Margin of Safety
Welcome to the October 2022 edition of our Quarterly Investment Report.
This report brings you key investment insights from our research partners and independent advisory board.
Summary of our latest insights
- There haven’t been many places to hide in markets this year, and the uncomfortable environment is expected to linger into 2023.
- Ultimately, liquidity drives financial markets, and this is being removed at a rapid pace to combat inflation through the withdrawal of monetary and fiscal stimulus.
- There are increasing risks to unlisted asset valuations (valuation-lag), often evident after swift increases in interest rates.
- In light of this, it is crucial to remember that some of the best buying opportunities arise when there are many reasons to be cautious.
- Australian listed Property (A-REITs) offer value after a -25% fall in price YTD. We believe the bad news has been priced in, and whilst they trade at a significant discount to book value, there is a margin of safety.
- Our House View has been updated to reflect the changing environment, with an overweight position to Property through A-REITs and an underweight position to Alternatives – selling the unlisted to buy the listed.
- We have a short-term preference for domestic exposures, both from an asset and currency perspective.
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