In late August 2020 the US Federal Reserve officially relaxed its inflation target of 2% saying that it may let inflation run above that level into the future, before it next raises interest rates. Last time the Fed raised interest rates(four times in 2018) it was precisely to combat the prospect of future inflation amidst a tightening labour market. And while markets initially interpreted the Fed’s new policy as meaning bond yields will stay lower for longer, this new policy is stimulatory and means that long bond yields can start to rise without inflation. Why? Because without the Fed being on watch for a specific level of inflation, and being willing to pre-empt it, markets will now have to be more vigilant.
While the Fed’s new policy is a necessary, but not sufficient condition to actually achieve inflation, coupling it with global economies in the midst of re-opening and the largest-stimulus-ever working its way through financial systems, the risk of inflation has indeed risen.
Mirvac: Sustainability leader
During the month we met with the Mirvac sustainability team. Mirvac continues to be an ESG leader in our view and it is a company where over time the market will continue to assign a higher rating to the stock as a result. Sustainability “is” the business at Mirvac. It isn’t an afterthought or a set of strategies added on to the core business strategy. The company’s sustainability positioning statement of “Reimagine Urban Life” is particularly interesting given COVID19. We asked if it was time to “reimagine” Reimagine Urban Life given the changing lifestyle trends of work from home, less time in cities, preference for landed houses over apartments and so on during and post COVID19.
Full update attached
During October 2021 the Fund returned 1.09% versus the S&P/ASX 300 Accumulation Index of 0.10%, outperforming the market by 0.99%. An overweight position in Materials added to relative performance while and overweight position in Financials detracted from relative performance.
This World Children’s Day, 20 November, we recognise the devastating and disproportionate impact the climate crisis is having and will continue to have on children. As the most anticipated event of the year, COP26, finishes, it remains clear we have never needed more urgent action from government, business and society to respond to the climate crisis
During September 2021 the Fund returned -1.19% (after fees) versus the S&P/ASX 300 Accumulation Index of -1.89%, outperforming the market by 0.70%. An underweight position in Healthcare and an overweight position in Transport added to relative performance. Over the last 12 months the Fund has returned 36.03%, outperforming the ASX300 Accum Index by 5.17%.