Update No. 67 – 08/07/12

The fund jumped out of the blocks like Usain Bolt in this the first week of Financial Year 2013.  We are already up 3.73% after a couple of stocks we own made solid starts to the year.  The figure is all the more impressive when you consider the fact that we are nearly 30% in cash at the moment as I weigh up the capital allocation of the new subscriptions.

Our opponent (the ASX200TR index) also got a pretty good start, jumping by 1.56%, but there remains an interesting mix of opposing forces at play in the market.  The global economy definitely appears to be slowing, and that slowing appears to be taking effect in the developing economies as well.

The World’s central banks had a busy week, although the Australian RBA left rates on hold, China’s PBOC and the ECB both cut rates this week & the BOE announced a ₤50B stimulus package.  These appeared to have only a muted affect on global equities markets.  The US jobs figures were weak for the 3^rd month running, but apparently not so weak that the US Federal Reserve is likely to stimulate further. So sideways seems to be the likeliest direction, with further muddling along.

Without making a prediction about the direction of global markets generally, or the Australian market specifically, it does behove the average investor to think about whether it is time to trade away from the safety of the Australian 10-year bond yield which recently hit a record low of 2.8%, given the current yield across the Australian market is over 6% plus franking credits, company profits would need to fall a long way, or bond yields rise a long way, before bonds become a prospect that could warrant a significant position in any correctly risked portfolio  – Tony Hansen 08/07/12.

*Unaudited figure to be confirmed externally

EGP Fund No. 1 Pty Ltd. Up by 3.73%, leading the benchmark by 2.17% since July 1^st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 6.83%, leading the benchmark by 15.89% all-time (April 1^st 2011).