July 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

Share markets started the new financial year positively, with the Long account posting a solid rebound in July. The catalyst? The belief inflation may have peaked, and the likelihood of interest rate hikes going forward are likely to be less aggressive than previously anticipated. Last month we wrote when invested, it pays to be just that – invested! Months like July remind us how important it is to stay and keep investing through the cycle irrespective of the short-term noise. Timeframe, diversity, and volatility continue to be an investor’s best friend.

Short Term Portfolio

July was a strong rebound month for bonds, equities and credit markets. In terms of market events in July, the RBA lifted the official cash rate by another 0.50% to 1.35%. The US Federal Reserve lifted their interest rates by 0.75% as expected. Other countries are following suit to combat tight labour markets and rising inflation. Many economists are now anticipating a slower increase in interest rates followed by possible rate cuts late next year, which helped markets rally in July. Regardless of this happening or not, Central Banks are still in the process of tightening monetary conditions globally with further rate rises expected in Australia next week and around the globe. We expect asset prices to remain under pressure as the tighter financial conditions start to negatively impact fundamentals as reporting season gets well underway.

Micro Cap Portfolio

Global equities rallied in July as markets reduced future rate hike expectations based on weakening macroeconomic data and a belief that inflation have peaked (9.1% for June). As widely expected, the U.S. Federal Reserve increased interest rates by a further 75 basis points in July. Domestically our RBA followed suit, raising rates by another 50 basis points in line with expectations, with domestic inflation coming in at 6.1 percent.

In July, global equity markets posted their best monthly return of 2022 to date with a 5.43 percent rise (MSCI ACWI). The S&P/ASX 300 Accumulation index also posted a strong result of 5.95 percent. Equity markets were also reassured by some encouraging quarterly reporting from several of the largest U.S. companies, including Amazon and Microsoft, with earnings holding up despite the challenging macroeconomic backdrop.

The economic set-up leading into this season is more pronounced than most. Our managers enter this reporting season with cash to deploy. We expect there to be opportunities during the earnings season where emotional share price moves offer opportunities where concerns about the fundamental outlook have been overdone.

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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