Welcome to the Trustee User Update.
The government’s debt manager is tracking well ahead of the run-rate of bond sales required to fund a record postwar budget deficit after closing the books on a $15 billion 30-year bond issue that attracted more than twice that figure in investor demand.
Feds sell $15b of 30-year bonds at 1.94pc, AFR July 29th
The June quarter has seen Australia register outright deflation of 1.9%, a level not seen in the 70+ years in which these statistics have been recorded.
While in the short term much of this quarterly figure can be attributed to the impact of COVID-19, the reality is that:
- Inflation has been on a downward trend throughout that period
- The rate of decline is accelerating
This is important to investors because:
- The RBA has little (if any) ammunition left to fight deflationary expectations
- Once entrenched, those expectations can become self-fulfilling (which is why policy makers have tried so desperately to avoid such a situation)
We have now released an upgrade to the logic for bonds, replicating the asset architecture applicable to equities.
This will make it easier to manage this asset class on Mclowd, and has provided a template for us to apply the same logic upgrade to managed funds and alternative assets.
Download of the FY20 tax extract is also now available and Release Notes for the June quarter can be downloaded from the website.
New User Interface
A refresh of the user interface is now in testing. This project has been focused on reducing the number of clicks required to access core functions, including reports and period processing.
An interactive demonstration can be accessed here.
The most recent ATO statistics indicate that over 20% of SMSF assets are held in cash and term deposits. While there will be a lag due to the maturity profile of those TDs, moving forward that capital will be yielding less than 1% p.a.
While government debt securities have a much smaller footprint, the fact that investors are falling over themselves to lock in a yield to maturity of less than 2% for the next 30 years illustrates just how quickly the investment landscape is shifting.
In aggregate these trends will impact fund incomes – and by definition the entire SMSF value chain – for decades to come.
Mclowd Pty Ltd