Premium Essay

Would Investors Have Benefitted from Staying with the Australian Share Market Through 2008 Instead of Being in the Dip #2 Fund

In: Business and Management

Submitted By kisor
Words 816
Pages 4
1. Would investors have benefitted from staying with the Australian share market through 2008 instead of being in the DIP #2 Fund?
The Global Financial Crisis (GFC) caused a worldwide drop in stock markets and Australia was no exception. Although not as badly affected as some other developed economies (Brown & Davis 2009, p. 1 of 7), the effect of the GFC was clearly felt in the Australian share market. The following graph of the Australian stock market (S&P/ASX 200) for 2008 illustrates the extent to which the market was affected by the GFC.

The stock index, which was at 6353.20 points at the beginning of the year, fell dramatically throughout most of the year, dropping as low as 3352.9 points on November before reaching 3722.3 points on the last day of the year (Yahoo finance 2014). This was a drop of 41.29% in the year 2008, during which time the DIP #2 fund fell 25%. When we compare these two figures, we can see that the DIP #2 fund performed much better compared to the Australian share market, the most likely reason for it being the DIP #2 fund's smart asset allocation and international diversification. While a drop of 25% is not a desirable outcome, it is definitely more preferable to the alternative of a 41.29% drop in value that would have occurred had the investors stayed with the Australian share market. So, not only would the investors have not benefitted, they would have been worse-off by a considerable margin had they stayed with the Australian share market through 2008 instead of being in the DIP #2 fund.

2. Should clients transfer their money to a Bond Fund at this point in time?
While the decision to transfer money to a Bond Fund is largely dependent on the willingness to take risk on the part of the clients, there is a good case to be made that the clients should stick with the DIP #2 fund at this point in time. The first argument in…...

Similar Documents

Premium Essay

Emerging Market Mutual Fund Performance and the State of the Economy

...Emerging Market Mutual Fund Performance and the State of the Economy∗ Ayelen Banegas November 2010 Abstract Following the financial liberalization of many Asian, European, and Latin American countries emerging markets have become a central player in the global economy. As a result the universe of equity funds investing in these developing economies has been in continuous expansion. In this paper we propose a set of asset class specific predictive variables for emerging markets and exploit them in order to identify those funds that outperform the market in different phases of the economic cycle. We employ a comprehensive survivorship-bias free universe of global and regional emerging market funds and use a Bayesian framework that incorporates predictability in manager skills (stock selection and benchmark timing skills), fund risk loadings and benchmark returns by exploiting ex-ante business cycle related state variables. Our results provide empirical evidence of return predictability and the economic value of active management in emerging markets. ∗ I would like to thank Allan Timmermann for his guidance and support. I am also grateful to James Hamilton, Bruce N. Lehmann, Ross Valkanov and Debbie Watkins for their helpful comments. I also benefited from discussions with Ben Gillen. Finally, I want to thank Russ Wermers for providing me with the mutual fund dataset. 1 1 Introduction During the last decades the mutual fund industry has been......

Words: 13697 - Pages: 55

Premium Essay

Share Market

...RECENT TRENDS IN CAPITAL MARKET OF BANGLADESH: CRITICAL EVALUATION OF REGULATION by Syed Golam Shahjarul Alam A thesis submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Winai Wongsurawat Dr. Yuosre Badir Nationality: Previous Degree: Bangladeshi Master of Business Administration University of Dhaka Dhaka, Bangladesh Bangladesh Bank (Central Bank of Bangladesh) Scholarship Donor: Asian Institute of Technology School of Management Thailand May2012 ACKNOWLEDGEMENTS My greatest Gratitude is given to Dr. Sundar Venkatesh, my project advisor, for his deep insight in capital market, which helped me to accomplish the project paper. His dedication towards teaching, motivating and supervising influenced me greatly, leading to do my project work carefully and seriously. I wish to express my deepest gratitude and appreciation to Bangladesh Bank, My office, for granting me a scholarship, to pursue my Masters in banking and finance. I express my gratitude and deepest appreciation to my friend Ms. Senjuti binte rafiq, My Colleagues in Bangladesh Bank and DSE Library staffs who helped me by providing valuable suggestions and necessary data for my analysis. I am very much thankful to Dr. Winai Wongsurawat and Dr. Juthathip Jongwanich for their valuable suggestions regarding my project. I express my gratitude and deepest appreciation to Ms...

