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Aug 7, 2020 7:37:20 PM

Audited Returns for 2019-2020

Our MDA Model Portfolio 2019-2020 financial year audit has just been completed and we are delighted to share the results.

Our performance of our swing strategy for the 2019-2020 financial year:

(All Returns are Net of Fees)

Swing Strategy  28.57%

Get exclusive access to our Auditors report for 2019-2020 by completing your details below.

 

 

Apr 30, 2020 8:06:32 PM

2020 will forever  be the year COVID-19 gripped the world

2020 will forever be the year COVID-19 gripped the world and the sent global equities into free-fall.

Although many of us are not strangers to stock market crashes – there are some unprecedented circumstances around this particular COVID Crash which suggests that it may be more malignant and less temporary than its predecessors – leaving a lasting change on investor behaviours whilst hindering any chance of ‘quick knee-jerk recovery.’

Some prudent questions Investors should be asking themselves given the current circumstances…

What are the medium to long-term of effects of sustained quarantine?

The world has never endured a sustained quarantine where global economies have been stripped to bear essential goods and services only. A sustained quarantine – more aptly, sustained unemployment - could have devastating and permanent effects on both the micro and macro economy.Unlike the recent COVID19 Crash, immediately following the 2001 and 2008 Crashes, Consumers around the globe could return to work the next day and continue grinding the gears of their respective economies – with unemployment peaking at 7.1% and 5.9% in both 2001 and 2008 respectively(https://tradingeconomics.com/australia/unemployment-rate)

Treasury Data in Australia indicates that without the JobKeeper allowance unemployment rate could be as high as 15% as of April 2020 – for some context, during the Great Depression levels of unemployment hit 20-25%.

Is unemployment artificially supressed due to JobKeeper allowance?

 

Unemployment is a lagging indicator – Q1 unemployment was 5.1% which is forecasted to rise approximately 10% in the June quarter (https://www.abc.net.au/news/2020-04-13/coronavirus-unemployment-covid-19-treasury-figures-jobless-rate/12145542

Recipients of the JobKeeper Allowance are classified as employed according to ABS reporting - which leaves room for speculation that it could well in fact be a lot higher.

Moreover, there will a prolonged period between when the Government can no longer afford to continue JobKeeper Allowance payments and when we see aggregate demand restored to pre-virus levels.

The longer this period the higher the potential unemployment rate will climb – especially pertaining to small to medium sized businesses who cannot afford to absorb demand lag.

Is there sufficient room for effective Monetary Stimulus?

In short, NO.

The Modern Monetary Theory adopted by Central banks the world over, have become solely reliant on the swift adjustments of interest rates to remedy any economic downturn.

However, it seems this trend is simply no longer viable.

During Recession, Central Banks reduce interest rates and increase the Monetary Supply -  through Quantitative Easing – which in turn increases inflation and drives up asset prices. This has become known as expansionary monetary Policy – and has been the Get-Out-Jail-Free Card for central banks for the past 40 years.

However, nothing is free in this world…

Expansionary monetary policy has ultimately increased global debt and has now pinned global interest rates to near zero.

(https://tradingeconomics.com/australia/interest-rate)

In May of last year Ray Dalio, CEO of Bridgewater Hedge Fund, described the diminishing effectiveness that Quantitative Easing and lowering interest rates has on stimulating an economy in downturn. Ultimately foreseeing a monetary apocalypse in which there would be an i) economic down-turn and ii) where interest rates would be pinned to zero.

Lo and behold here we are 1 year later….

It may be quite dry to those of other affinities, but I  encourage you all to read it: https://www.linkedin.com/pulse/its-time-look-more-carefully-monetary-policy-3-mp3-modern-ray-dalio/

Dalio goes on to detail that in this scenario there is little to no room to lower interest rates and that QE effort would only lead to hyperinflation. He describes how Governments and central banks would need to move to a new version of Modern Monetary Policy – which he calls Monetary Policy III – more reliant on fiscal stimulus rather than monetary.

As investors, you do not need to need to concern yourselves with the minutiae of this inevitable cataclysmic shift in global monetary policy – all you need to know is that such a change would be lengthy, arduous and will riddle global equities in speculation for a continued period.

 Can we find refuge in Gold and Silver?

To an extent…

Investors tend to change asset classes depending on the perceived risk in the markets. Stocks are considered to be riskier assets than bonds, precious metals and cash. Therefore, ‘a market where stocks are outperforming bonds, precious metals and cash is said to be a risk-on environment’. https://www.investopedia.com/terms/r/risk-on-risk-off.asp

Precious metals are what we call Inflation hedged assets which means they are risk-off and as such are negatively correlated to stocks.

