March 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

Markets bounced back in March following the demise of several US banks which has seen an acceleration of tightening credit conditions amongst their survivors. Such industry policing, in conjunction with Federal Government intervention (guaranteed deposits) does a lot of the heavy lifting the Central Bank had been doing over the past year increasing interest rates. This has led many to believe, interest rate cuts may be sooner (late 2023) than later (early 2024). This is positive for business and share markets in general and market performance has improved as a result. We still however remain cautiously optimistic and note the Long portfolio’s 11% cash and fixed income position, in addition to its defensive infrastructure (13%) holding.

Short Term Portfolio

Mortgage holders are eagerly anticipating next Tuesday’s RBA rate decision, hoping that the easing of inflation momentum in the March quarter will persuade the RBA to keep the cash rate unchanged at 3.6%. Although the cost of most goods and services continues to increase, the most recent data suggests that the rate of growth has moderated, resulting in a lower annual inflation rate.

Given the persistent high level of inflation, the next few decisions on interest rates will be close calls. The RBA may still be concerned about potential risks bought about by high inflation in the future that could require them to raise rates again.

We increased the Short SMA’s exposure to quality, long duration credit investments back in January which is producing positive results. Over the long term, as rates fall and normalise, these long duration credit asset prices will benefit and ultimately increase in value. As always, we are vigilant and ready to make additional adjustments to capitalise on opportunities as presented.

Micro Cap Portfolio

Volatility has been the key theme through markets in the March quarter and we expect this to continue into the June quarter. The collapse of regional US banks added to the ongoing theme of inflation and impact to interest rates to put pressure on global markets in March.

Locally the RBA put a temporary end to interest rate rises at the start of April holding rates at 3.6%. The RBA is trying to find a balance that reduces the upside risks to inflation and downside risks to growth.

The funds in this portfolio are presently investing in assets that are dislocated to economic growth given the expectation that economic growth will slow with the recent rises in interest rates. Strong balance sheets and cash generation remain the key themes. The quote from author Morgan Housel which sums up the current market well “Volatility is the price of admission. The prize is superior long-term returns”.

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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