May 2024

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

May was a turbulent month, characterized by significant swings reminiscent of Dr. Jekyll and Mr. Hyde. Despite the volatility, the month concluded on a positive note. Looking ahead, there’s increasing speculation that Australian interest rates may continue to climb in the latter half of the year, though the apex appears imminent. This trend generally supports equity markets, a sentiment mirrored globally with recent rate adjustments from the Canadian and European Central Banks.

The shift towards more moderate rate policies, driven by disinflationary pressures, is particularly favourable for equities. This adjustment not only fosters a more stable economic environment but also provides clarity regarding borrowing costs, enabling businesses to plan and forecast more effectively. While interest rates and inflation remain focal points, our approach remains agnostic, prioritizing exposure to high-quality businesses within our portfolios. This strategy ensures resilience amid evolving market conditions and diverse economic factors.

Short Term Portfolio

Global economic data released in May shows a decline in inflation across many countries, but Australia is experiencing a different trend. Inflation in Australia rose to 4% over the 12 months to May, up from 3.6% in April, marking the highest monthly inflation in six months. This comes after the RBA decided to maintain rates at 4.35% in June, indicating a potential rate hike in August. The market now predicts a 40% chance of a rate increase in August and a 65% chance by November.

As investment managers, we closely monitor these market developments. Given the current bond market volatility and inflation trends, we continuously assess and adjust our portfolios to ensure they remain aligned with your long-term financial objectives. Rest assured, we are vigilant and will make necessary changes to navigate these economic fluctuations effectively.

Micro Cap Portfolio

Domestically we are still seeing a return in volatility in equity markets on the back of inflation reads. Higher than anticipated inflation has resulted in talk of interest rate drops pushing out to 2025 spooking the market.

Globally, equity markets have been supported by cooler economic indicators coming out of the US and Europe. Corporate earnings in the US continue to be robust and driving gains, particularly in the technology sector.

Artificial intelligence remains a focus of discussions, with Nvidia rallying a further 27 per cent for the month and now approaching a 4 per cent weight in the MSCI ACWI Index. Fund managers are looking to likely winners in AI to fuel their performance in 2024 and 2025.

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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