Aus macro/PMI’s

The Aussie Judo PMI’s are a looking a touch perkier, this is the flash reading for January.

A few thoughts. One) PMI’s have told us, unfortunately, almost nothing regarding hard data outcomes (retail sales, IP, unemployment) and trading off them would have resulted in very defensive portfolios in aggregate and two) those surveys moving up is still generally regardable as a good thing, particularly in services, where a rebound is not just nice but necessary.

Now, we’ve been underweight Australia in our DAA funds for some time, preferring international equities, and other investable equity pockets like infrastructure and REITs (which had been material underperformers and were thus, relatively, more attractive). However our underweight stems mainly from our worries about a slowdown in China’s commodity demand impacting resources, and from higher mortgage repayments impacting, well, pretty much everything, but obviously and especially the Aussie consumer. The PMI’s were the cherry on top.

But, we’ve still got between 16-18% of the fund invested in Aussie shares, across the various balanced funds, and it is a good caution on never overweighting one single data point or series, such that you thunder in or thunder out of an asset class in its entirety.

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