Whilst a portfolio which is negatively correlated to the stock market is great during crashes, it is adversely susceptible to quick changes in investor sentiment should the market consolidate sideways – which is what can be expected as the stock market treads water or tapers back-and-forth whilst trying to find its bottom.

Investors would be wiser to achieve a portfolio that is NON-CORRELATED as opposed negatively correlated to the equity market.

Instead of backing a horse to win or not to win – it’s sometimes best to bet on sport or some other unrelated event.

Since winding down our ASX portfolio last year, we have had been steadfast in achieving returns uncorrelated to the Global Equities – we feel our Swing Strategy has best achieved this.

Here is another great source of uncorrelated assets from Guggenheim Investments: https://www.guggenheiminvestments.com/mutual-funds/resources/interactive-tools/asset-class-correlation-map

Is Property a viable alternative in Australia…?

High unemployment leads to reduced household income which ultimately reduces serviceability of debt for the average Australian investor – ultimately causing a drop in housing demand.

Historically, demand-driven crashes are quickly recovered provided there are no extraneous inhibitors of demand… such as sustained employment and the stoppage of immigration.

Previously under these circumstances, the RBA would cut rates to increase the availability of credit which would inturn prop up demand – however with  current cash rate set at 0.25% leaves little room for a rate cut, with evidence supporting  “monetary policy transmission of rate cuts is indeed weaker when interest rates are persistently low”. https://www.rba.gov.au/publications/confs/2017/pdf/rba-conference-volume-2017-borio-hofmann.pdf

More concerning is that the key driving force behind Australian Residential housing market strength has been Australia’s net immigration. 

It’s no secret that migration increases house price.

“The pick-up in immigration coincides with Australia’s most recent housing price boom. Sydney and Melbourne are taking more migrants than ever. Australian house prices have increased 50% in the past five years, and by 70% in Sydney.” (https://theconversation.com/how-migration-affects-housing-affordability-92502)

One can only speculate how long Australia’s border will be closed and  what the immediate effects a zero-immigrant economy will have on residential housing market…

Coupled that with a potential 15% unemployment rate and ineffective monetary stimulus – we may see a slide in both demand with a potential increase in supply as Australian Households seek to ration assets.

‘Some economists, such as AMP’s Shane Oliver, estimate that prices could fall as much as 20% if the recession lasts more than six months’ https://www.theguardian.com/australia-news/2020/mar/20/australian-housing-market-will-hit-the-wall-in-coronavirus-recession-experts-say

What should my portfolio look like in  2020?

A bear market is hard to predict – it’s turn-around even more so. One thing that can be predicted with confidence is the prevalence of market volatility as investor sentiment switches back and forth from risk-on to risk-off.

The dynamic shifts between risk-on and risk-off sentiments require portfolios which are actively traded and directionally unbiased – can profit in up and down markets.

Walker Capital’s current strategies are actively traded currency and commodity portfolios. It is our objective to achieve returns uncorrelated to the stock and property markets in order to provide investors opportunity to diversify risk and maximise returns.

Whilst there are there are correlations between certain stock indices and currency pairs – provided we actively trades both directions in currency prices the returns we yield are uncorrelated the stock markets.

Our strategies should be considered as an alternative to investments into the stock market given current market conditions

1565815932-GettyImages-1161631113-960x540

Aug 15, 2019 4:49:11 PM

Sharemarket wiped out $50 Billion - Where to Now?

“The Australian share market has wiped out $50 billion worth of gains it made in the past two months “ 1

The benchmark ASX 200 has fallen 2.6 per cent to 6,427 points by 2:00pm (AEST), with nine out of every 10 stocks in the red” 1

The recent decline in the domestic stocks is part of a global sell-off amidst recession fears in the US coupled with trade-war speculation along with all-in-all lacklustre economic forecasts.

China experienced its weakest factory output in 17 years, with its latest official figures showing that industrial production grew by an annualised 4.8 per cent in July”

“The cause of the market panic was a bond market phenomenon known as the "inverted yield" — when interest rates on America's long-term (10-year) government bonds fall below short-term (two-year) rates.

