September 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

September closed down during what was a period of heightened volatility. Interest rates and inflation concerns continue to dominate the narrative. We do not anticipate this reducing anytime soon, however, recent comments from the RBA suggest policies are working, and the likelihood of continuing significant rate hikes remain more remote than likely. During periods of uncertainty, it’s important to remember that in markets where assets are priced daily (share market), volatility provides opportunity. And there is plenty of opportunity! Our skilled fund managers within the Long account have been actively trading their positions to take advantage of the large daily ups and downs we are seeing.

Short Term Portfolio

In September, there was a notable transformation in the global financial markets. This transformation was marked by a deceleration in the decline of inflation and the anticipation of a prolonged period of higher cash rates. While the prevailing sentiment still suggests that cash rates have probably reached their peak in key regions, the prevailing narrative has shifted towards the expectation of rates remaining elevated for an extended period, often referred to as “higher for longer.” This change in outlook arose from concerns that central banks might maintain higher interest rates well into the second half of 2024. The consequence of this shift was a significant reassessment of bond markets in September, leading to yields reaching their highest points in years within the current economic cycle. Additionally, it triggered a widespread sell-off in equity markets. In light of this volatility, the Short SMA portfolio produced a positive 0.15% for the month.

Micro Cap Portfolio

September was not a positive month for global and local equity markets with gains year to date for most markets largely reversed in September. Much of the decline can be attributed to re-emerging concerns about rising bond yields with the US 10-year bond yield increasing a material 70 basis points to 4.80 percent in September. Meanwhile the recent cooling of inflation slowed as the rebound in oil prices caused inflation to increase. The impact of this – virtually removing hope of interest rate cuts early next year solidifying the views of ‘higher for longer’.

The portfolio remains positioned to manage both near-term volatility in defensive stocks and rebound through profitable high growth stocks that have the combination of relative earnings certainty or under-appreciated earnings power. There is a solid case to mount that the market has underestimated the cost-out impact on earnings that doesn’t materially impact the cadence of growth delivered.

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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