Playing the long game – real challenges & achievements
Investor Insights - Monthly news for investment professionals 9 June 2016

In last month’s Investor Insight, we explored the idea of ‘secular stagnation’. We considered the prospect that future portfolio returns could be significantly lower than what the experience of the last one hundred years had conditioned us to expect. We asked investors to reflect on what this could mean for their own portfolios.

These challenges will not go away. With the federal election set for Saturday, 2 July 2016, the various political parties are busily arguing for their vision of the future. An important subtext is the same key themes behind the secular stagnation theory. Amidst all the unavoidable noise of the political debates, investors need to keep their eye on the long game.

On the negative side of the ledger (and supporting the secular stagnation theory) is perhaps the most inexorable of empirical facts: demographics. We frequently return to demographic themes because, in the long run, there is a very strong argument that demographics are destiny. And as the two graphs that follow show, Australia’s future is one in which fewer and fewer workers will be supporting a growing number of dependents. Despite all the talk, this remains one of our nation’s most striking challenges.

On the other hand, our nation – indeed our world – has met challenges of this magnitude before. Remember the “Population Bomb” hysteria of the late 1960s and early 1970s? The graph below shows how that worked out. It shows the world population (as an absolute number and as a percentage) who are living on $1/day or less (in 1987 dollars).

The results are startling. For all the fears, conflicts, wars and famines of the last fifty years or so, the world has made real and significant steps towards improving the conditions of the most desperate.

So the best response to the challenges of today is neither denial, nor despair. Rather, it’s to study the issue frankly and focus on real, long term solutions.

EOFY – tax time’s coming

Finally, it’s less than a month until the end of financial year. SMSF investors especially need to consider their position this year, given the raft of changes being championed by the government and the opposition. Some important issues to consider include:

  1. Concessional contribution caps for FY16 and FY17 are $30,000 for those under 49 and $35,000 for those 49 and over. The Coalition plans to reduce this cap to $25,000 from 1 July 2017.

  2. The “Division 293” threshold will be lowered from $300,000 to $250,000, which means that concessional contributions, when added to a client’s income that is over $250,000, will be taxed at 30%.

  3. Both parties are planning to tax super in pension mode. The Coalition will do it via the $1.6 million pension limit, Labour will do it by taxing income drawn from pensions. Equalising super between couples must be considered.

  4. The Coalition is planning to enhance the spousal rebate program, lifting the income threshold for the lower earning spouse from $10,800 to $37,000. Nothing can be done unless and until legislation is passed, but it’s worth starting to consider now.

  5. The Coalition is planning to limit lifetime non-concessional contributions into superannuation to $500,000 per person. If a couple is planning on making additional non-concessional contributions, it will be critical to know what each party has already contributed.

As always, make sure you see your tax adviser well in advance of EOFY so that you can take whatever actions are required to optimise your position.

La Trobe Financial unveils a new advertising campaign with the theme:

We know that you have worked hard for your money...
...isn’t it time your money worked hard for you?

For over sixty years, La Trobe Financial has helped Australians achieve financial independence. Our story began in 1952 with one man’s dream. Now, in 2016, we have helped hundreds of thousands of Australians realise their own dream.

Our multi-award winning retail Credit Fund continues to offer investors market-leading returns. It has a track record second to none. Our flagship Pooled Mortgages Option (currently paying 5.20% p.a. variable) is the highest rated fund in the sector and has been judged “Best Mortgage Fund in Australia” for the last seven years by reputable finance journal Money magazine. Our peer-to-peer investment offerings are Australia’s highest rated (“Superior” – SQM Research), largest and most robust.

Underpinning it all, is the conviction that you deserve better – better rates, better income, in every economic cycle.

This week, we launch a new national advertising campaign across television, digital and social media. In this campaign, we tell the story of one of our investors. After a lifetime of hard work, isn’t it time your money worked hard for you and your family?

As one of our valued supporters, we offer you the early opportunity to view one of our commercials – click here.

Best regards,

Chris Andrews
Vice President,
Chief Investment Officer

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The above awards and ratings were given to the Pooled Mortgage Option within the La Trobe Financial Credit Fund and may be viewed

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 Credit 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 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 Credit Fund.
- Any rating is only one factor to be taken into account in deciding to invest.

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 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 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 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.
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 Credit Funds under AFSL 222213. It employs over 150 staff and has managed over AUD$10 Billion covering over 100,000 investment grade assets since inception in 1952.

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This publication does not constitute financial advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek your own financial or other professional advice before acting or relying on any of the content.
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