There are always a few types of business which can profit from a financial crisis, and it’s been interesting to watch those who hope to be among them subtly play their angles.
The bids for attention have sometimes come from opposite ends of the risk spectrum. For instance this month we had fixed income broker FIIG Securities herald ‘Government-guaranteed bank debt’ as the new asset class du jour, which will trade at a wider spread than traditional Australian Government bonds.
FIIG said the guarantee “improved the creditworthiness” of the entire fixed income sector. In more exotic territory, Select Asset Management loudly proclaimed an October-to-October pre-tax return of 20.77 per cent for its Select Futures Fund (that’s right, no minus sign) as evidence that managed futures were a highly liquid panacea that performed best in moments of market stress.
Likewise First Quadrant, whose head derivatives trader Steve Richey visited these shores last month, was using the extremely high price of volatility protection as a springboard for the firm’s global TAA fund in to Australia, given its rare place as a seller of such protection in the current market accounted for much of the fund’s positive return last year.
Back in the more traditional world, van Eyk was telling anyone who’d listen that the times finally suited concentrated Australian equity managers, after years of disappointment thanks to their higher fees and inability to get an edge in bull markets. And guess who can help you select a couple of them?
Recessionary times are also a good time to appeal to the bargain hunters, and First State Super was among those doing just that, announcing that its average member fee of 0.4 per cent had seen it deemed Australia’s lowest cost public offer fund by all three super ratings agencies. When sharemarket investors are near the point of “capitulation” (to use Jack Brennan’s phrase), they are more receptive to new narratives. Let’s hope a few of those being bandied about stick, because at least the beneficiaries won’t be sacking anybody.