July 2023

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

The Long account closed up in July with Central Banks starting to signal the journey to lower inflation is beginning to make some progress. In spite of inflation remaining higher for longer and going through a period of the quickest interest rate hiking cycle we have seen for some time, markets and the global economy, continue to show resilience. Unemployment, broadly, remains at historically low levels, recession concerns are abating, and company results are mixed yet without extremities. Given a number of factors still in play and to play out, we continue to maintain a cautious approach in the portfolio.

Short Term Portfolio

Despite the encouraging developments regarding inflation, central banks maintain a keen awareness of the persistently tight labour markets. Central banks recognise that a mere few months of improved inflation data does not necessarily indicate a lasting trend. Consequently, they are consistently signalling a predisposition toward continued tightening monetary policy, with any further rate hikes contingent upon the incoming economic data. It is acknowledged that there are potential risks associated with the durability of inflation’s current trajectory, and there may be a requirement for one or two additional rate hikes. Nevertheless, it’s becoming evident that the risks are gradually achieving a greater equilibrium, suggesting a more balanced outlook in the near term.

Micro Cap Portfolio

Global equities rallied in July after the US inflation was softer than expected. This supported the view that the rate hiking cycle may be coming to an end. To date we have seen slowing inflation without a material rise in unemployment. This is providing hope in the soft landing scenario some economists point to for the US economy.

Here in Australia, the economic outlook looks less certain considering the potential negative impact of the ‘mortgage cliff’ on discretionary consumption. Rising rents from a structural housing shortage, rising wages from industry award determinations and rising power costs are all headwinds the Australian economy is working through presently. With August results season now upon us, investor focus shifts towards corporate earnings and outlook statements where expectations and market positioning will be measured against the hard data.

After good performance in July for the Microcap portfolio, this reporting season looks to be one that won’t be entirely macro dominated.

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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