What a month it’s been.
Although October still isn’t done, did you know this happened(!?):
Aussie shares rose 5%!
I repeat: Australian shares went up 5% — in October alone.
Despite fears of higher rates, inflation, geopolitics and something bizarre happening in the UK bond market, shares went up.
Talk about good news stories…
The following chart shows the performance of the iShares S&P/ASX 200 ETF (ASX: STW) over 10 years. This does not include dividends or franking credits.
I bought 5 ETFs
During the month, The Rask Group began the first of its automated investing efforts with Pearler.
As I wrote in a Rask Core 🌏 update earlier this month, our company made the first of its automated investments / dollar-cost averaging into a variation of the Jupiter portfolio.
However, there was one tweak I made. More on this below.
Here are the 5 ETFs/funds I bought and the rough percentage I added:
Vanguard Australian Shares ETF (ASX: VAS) – 40%
iShares S&P 500 ETF (ASX: IVV) – 20%
iShares S&P 500 ETF (hedged) (ASX: IHVV) – 20%
Fidelity Emerging Markets Fund (ASX: FEMX) – 10%
Global X Gold ETF (ASX: GOLD) – 10%
Unfortunately, as this was an automated rebalancing of the portfolio, I sold our small shareholding in the Betashares Australia 200 ETF (ASX: A200) by mistake.
I did not mean to sell this (Pearler rebalanced it into VAS, as I set VAS as my preferred Australian shares exposure). As I said to Dave in the Rask Core 🌏 community, I was hoping to stick to my advice of holding onto ETFs with high levels of ‘likeness’.
Currency swings
Another thing you might notice is that 20% of the purchases went into IHVV. This is basically the same as IVV but it neutralises the impact of the USD.
This is a 10% deviation from the Jupiter portfolio, which suggests investors have 10% in IHVV.
The move to make it 20% simply reflects my view that I’m ever so slightly leaning towards currency hedged ETFs when investing in the USA.
Obviously, 20% of one transaction is not a game-changer, so don’t get ahead of me. It’s our first position in the IHVV ETF. So the tweak is small.
That said, if I was starting a new position in the IVV or BetaShares NDQ ETFs, I might consider using the IHVV or HNDQ for part of the purchase — just in case the Australian dollar bounces back against the US dollar. Again, this is not a forecast of the currency, just a simple reflection of the state of play — the Aussie dollar has fallen a long way.
The chart above shows the Australian dollar over 10 years. As you can see, over the past 10 years, the Australian dollar has slowly moved lower. You can also see two standard deviations and the long-term average.
However, zooming out a bit more, back to January 2000, the Australian dollar has averaged around 82 US cents. So at the current exchange rate of around 67 US cents, I’m hesitant to invest a lot of my new dollars in shares supported by the USD currency.
Depending on your time horizon, the average AUD to USD rate might be somewhere between 72 and 82 US cents.
Over the long run my view on currency might not matter too much, but right now hedging some of my portfolio makes me feel comfortable. I think comfort is one the best predictors of success in long-term investing.
Laserbond in focus
Lastly, I’m currently finalising the list of direct stocks/shares I’ll be covering for you inside Rask Core 🌏.
It’s likely I’ll prioritise my 10 best share ideas at any one point in time and commit to keeping up with those 10 companies until a better idea replaces them.
Thank you to everyone who jumped on the forum and took part in our survey to pick the 10 companies. Xero (ASX: XRO) and Alcidion (ASX: ALC) are two names that have, so far, featured at the top of your lists.
To be clear though, I’ll also provide research on other companies.
However, I think it’ll be most valuable for Core members to continually have access to only my best ideas.
To that end, one of the companies I will be covering is Laserbond Ltd (ASX: LBL). Laserbond is a little Australian company with 100+ employees.
Because it is so small, by ASX standards, its shares are very volatile — and it can be hard to find shares available to buy or sell. So only consider this company if you have experience investing in individual companies and/or are prepared to take high levels of risk.
What does Laserbond do?
Laserbond repairs heavy steel components (think: wheels for big trucks at a mine site) using sophisticated laser technology. It also creates brand-new products for equipment, such as rollers or conveyor belts. Finally, it is now licensing its laser technology to overseas customers — bringing in high margin sales that keep customers coming back.
Laserbond is only a $100 million company but it is an industry leader in rebuilding parts to 5x or 10x their original strength. This makes Laserbond an interesting idea for a sustainable manufacturing economy.
Laserbond’s laser machines are built here in Australia and are about the size of a truck or bus. The lasers are only one part of a process that requires multiple steps inside a factory the size of a soccer field.
I haven’t officially released my research on Laserbond but you can find out more by watching the recent episode of The Australian Investors Podcast featuring Laserbond CEO, Wayne Hooper.
I originally shared the video with Rask Core 🌏 members ahead of the public release. We intend to keep releasing videos, interviews and updates exclusively to Rask Core 🌏 members ahead our public release.
If you have any questions for me on Laserbond, don’t forget to jump into the Rask Core 🌏 community.
And also don’t forget to see special guest contributions from Dave Gow from Strong Money Australia and Kerry Craig, CFA from J.P. Morgan Asset Management. Both write-ups are available inside Rask Core 🌏.
I’ll keep you updated via email, and inside the website, when new research is released on companies or ETFs. But please say hello and help out other members if you know the answer to a question.
Here’s to another month of great investing!
Owen Raszkiewicz
Founder, Rask
