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Ready for 2021?

10 December 2020 |Education & Resources
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Ready for 2021?

10 December 2020 |Education & Resources

As we draw a close on the end of the year, hear from our executive and leadership team on their reflections on the year that was and their thoughts on what lies ahead for 2021.

Paul Rohan, Head of Wealth Services
What are your reflections for 2020?
2020 has delivered different experiences – challenges and opportunities for all. One change for the positive, from a person living with a family in a regional location, is that the expectation around work and your physical location has altered. 2020 has shown that more people will be able to work from where they prefer to live going forward.

What’s ahead for 2021?
Government stimulus will continue in some form and be important for recovery. But most important, is that people get access to professional advice and take the time to increase their own personal financial knowledge and understanding, because it’s not a matter of what will happen next year, it’s how you navigate it that really counts.

What’s the best advice you’ve received?
10% inspiration, 90% perspiration. You need both - and hard work brings success.

Justin Hoare, Head of Superannuation and Sandhurst Trustee Limited
What are your reflections for 2020?
2020 has required significant resilience and an openness to change. Businesses have had to redesign and reinvent their operations, change processes and adapt while seeking growth in challenging times. Risk management has been critical.

What’s ahead for 2021?
Unwinding support mechanisms is going to really test the economy. Global trade will play a big factor and how trade tensions play out with China will create further challenges.
We have seen strong performance in equity markets recently and therefore good news, such as vaccine success, is likely to be priced in. My sense is that the market is more primed to react strongly to bad news.

What’s the best advice you’ve received?
Make sure that there is a strong foundation, a true north, to position yourself strongly.

Thad McCrindle, Head of Investments
What are your reflections for 2020?
Despite increased volatility with a big drop in equity markets, the subsequent rapid rise is a good reminder that markets can do anything. Who would have foreseen a physical commodity such as oil, falling to a negative price?

What’s ahead for 2021?
A positive risk sentiment and economic momentum coming off a low base. Definitely expect more volatility. Tentatively bullish, on risk assets but there are risks in more expensive assets like equities and particularly credit. What will help in 2021, is government and central bank support for both the economy and financial markets.

What’s the best advice you’ve received?
Do your homework to find opportunities in business, investments and in life. To do this well, challenge your own beliefs and assumptions. Play the devil’s advocate.

Lily Elliott, Head of Leveraged
What are your reflections for 2020?
2020 carried uncertainty. There were so many variables packed into decision making for investors, business and companies alike. We have seen winners and losers in 2020 and there is one common theme that continues to play out -and that is the ‘sideline’ investors who have been cautious for too long. This time we are seeing more defined boundaries, limited exposures, diversification and protection. We are also seeing a new generation of investor entering. They don’t have the wealth sitting behind them, but they are starting from the very same place as some of the most sophisticated investors. This is a promising sign.

What’s ahead for 2021?
The pathway for the economy and the health situation is much clearer now. We will probably see some fast growth in the equity markets. RBA’s commitment to keeping rates at the current level for the next three years and forecasts in unemployment remaining well below the projected numbers are all positive signs. Continuing risks include some investors being too cautious for too long, being under-invested or simply investing their money in products that are returning low yields. Hopefully, 2021 will open the pathway to recovery and certainly for equity markets there is optimism around significant growth and opportunity ahead.

What’s the best advice you’ve received?
If you’re feeling comfortable, you’re not pushing hard enough. I think this applies in many aspects, but I often think about in the business context.

Richard Fennell, Executive Consumer Banking
What are your reflections for 2020?
The key reflection in my mind is our ability to adapt to change on an accelerated basis. Getting used to working from home, not travelling, not wearing a suit – these have all been changes on a personal basis. As a business, we have also had to change the way we work and operate effectively, along with the way we service our customers to reflect changing dynamics - because our customers too have had to change in order to adapt to the limitations and impacts brought about by Covid-19.

What’s ahead for 2021?
Of course I’m looking forward to my football team, the Adelaide Crows, hopefully winning a few extra games, but seriously, governments, both Federal and State, have done a fantastic job of supporting and keeping a strong foundation under the economy - and that’s allowed businesses to manage their way through some incredibly challenging times.

With high unemployment, now is certainly a good time for government to be taking on debt to reinvest into the economy. With interest rates where they are, we’ll continue to see strength in the property market and hopefully we will see business start to invest again in the new year. If we can get confidence back into the consumer’s mindset and get them opening their wallets again, that will go a long way to supporting growth back in the economy.

What’s the best advice you’ve received?
Keep learning. Extend yourself and take a risk. Take opportunities that come your way, challenge yourself and bring out your best.

David Robertson, Head of Economic and Market Research
What are your reflections for 2020?
Financially, 2020 has been an incredibly challenging year with rising unemployment, the market collapse and borders closed - but equally surprising, the speed of the recovery after probably the fastest and shortest bear market in history. It’s been a unique recession because it was a deliberate lockdown of the economy, not a bubble bursting. To see the recovery in the jobs market since May has been a tremendous relief and a sign that the fiscal and monetary stimulus is working.

Particularly refreshing is the way all levels of government and industry have come together to break down barriers and fix problems. It’s been quite inspiring. Fiscal policy, not just here but all around the world is ‘all in’. In Australia, our low level of debt going into the pandemic and our AAA rating means we can afford the debt. Monetary policy has delivered, at least in Australia, where the RBA also had room to cut rates.

