager and our Fund.

Event Details

Date: Tuesday, 25 February 2014  



12:00pm - 12:30pm
  SA 11:30am - 12:00pm  
  QLD 11:00am - 11:30am  
  NT 10:30am - 11:00am  
  WA 9:00am - 9:30am  

Further details will be provided on registration.

Click here to register your interest in participating

We hope that 2014 is a safe and prosperous year for you and your loved ones.

Whatever market you’re in... hope it’s profitable.

Best regards,
Randal Williams, Chief Wealth Management Officer &
Chris Andrews, Head of Funds Management
La Trobe Financial Asset Management Limited

La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 123 staff and has managed over AUD$10Billion covering over 100,000 investment grade assets since inception in 1952.

Copyright 2013 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

The following awards and ratings were given to the Pooled Mortgage Option within the La Trobe Financial Mortgage Fund and may be viewed on our website

Ratings And Awards

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La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. The PDS is available on our website www.latrobefinancial.com.au or by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.
- The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund and may be lower than expected. Investors risk losing some or all of their principal investment. The investment is not a bank deposit.
- Past performance is no guarantee of future performance.
- Withdrawal rights are subject to liquidity and may be delayed or suspended.
- The award and ratings were given to the Pooled Mortgages Option within the La Trobe Australian Mortgage Fund.
- Any rating is only one factor to be taken into account in deciding to invest.

La Trobe Financial Services Pty Limited - Australian Credit Licence Number: 392385
La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213

1. Zenith's "recommended" rating indicates that it has high confidence in the manager meeting its objectives. The Zenith Investment Partners ("Zenith") ABN 60 332 047 314 rating referred to in this document is limited to "General Advice" (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product(s), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. To view the relevant research information, please visit www.latrobefinancial.com.au The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.
2. SQM Research - 4 stars to 4.25 stars - superior, suitable for inclusion on most Approved Product Lists. To view the relevant research information, please visit www.latrobefinancial.com.au This rating will not take into account your, or your clients' objectives, financial situation or needs. It is up to investors to consider whether specific financial products are suitable for your objectives, financial situation or needs. Research houses receive a fee from La Trobe Financial for rating the product.
3. Lipper Leaders Rating Total Return (Score – 5) Lipper Ratings for Total Return reflect funds’ historical return performance relative to peers. The ratings are subject to change every month. The highest 20% of funds in each peer group are named Lipper Leader or a score of 5 for Total Return. Lipper Leader ratings are not intended to predict future results and does not guarantee the accuracy of this information. More information is available at www.lipperweb.com. Thomson Reuters Copyright, All Rights Reserved.
4. Australia Ratings (AFSL 346138) makes every effort to ensure the reliability of the views and rankings expressed in its reports and those published on its websites. Australia Ratings research is based upon information known to it or which was obtained from sources it believed to be reliable and accurate at time of publication. However, like the markets, it is not perfect. This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each rating for their own specific circumstances and realise that not all investments will be appropriate for all subscribers. To the extent permitted by law, Australia Ratings and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Australia Ratings hereby limits its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.