Words: 15692 - Pages: 63

Premium Essay

Australian Fund Managers

...Project | Australian Fund Managers | | | | Our group has chosen Perpetual Investor Choice Fund for the long term investment. There are a variety of reasons as to why we chose Perpetual fund over the rest and they will be explained below. The first and foremost are the excess returns after entry fees and management fees. Fund | UBS | Perpetual | HSBC | Merrill | 5 year return | 11.90% | 13.81% | 7.83% | 8.24% | Benchmark Return | 9.24% | 9.24% | 9.24% | 9.22% | Excess return | 2.66% | 4.57% | -1.41% | -0.98% | Figure 1: Table of Excess returns before computation of entry and management fees Figure 1 shows the excess returns that the respective fund managers achieved for the period of year 2000-2004. All returns have been annualized for comparison. It is shown that Perpetual fund managers outperform their benchmark by 4.57%, which is almost 50% higher than the nearest competitor, UBS funds. A mutual fund traditionally has management and entry fees, which affect the actual net return an investor receives. It should be noted that the Perpetual Fund has one of the highest entry and management fees which are 4% and 1.95% respectively. Nevertheless, it still manages to outperform the benchmark and its competitors. At this juncture, it should be noted that HSBC Imputation Fund and Merrill Lynch Australian Shares Fund have been ruled out in our selection, as they are not able to match the benchmark. Taking a closer look at UBS and Perpetual, Figure 2......

Words: 2742 - Pages: 11

Premium Essay

Australian Dollar Forecast

...Raashi Chawla Australian Dollar Analysis History: * The Australian Dollar is the currency of the Common Wealth of Australia, including Christmas Island, Cocos (Keeling) Islands and Norfolk Islands as well as the independent Pacific Island States of Kiribati, Nauru and Tuvalu. Within Australia it is almost always abbreviated with the dollar sign ($), with A$ sometimes used to distinguish it from other dollar-denominated currencies. It is subdivided into 100 cents. * Prior to 1983, Australia maintained a fixed exchange rate. The first peg was between the Australian and British pounds, initially at par, and later at 0.8 GBP (16 shillings sterling). This reflected its historical ties as well as a view about the stability in value of the British pound. From 1946 to 1971, Australia maintained a peg under the Bretton Woods System, a fixed exchange rate system that pegged the U.S. dollar to gold, but the Australian dollar was effectively pegged to sterling until 1967. With the breakdown of the Bretton Woods system in 1971, Australia converted the traditional peg to a fluctuating rate against the US dollar. In September 1974, Australia valued the dollar against a basket of currencies called the trade-weighted index (TWI) in an effort to reduce the fluctuations associated with its tie to the US dollar. The daily TWI valuation was changed in November 1976 to a periodically adjusted valuation. * On 12 December 1983, the Australian Labor Government led by Prime......

Words: 4161 - Pages: 17

Premium Essay

Whole Foods Market 2008

...COMPANY BACKGROUND Whole Foods Market was founded in Austin, Texas, when four local businesspeople decided the natural foods industry was ready for a supermarket format. Their founders were John Mackey and Renee Lawson Hardy, owners of Safer Way Natural Foods, and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery. The original Whole Foods Market opened in 1980 with a staff of only 19 people. It was an immediate success. At the time, there were less than half a dozen natural food supermarkets in the United States. It has grown in leaps and bounds since then. Today, they are the world’s leader in natural and organic foods, with more than 310 stores in the North America and the United Kingdom (About Whole Foods Market). During its 31-year history, Whole Foods Market has been a leader in the natural and organic food movement across the United States, helping the industry gain acceptance among growing numbers of consumer concerned about the food they eat (Thompson, Strickland, & Gamble, 2010, p.C-2). The company seeks out the finest natural and organic foods available, maintains the strictest quality standards in the industry, and has an unshakeable commitment to sustainable agriculture. Add that to the excitement and fun they bring to shopping for groceries, and you start to get a sense of what they are all about. John Mackey, the company’s cofounder and CEO, believes that Whole Foods’ rapid growth and market success has much to do with its having “remained...