What’s ahead for 2021?
I’m cautiously optimistic. Overall, the risks are evenly balanced. The latest vaccine news has been good for the economy and in terms of the outlook for the markets. Globally there will be a rebalancing and adjustment to the post-pandemic economy. I see Asia and Oceania coming through it better than elsewhere. Infrastructure investment will be one way we can deliver uplift in productivity and jobs. Migration needs to be ramped back up. Australia’s asset classes have a lot going for them, so get in early and gear up sensibly.

What’s the best advice you’ve received?
When you are planning your day, do the hard bits first. If something needs addressing, get it done. Don’t let it fester.

Arthur Basha, Senior Manager Products
What are your reflections for 2020?
I’ve always held the belief that leaving money in a bank account is lazy. Younger investors have taken advantage of downtime to do plenty of online research, take advantage of low interest rates and are investing in exchange-traded funds. Regarding margin loans, even with low interest rates, investors are using gearing conservatively and increasing diversification. Investing is strong in new fintech stocks alongside the traditional ASX200 picks.

What’s ahead for 2021?
This has to be the most exciting economic cycle in history. Debt is going to be king for any revival into the next economic cycle. High government borrowing will enable infrastructure projects to push through and provide a knock-on effect to the rest of the economy and down to households. The solid regulatory framework that we have will allow us to manage any asset bubble bursts or whatever the next form a downturn takes, better than we’ve seen in the past. Australia’s economic policy and the way it has governed us through the crisis along with our strong credit rating will continue to spur economic growth and attract global investors who are falling over themselves to get in line to buy. This should all contribute to providing some healthy dividends.

What’s the best advice you’ve received?
Be a good listener!

Ken Jackman, Key Account Manager, Leveraged
What are your reflections for 2020?
2020 has forced people to consider what they need, what they’re trying to achieve and how they plan to get there. Covid-19 has also exposed some fragilities that existed across markets and companies along with supply chain shocks, counterparty risks and to business models that weren’t sufficiently diversified. Covid also exposed the need to have some liquidity or access to capital to take advantage of opportunities as they presented at short notice. When it comes to active investing, positioning yourself with a line of credit can be one option to take advantage of market opportunities.

Margin lending can provide a gateway to potential opportunities that you may not have otherwise had access to - particularly at short notice. Utilising a gearing strategy to enable further diversification in a portfolio is also a proven pathway for some.

Another consideration for investors is that a line of credit such as a margin loan can sometimes remove the need to sell existing securities that can generate capital gains and may further allow them the freedom to participate in opportunities that they may not otherwise have had.

What’s ahead for 2021?
Positive sentiment is evident. The low interest rate environment has incentivised investors to consider additional risk exposures within their portfolios. Equities will continue to draw capital into the asset class and elicit continuing interest from first time investors – but be prepared. Rotation of capital can happen at any time. Having in place a strategy to access capital becomes very important. Margin lending and gearing solutions carry their own risks but can be used by investors to smooth out that sequencing risk .

What’s the best advice you’ve received?
Invest in yourself. Be prepared to back yourself and be challenged. I think this can be applied both professionally as well as to health and well-being. And something dear to my heart - have guiding principles. They are powerful levers and constraints as you move forward to truly understanding the path you have chosen - and in understanding the factors that have led you to arrive at and to make a decision.

Geoff Johnson, Head of Liquidity and Funding, Group Treasury
What are your reflections for 2020?
We’re been dealing with very low interest rates, changing customer preferences from a product perspective and structural shifts in the way people now think about working.

What’s ahead for 2021?
I’m reasonably positive about the markets. Markets are starting to factor in the vaccine rolling out early next year and have certainly priced that in. From a risk asset perspective, the low rate environment provides lot of support and with the RBA expressing the view that rates aren’t going up for at least three years gives a real lift to asset classes such as equities and property. Central Banks around the world have got enough firepower that they can continue to step in where necessary and I believe any missteps in the markets over the next 12 months will be quickly supported.

What’s the best advice you’ve received?
Be patient.


Things you should know

Gearing involves risk. It can magnify your returns; however, it may also magnify your losses. Issued by Leveraged Equities Limited (ABN 26 051 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). Information is general advice only and does not take into account your personal objectives, financial situation or needs. The views of the author may not represent the views of the broader Bendigo and Adelaide Bank Group of companies (“the Group”). This information must not be relied upon as a substitute for financial planning, legal, tax or other professional advice. You should consider whether or not the product is appropriate for you, read the relevant PDS and product guide available at www.leveraged.com.au, and consider seeking professional investment advice. Not suitable for a self-managed superannuation fund.

Examples are for illustration only and are not intended as recommendations and may not reflect actual outcomes. Past performance is not an indication of future performance. The information provided in this document has not been verified and may be subject to change. It is given in good faith and has been derived from sources believed to be accurate. Accordingly no representation or warranty, express or implied is made as to the fairness, accuracy, completeness or correction of the information and opinions contained in this article. To the maximum extent permitted by law, no entity in the Group, its agents or officers shall be liable for any loss or damage arising from the reliance upon, or use of the information contained in this article.

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