February 2022

By Forrest Private Wealth

At Forrest Private Wealth, our investment philosophy underpins our financial planning advice, which ensures our client’s wealth benefits from long-term exposure to equity markets. We believe holding a well-diversified portfolio of predominantly dividend-paying businesses over a long-term period is essential in financial planning for wealth accumulation and, ultimately, retirement planning.

By following our retirement planning process, a Forrest Private Wealth financial planner stays true to their investment advice, ignoring the noise and pressures of the market to provide their clients with a stress-free retirement. At Forrest Private Wealth, our financial planners capitalise on an investment philosophy that provides predictable income streams from equity markets, setting clients up for their desired retirement.

Long Term Portfolio

January’s turbulence rolled into February with heighten trading volatility throughout the month. The Russian invasion of the Ukraine played out before the world and consequently, the Long account finished down for the month. Our core philosophy in periods like these is always not to react and rush to the macro and political noise of the day. Rather, sticking to investment process, concentrating on what the portfolio is invested in, affirming the assets are still of good quality and we are comfortable being exposed to in the long term. This has held true over many years and irrespective of current short-term, and potentially medium-term sensitivities, will continue to serve us well in the years ahead.

Short Term Portfolio

February was ultimately overshadowed by Russia’s invasion of Ukraine, and the threat of a major regional conflict and the ramifications for global political order. The final days of the month saw heightened volatility as markets began to absorb the enormity of the situation along with the dire humanitarian consequences. Yields were volatile, however domestic yields rose over the month with the curve steepening at the short end. Throughout the first half of the month, yields rose as the market continued to price in a tightening schedule for the RBA. During this time, the RBA took a more hawkish stance with 2022 rate hikes being discussed and their Bond Purchase Program ceasing. While markets have recently stabilised, the conflict has shown significant ramifications on energy prices and continued supply chain disruptions. This is likely to impact central bank policy around rate setting.

We continue to remain positive on credit fundamentals as the economy navigates living with COVID. The economic outlook remains positive over the medium term from a fundamental perspective. We continue to remain active in investment selection within the Short SMA.

Micro Cap Portfolio

During February the market punished Omicron-driven earnings misses. Growth stocks continued to be left behind by investors as earnings were repriced for potential inflationary impacts. Strong balance sheets and cash positions were no defence for the selling pressure.

The situation between Russia and Ukraine dominated headlines and impacted global markets. This has also pushed energy prices higher adding to the concern of inflation in most Western markets. Although expectations of rapid rate increases in the US have abated with some transitory pressures releasing, high energy prices based on the geo-political situation noted, will continue to act as an ongoing inflationary force. Cyclical stocks that will benefit from these inflationary forces will be in favour in the near term.

The domestic market will be dominated in the near term by the re-opening post Omicron. Managers will look for those that will benefit from the reopening theme. With unemployment at 40 year plus lows and pent up capacity in consumer wallets, it’s expected recovery plays will perform well in the near term.

Forrest Private Wealth’s discipline in providing financial planning, retirement planning, and wealth management services to its clients allows our clients to benefit from years of experience providing financial advice through major impacts to equity markets where staying the course has helped them.

Forrest Private Wealth has a dedicated team of financial planners and support staff providing clients with peace of mind in working towards and achieving their life goals.


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