Welcome to the July Newsletter

Another financial year begins. Since we last spoke we have a new Prime Minister and we have a new Ashes cricket star. And more super changes. No time to be bored!

So how did last financial year end in market terms. The All Ords was up +15.40%  which is a pretty solid return really, however there was a lot that went on inside that number that is worth considering.  

Large caps were the key; The ASX top 20 added +23% on the year highlighting where the bulk of the money flowed. Within that index, resource companies offered little.  The other glaringly obvious theme in Australia this year was the total under performance of the Small Ordinaries with the S&P/ASX Small Ordinaries Index down -8.34% on the year. Whether or not this sector of the market bounces back in FY14 will largely depend on the stability of China and the ability for the market to remain positive for multiple quarters. It takes a while for confidence to reach a point where investors head down the food chain. I do however suspect we would have seen a short term low leading into June 30 for many of these small caps- as investors offset some of the gains made from their large cap holdings throughout the year. 

At any major turn of the calendar you get all the major brokers reinforcing their targets for year end. Most end up being wrong - generally over optimistic or overly pessimistic depending on the current trend of the market however it does give a feel for sentiment. 

A survey of strategists by The AFR shows the S&P/ASX 200 is expected to average out at 5186 by December 31 of this year. By June 30, the market is expected to climb higher again and reach an average of 5513 points. Morgan Stanley is the most bullish for FY14 with a target of 5750 - representing a return of +20%.

It’s important to sit down and plan your strategy and asset allocation for the year ahead.

This month we cover the nine superannuation changes everyone should be aware of. We provide an overview of last year’s markets in more detail, discuss the role of an executor and for business owners we cover if keyperson insurance should be considered.

With the Mandela era coming to an end there is concern that the long term value of the South African Rand may decrease substantially over the coming years. For those clients who are still considering cashing in their Retirement Annuity Policies, please give me a call on (02) 9411-4161 or email gordon@taurusfinancial.com.au. If you would like to redeem these investments.

We wish you a wonderful month ahead.

Regards

Gordon