Words: 6451 - Pages: 26

Premium Essay

Australian Vintage Limited Entering Poland Wine Market

...Australian Vintage LTD (AVG) The Australian industry The Australian wine industry is the 4th largest exporter in the world, exporting over 400 million litres a year to a large international export market that includes “old world” wine-producing countries such as France, Italy and Spain. There is also a significant domestic market for Australian wines, with Australians consuming over 400 million litres of wine per year. The wine industry is an important contributor to the Australian economy through production, employment, export and tourism. The Australian Wine export market was worth 2.8 billion Australian dollars in June 2007, and had a growth rate of 9%pa. Of this about AU$2 billion was accounted for by North America and the UK, and in this key latter market Australia is now the largest supplier of still wines. 2007 statistics for the North American market show that Australian wine accounted for a 17% share of the total value of U.S. imported wine, behind France with 31% and Italy with 28%. Australian Vintage Limited Australian Vintage Limited is a leading Australian wine company, known as McGuigan Simeon Wines until February 2008, when shareholders voted to change the name. Today Australian Vintage Limited is at the forefront of the Australian wine industry. Crushing 9% of total Australian annual production, its vineyards and grape supply capacity extend through some of Australian’s most captivating and diverse wine regions including the Hunter and Barossa......

Words: 1866 - Pages: 8

Free Essay

How Have Changes in Technology Contributed to the Globalization of Markets and of Production? Would the Globalization of Products and Markets Have Been Possible Without These Technological Changes?

...How changes in technology have contributed Q. Explain How Changes In Technology Have Contributed Towards Globalization Of Markets And Of Production? Answer: Technology has dramatically changed people's way of life all over the world and the world today has become a true manifestation of a global village. Not only the frequency of international travelling increased manifold but the possibilities of cross-border trading of goods and services have also increased exponentially. These impacts are collectively known as globalization. (Hill, 2009) defines globalisation as a process which enables individuals, organisations and governments from different natins to come across each other and interact in an intergative manner. The end result of such intergation would be an intergated globalised market system which can act as a melting pot of indivual economies of different nations. There are two ways in which globalisation can be envisaged, i.e. with the production perspective and thebmarket perspective. (Hill, 2009) defines the markets' globalisation as melting down and convergence of individually independent market places into an amalgamated market place. Sharing of the sources of production from different geographical locations for levaraging the quality and cost of the goods and services produces is the idea behind the products' globalisation. (Hill, 2009) Many institutions have been formulated to help manage, regulate and police the phenomena of globalization and to promote......

Words: 1856 - Pages: 8

Premium Essay

Australian Grocery Stores Industry

...Business Monitor International Mermaid House, 2 Puddle Dock, London, EC4V 3DS, UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com © 2010 Business Monitor International. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher. DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. Australia Food & Drink Report Q4 2010 © Business Monitor International Ltd Page 2 Australia Food & Drink......

Words: 34457 - Pages: 138

Free Essay

Australian Wild Tuna, in the Thai Market.