It has been regarded by traders as a reliable predictor of US recessions in the past few decades. Furthermore, this "inversion" in bond markets has not occurred since 2007, just before the global financial crisis.” 1

A more chronic - and local - cause for concern is the 12-month -8.37% decline in house prices across Australia. 2

The RBA also cut the cash rate to all-time lows in July to 1.0%3  - leaving little-to-no room for monetary stimulus – which may signal that the worst is yet to come.

After enjoying years of expansionary monetary and successful performance of Risk-On assets – it appears the tide may be turning…

“You only find out who is swimming naked once the tide goes out…” – Warren Buffet

As we enter the contractionary phase of the credit cycle, we will see capital flight away from traditional risk-on assets - like shares and property – and increase investment into inflation-hedged assets – like bonds and alternatives.

For investors, it may be prudent - and timely - for a re-appraisal of your portfolio’s nakedness…

We here at Walker Capital have held the belief all year that the domestic stock market is overpriced - beckoning a long overdue correction. As such, we remain steadfast in our absolute return investment style and will be looking to capture market volatility in either direction.

Walker Capital provides investments uncorrelated to shares and property. Given Walker Capital’s MDA products are aggressive, we recommend no more than a 10% allocation of a client investable net assets.

If you missed our Audit Report 2018-2019 you can  access it here

See what our clients have to say review our testimonials.

If you want to know more we have specialised investment managers ready for a free one-on-one session with you to discuss your investment possibilities

Talk to us Now about Alternative Investments!


Schedule Session

References

1. https://www.abc.net.au/news/2019-08-15/asx-tumbles-on-us-recession-fears/11416348)

2. https://www.rba.gov.au/statistics/cash-rate/
3. 5-capital-city aggregate house pricing index
4. https://www.corelogic.com.au/research/monthly-indices
5. Warren Buffet
Audit Concept. Word on Folder Register of Card Index. Selective Focus.

Jul 25, 2019 2:34:26 PM

Audited Returns for 2018-2019

Our MDA Model Portfolio's 2018-2019 financial year audit has just been completed and we are delighted to share the results.

Our performance varied between strategies, overall a solid result

The following Strategies have been Audited below for the 2018-2019 financial year:

(All Returns are Net of Fees)

Swing Strategy  39.87%

High Growth Strategy 83.84%

Multi-Strategy 8.30%

Alpha Growth Strategy 39.87%

Get exclusive access to our Auditors report for 2018-2019 by completing your details below.

Walker Social img 3

Jun 13, 2019 9:57:15 AM

Walker Capital Expansion

We have expanded our footprint with new offices in Melbourne, Brisbane and can now service clients face to face in New South Wales, Victoria and Queensland.

If you are looking to diversify your portfolio with an investment not correlated to the market which targets alpha returns then speak to an advisor.

 

Level 40, 140 William Street
Melbourne VIC 3004

+61 3 8103 3082

 

 

Level 36, Riparian Plaza, 71 Eagle
Street Brisbane QLD 4000

+61 7 3059 3082

 

Sydney (Head Office)

Level 57 19-29 Martin Place
Sydney NSW 2000

+61 2 8076 2210

Uncategorized | 5 MIN READ

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Apr 12, 2019 10:08:47 AM

Investment Seminar Melbourne

Our first Investment Seminar was held in Melbourne on the 10th of April 2019 at the RAVC Club.

We had a great turnout for the event with the support of Robert DiPierdomenico (Dipper) and our shareholders. An informative and social night with strong interest in our Managed Investments from the attendee's below is a few photo's of the evening.

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Investment, Portfolio | 5 MIN READ

SMH

Mar 21, 2019 7:18:57 AM

Walker Capital Features in the Sydney Morning Herald

 

Following the Royal Commission into the banking sector, investors are looking for transparency and responsibility when choosing where to put their money – with Managed Discretionary Accounts (MDAs) emerging as an increasingly preferred option.

‘‘People are now much more well informed with investments and want to know what’s going on with their money,’’ says Michael Walker, principal of Sydney-based investment management firm Walker Capital.

‘‘Investors are moving away from traditional and less transparent funds into MDA structures because they want to maintain ownership of their investments. They want transparency and real-time access to their accounts.’’

The Institute of Managed Account Professionals reports that in 2018 MDAs experienced year-on-year growth of 31 per cent, representing $14.85 billion, thereby increasing funds under management in MDAs in Australia to $62.43 billion.

When setting up Walker Capital three years ago, Walker says he aimed to create an investment company that is ‘‘transparent and secure’’ while simplifying the sign-up process with ‘‘digital onboarding’’ to streamline applications.

