Tim Rocks

There are some significant structural changes going on in the world at the moment, with some meaningful implications for cross-asset price correlations. Here are the key takeaways from the note I wrote with Glen Bertram, Acting CIO for the JBWere and NAB Private Wealth CIO office (to get the full document, please contact your to your NAB banker or JBWere adviser). -We have written previously about the notion of regime change, and its utility as a framework in which to make sense of the many changes taking place across economics, politics and ultimately, financial markets. In our view, these shifts are both significant and likely to endure. -At the same time, the policy environment is changing too. Central banks are likely to face into both demand- and supply-side shocks in the new regime, which has different consequences for monetary policy. That this is occurring at the same time as central bank independence is being tested in some jurisdictions only amplifies the challenges. -One important consequence of these changes relates to the stability and directional characteristics of cross asset correlations. Many fundamental assumptions that investors and risk managers have taken as constant appear to be changing as we transition into a new regime. -In our view, this is consequential for both portfolio construction and risk management practices, and hence the topic of this note, jointly written with our colleagues in the JBWere & NAB Private Wealth CIO Office. -For portfolio construction, the most significant changes relate to correlations between government bond and equity market performance and AUD/USD and US equity market performance. These changes are likely to force (for local investors) a reassessment of optimal USD growth asset exposure and hedging levels, as well as a consideration of new or “alternative” defensive assets. -For other financial participants, there is much to absorb. At a minimum, the cost of hedging will rise, and scenario analysis will need to envisage a wider range of outcomes. A more de-synchronised global economy will influence cross market correlations and perceptions of both counterparty and sovereign risk.

105

7 Comments

Australia’s AAA credit rating has been reaffirmed by S&P Global. Only nine countries hold a AAA rating from all three major agencies (💡 do you know who they are?). For multinational corporates and global pension funds and SWFs looking at where to commit capital, Australia’s AAA rating is not just recognition of past performance – it’s reassurance for the future. I was lucky to work with S&P and appreciate the rigour of the forward-looking analysis. In an environment of global uncertainty, very few markets can offer both strong growth potential and sovereign stability. Australia’s long-term AAA rating is a signal to investors that this is a place where capital is protected, risks are well-managed and long-term investments can thrive. At the Australian Trade and Investment Commission (Austrade), we see this every day in conversations with global investors: the combination of stable institutions, prudent fiscal management and a dynamic economy is what sets Australia apart. Australian Department of Foreign Affairs and Trade | Export Finance Australia | Paul Grimes | Daniel Boyer | Jay Meek | Jason Verspuy | Nigel Warren | Jennifer Mackinlay | Dominic Trindade | Bryony Hilless | Brad Williams | Elizabeth Cox | Mukund Narayanamurti | Catherine Gallagher | Frances van Ruth | Wendy Haydon | Carolyn Conner | Caroline Juricic, CFA, GAICD | Nicole Commerford  

78

1 Comment

Airtree has officially closed its fifth fund at $650 million, with more than half the capital coming from global institutional investors. Despite the impressive number by Australian standards, partner James Cameron says the figure represents a deliberate decision to maintain fund size discipline rather than chase a mega-fund. "Fund size inflation can be the enemy of returns in venture and all of the big LPs internationally are very attuned to that," he told Capital Brief. Some of the previously identified backers of the fund include Harvard Management Company, the University of Wisconsin, and Chicago-based private equity firm Adams Street Partners. Read the full story by Bronwen Clune 👉 https://lnkd.in/gfTrdAED 

168

4 Comments

Macquarie Capital is pleased to have advised Telstra on entering into a strategic partnership with Infosys through Telstra’s divestment of a 75% stake in Versent Group. The transaction will enable Telstra and Infosys to refer and leverage each other’s offerings and furthers Telstra’s ‘Connected Future 30’ strategy of focusing on core connectivity. Completion of the transaction is subject to regulatory approvals, employee consultation and other conditions.

346

1 Comment

Koda Capital Chief Investment Officer Norman Zhang, CFA, recently joined ausbiz for a discussion on market conditions. Norman offered a nuanced perspective on current US-China trade tensions, acknowledging manageable uncertainty but warning that escalating tariffs could challenge inflation control. You can watch the interview here: https://lnkd.in/gqm_kr7u #KodaCapital #InvestmentInsights #MarketOutlook #Diversification #PortfolioStrategy

73

1 Comment

A great FY2425 for two of Pinnacle Investment Management Group’s Affilates - Firetrail Investments and Hyperion Asset Management Limited in Australian Small Cap Equities according to Mercer and The Australian Financial Review. For comparison, the S&P/ASX Small Ordinaries Total Return was 12.3% for the 12 months through June 2025. https://lnkd.in/ezYntr5P

40

1 Comment

In an interview with The Australian Financial Review, Firetrail Investments Portfolio Manager and Deputy Managing Director Blake Henricks has discussed how Firetrail's primary focus on investing in high-conviction ideas across both value and growth #stocks, together with selective participation in recent #ASX IPOs, has helped deliver for Firetrail Australian High Conviciton Fund investors in a year when being underweight #CBA proved challenging for many. Looking ahead, Blake also shares insights into several companies the team believes could be key drivers of outperformance, inlcuding Cochlear, Life360, and GemLife. Read the article: https://lnkd.in/gtUUkQmM More about the Firetrail Australian High Conviciton Fund: https://lnkd.in/gCeRCUk4 Stock commentary is illustrative only, not recommedations to buy, hold, or sell any security.

63

Equity Trustees has been appointed Responsible Entity for the newly launched T. Rowe Price Global Structured Research Equity Fund in Australia, continuing a long-standing partnership that has seen more than 10 funds established over 18 years. T. Rowe Price Andrew Godfrey Read the full media release: https://lnkd.in/gKBMnZag

48