...Market Feasibility Report. Australian Wild Tuna, in the Thai market. Table of Contents Introductions4 Executive summary4 Introduction4 Sam’s Australian Wild Tuna Pty Ltd4 Internationalizing a Product1 Advantages5 Disadvantages6 Economic Environment6 Socio-Cultural Environment7 Social Prestige7 Daily Life8 Buddhism8 Swot Analyses9 Strengths9 Weaknesses10 Opportunities10 Threats10 Market Feasibility11 References11 Market Feasibility Report Executive Summary The following report analyses the market feasibility of the developing country of Thailand for Australian Wild Southern Blue Fin Tuna, for an organisation named Sam’s ‘Australian Wild Tuna Pty Ltd’. Global economic integration is battled by disadvantages such as risking large dedications of resources are discussed for internationalisation of a product in general. As the economy is seen to be growing but a great fallen yield in the Thai fishery market, the window of opportunity to infiltrate such a successful market in the world is crucial yet to do this the correct social prestige in the way business should be conducted, how the product impacts daily life and the Buddhist culture amongst the Thai is explored for essential prior-knowledge. Major Strengths and opportunities are found to outweigh weaknesses and threats in order for a concluding that the market is feasible for Australian Wild Tuna if applying the correct knowledge and accommodating for the different economy and socio-cultural......

Words: 3247 - Pages: 13

Premium Essay

Behavioural Biases of Mutual Fund Investor

...Behavioral biases of mutual fund investors$ Warren Bailey a,n, Alok Kumar b, David Ng c,d a Cornell University, Johnson Graduate School of Management, USA University of Miami, School of Business Administration, USA c Cornell University, USA d University of Pennsylvania, Wharton School, USA b a r t i c l e i n f o Article history: Received 19 October 2009 Received in revised form 6 July 2010 Accepted 9 July 2010 Available online 27 May 2011 JEL classification: G11 D03 D14 Keywords: Individual investors Mutual funds Trend chasing Behavioral biases Factor analysis abstract We examine the effect of behavioral biases on the mutual fund choices of a large sample of US discount brokerage investors using new measures of attention to news, tax awareness, and fund-level familiarity bias, in addition to behavioral and demographic characteristics of earlier studies. Behaviorally biased investors typically make poor decisions about fund style and expenses, trading frequency, and timing, resulting in poor performance. Furthermore, trend chasing appears related to behavioral biases, rather than to rationally inferring managerial skill from past performance. Factor analysis suggests that biased investors often conform to stereotypes that can be characterized as Gambler, Smart, Overconfident, Narrow Framer, and Mature. & 2011 Elsevier B.V. All rights reserved. 1. Introduction Previous studies of behavioral biases in the investment decisions of individual investors focus on the......

Words: 25255 - Pages: 102

Premium Essay

Investor Preferences Towards Equity Market

...STOCK & EQUITY MARKET GLOBAL INSTITUTE OF MANAGEMENT | 1 INTRODUCTION ABOUT STOCK AND EQUITY MARKET GLOBAL INSTITUTE OF MANAGEMENT | 2 1.1 What is Stock ? In finance, a stock represents a share in the ownership of an incorporated company. In Industrial societies wealth used in production is owned in the aggregate mostly by Corporations rather than by individuals because of the huge investments required. This trend began in 17th-century England when merchants formed JOINT-STOCK COMAPNIES, pooling capital to be used jointly in trading and manufacturing. Participants then received dividends, shares of the common PROFIT proportionate to their original investments. The Definition of a Stock : Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing. The wealth of individuals includes claims against, or investments in, corporations. These are called securities, the two most common being bonds and stocks. Corporate bonds are evidences of corporate debt to the bondholder. Stocks are evidences of ownership, or equity. GLOBAL INSTITUTE OF MANAGEMENT | 3 Investors buy stock in the hope that it will yield income from dividends and appreciate, or grow, in value. 1.2 History of Stock Market Indian Stock Markets are......