There is growing demand for investments into alternative asset classes as investors seek to diversify and de-risk their portfolios, he says.

‘‘In alternative assets like Forex and CFDs [contracts for difference], investors need to understand the MDA investment and what the risks are,’’ Walker says. ‘‘There is leverage in many of these investments and investors need to understand these risks against the potential rewards.’’

With a mix of retail and wholesale clients and a team of veteran traders, analysts and investment managers, Walker Capital aims to ‘‘balance the risks’’ and give its customers a healthy net return on their money, he says.

The MDA structure allows each client to have a separate investment account.

‘‘Our investments are not correlated to the market,’’ says Walker. ‘‘We use a mix of fundamental and technical analysis to target positive return in a rising and falling market.’’

‘‘Using derivatives in Forex and CFDs allows us to take advantage of that opportunity.’’

 Walker says the team provides a professional product in an alternative space with transparency and accountability.

‘‘Client funds will be held in a segregated trust account with an external counterparty. We utilise either Pepperstone or Interactive Brokers to hold the funds.’’

Walker Capital clients, who sign up with a minimum of $20,000, are also able to watch in real-time how their investments are performing.

‘‘In a normal managed fund you’ll get your statement, but you don’t necessarily see what is going on,’’ says Walker. ‘‘With us, you can log into your account at any time and actually see what’s happening with your money.

‘‘We also don’t have any lock-in periods and there are no exit or entry fees.’’

Clients who sign with Walker Capital benefit from the insight of brokers across the globe, he says.

‘‘We’re a small team,’’ says Walker. ‘‘But there is a value that we add for our clients because we have our own money invested in our own strategies too. And, as such, our interests are aligned with our investors.’’

SMH

Investment | 5 MIN READ

AGE

Mar 21, 2019 7:18:35 AM

Walker Capital Features in The AGE

 

Following the Royal Commission into the banking sector, investors are looking for transparency and responsibility when choosing where to put their money – with Managed Discretionary Accounts (MDAs) emerging as an increasingly preferred option.

‘‘People are now much more well informed with investments and want to know what’s going on with their money,’’ says Michael Walker, principal of Sydney-based investment management firm Walker Capital.

‘‘Investors are moving away from traditional and less transparent funds into MDA structures because they want to maintain ownership of their investments. They want transparency and real-time access to their accounts.’’

The Institute of Managed Account Professionals reports that in 2018 MDAs experienced year-on-year growth of 31 per cent, representing $14.85 billion, thereby increasing funds under management in MDAs in Australia to $62.43 billion.

When setting up Walker Capital three years ago, Walker says he aimed to create an investment company that is ‘‘transparent and secure’’ while simplifying the sign-up process with ‘‘digital onboarding’’ to streamline applications.

There is growing demand for investments into alternative asset classes as investors seek to diversify and de-risk their portfolios, he says.

‘‘In alternative assets like Forex and CFDs [contracts for difference], investors need to understand the MDA investment and what the risks are,’’ Walker says. ‘‘There is leverage in many of these investments and investors need to understand these risks against the potential rewards.’’

With a mix of retail and wholesale clients and a team of veteran traders, analysts and investment managers, Walker Capital aims to ‘‘balance the risks’’ and give its customers a healthy net return on their money, he says.

The MDA structure allows each client to have a separate investment account.

‘‘Our investments are not correlated to the market,’’ says Walker. ‘‘We use a mix of fundamental and technical analysis to target positive return in a rising and falling market.’’

‘‘Using derivatives in Forex and CFDs allows us to take advantage of that opportunity.’’

 Walker says the team provides a professional product in an alternative space with transparency and accountability.

‘‘Client funds will be held in a segregated trust account with an external counterparty. We utilise either Pepperstone or Interactive Brokers to hold the funds.’’

Walker Capital clients, who sign up with a minimum of $20,000, are also able to watch in real-time how their investments are performing.

‘‘In a normal managed fund you’ll get your statement, but you don’t necessarily see what is going on,’’ says Walker. ‘‘With us, you can log into your account at any time and actually see what’s happening with your money.

‘‘We also don’t have any lock-in periods and there are no exit or entry fees.’’

Clients who sign with Walker Capital benefit from the insight of brokers across the globe, he says.

‘‘We’re a small team,’’ says Walker. ‘‘But there is a value that we add for our clients because we have our own money invested in our own strategies too. And, as such, our interests are aligned with our investors.’’

AGE

Investment | 5 MIN READ

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