Investor Insights

In my video blog last week, I discussed why the major banks had not passed on the recent RBA rate cuts in full. This is due to an increasing proportion of each bank’s funding base approaching zero or close to zero interest rates.

The concept of negative interest rates makes the mind boggle. And yet, over recent years many central banks around the world have set their policy rates to negative levels.

While many lament the sad state of the U. S. healthcare system, with U. S. healthcare expenditure being multiples of other developed nations on a per capita basis, attempts to reign in this inflating healthcare expenditure have been ineffective, with the gap widening between U. S. healthcare spending and that of other comparable countries.

I have written previously about our view that interest rates are likely to remain low for a protracted period.

IDP Education (ASX: IEL) places international  students into Australia and other key English speaking destinations, while also administering English language proficiency tests. With defensive earnings, a long runway for growth and strong industry tailwinds, we think there’s plenty to like about this Australian-based global business. Exclusive Content This is exclusive content to subscribers on rogermontgomery. com.

  In this week’s video insight Stuart identifies the impact low interest rates have on the banks. On the back of three successive 25 basis point cuts to the RBA’s official overnight rate, the major banks have reduced their standard variable mortgage rates by a cumulative 55 to 59 basis points over the same period.

As we head into annual general meeting (AGM) season in Australia, one of the topics that will no doubt receive some focus will be management remuneration. This is increasingly a vexed issue in Australia and other developed markets, with management remuneration generally having skyrocketed in relative terms in recent decades.

Consumer packaged goods brands have been working to keep up with new world trends for some time now. The introduction of more affordable private label products and the general shift to be fresher and healthier have left the major brands behind.

Back in November 1990, with the Australian economy deep in the doldrums, Treasurer Paul Keating uttered his now famous remark that this was “a recession that Australia had to have”.   It was, remarkably, Australia’s last recession.

As news is emerging that Australian Treasurer, Josh Frydenberg, will soon deliver a balanced budget for the first time since the GFC, one needs to ask if this is even appropriate today.

We recently launched the Montgomery Small Companies Fund.   This new fund has invested in some truly dynamic businesses that we believe will deliver superior returns over the coming years.   One of those is EML Payments (ASX: EML). EML is one of our fund’s initial top five holdings.

  In this week’s video insight Tim discusses the revised strategy of our Montgomery Alpha Plus fund.  While one year is too short a timeframe for a meaningful analysis of fund performance, the early signs are encouraging.