Words: 12185 - Pages: 49

Premium Essay

Share Market Crisis

...Stock market crash of Bangladesh in 2010-11: Reasons & roles of regulators Sangit Saha Degree Thesis Förnamn Efternamn International Business 2012 DEGREE THESIS Arcada Degree Programme: International Business Identification number: Author: Title: 11497 Sangit Saha Stock market crash of Bangladesh in 2010-11: Reasons & roles of regulators Andreas Stenius Supervisor (Arcada): Commissioned by: Abstract: The aim of the thesis is to determine reasons of the stock market crash in Bangladesh in 2010-11 and roles of the regulators and government since the crash took place. The theoretical background of the study includes brief introduction of Bangladesh stock market with its structure and different regulatory and intermediary organizations. It also describes one international stock market crash and stock market crash of Bangladesh in 1996. For the theoretical part investigation report of Khondkar Ibrahim Khaled is used as the main secondary resource. The report helps to get background of the crash with reasons and role of different regulatory and intermediary organizations. Self-administered questionnaire is used to obtain primary data for the study. The author sent 25 questionnaires to employees of broker houses and general investors but 18 replied. The result of the Self-administered questionnaire helped author to find some other reason behind the stock market crash in addition with reasons provided in the investigation report.......

Words: 15094 - Pages: 61

Premium Essay

Capital Raising in Australia: Experiences and Lessons from the Global Financial Crisis

...FINANCIAL CRISIS ................................................................5 Credit and Debt Markets....................................................................................................5 Equity Markets ...................................................................................................................6 THE GFC AND EQUITY CAPITAL RAISING..................................................6 THE NATURE OF THE AUSTRALIAN EQUITY MARKET...........................10 THE STRUCTURE OF CAPITAL RAISING IN AUSTRALIA ........................12 Initial Equity Capital Raising...........................................................................................12 Secondary Equity Capital Raising..................................................................................15 Placements ................................................................................................................................. 21 Rights Issues .............................................................................................................................. 24 Share Purchase Plans ................................................................................................................ 29 Dividend Reinvestment Plans ..................................................................................................... 32 Comparing the Australian, UK and US Secondary Equity Capital Raising Systems .................. 33 Debt Capital......

Words: 10020 - Pages: 41

Premium Essay

Hedge Fund

...........................  1   INTRODUCING  HEDGE  FUNDS  ............................................................................................................................................  2   ORIGINS  OF  HEDGE  FUNDS  ..................................................................................................................................................  3   STRUCTURES  OF  HEDGE  FUNDS  ........................................................................................................................................  6   ROLE  OF  PRIME  BROKERS  ...................................................................................................................................................  9   FEE  STRUCTURES  OF  HEDGE  FUNDS  ..............................................................................................................................  11   MAJOR  HEDGE  FUNDS  .........................................................................................................................................................  13   BALANCE  SHEET  OF  A  HEDGE  FUND  ..............................................................................................................................  14   INCOME  STATEMENT  OF  A  HEDGE  FUND  ............................................................

Words: 22449 - Pages: 90

Premium Essay

Australian Funds Management Overview

...Australian Funds Management Industry Overview Australia holds one of the largest and fastest growing funds management sectors in the world. This growth and strength is underpinned by: • A government-mandated retirement scheme (superannuation), increasing progressively from 9 per cent to 12 per cent by 2019-2020. • A $1.2 Trillion existing pension fund pool; the 4th largest in the world. • A total $1.7 Trillion funds management industry (the largest in Asia-Pacific) • A unique 410,000 + strong investment community of self managed super funds (accounting for one third of the nation’s pension fund pool) With these figures representing a Compound Annual Growth rate (CAGR) of 11.9% since 1994, Australia’s total Funds Under Management (FUM) is: • 20% larger than the market capitalisation of the entire domestic equity market ($1.403 trillion) • A 135% of the Australian nominal GDP With forecasts stipulating that by 2015, Australia’s total FUM will reach $1.979 trillion, the continued changing sophistication and asset allocations of investors coupled with the robust underlying sector fundamentals has created opportunities for the launch of new funds in niche the areas of infrastructure, direct property and global macro trading. Current Opportunities In light of the consequences of ageing populations in virtually all developed counties and unstainable government debt levels, pension...

Words: 457 - Pages: 2

Kevin Hanchard | Flower (2017) [WEBRip] [720p] [YTS.AM] 11 minutes | SubManga.com - Peliculas 2015 Online Gratis!