Monthly Newsletter - July 2010

by Andrew Newman
in Newsletter
21 Jul 2010 | 0 Comments

Editors Note

This edition includes an inspirational quote, a funny picture, a market commentary with the main index returns during June 2010 and Financial Planning Q&A. I encourage you to make comments.

It was another challenging month for sharemarkets around the world as the sovereign debt and financial sector issues in Europe continue.

Inspirational Quote

We are what we repeatedly do.

Aristotle (Greek Philosopher, Physician and Scientist)

Funny Picture

Remember the old wives tale of "Don't Walk Under The Ladder". Well it may well be true when you look at this Blooper which was snapped at just the right moment!

Don't Walk Under The Ladder

Market Commentary

It was another challenging month for sharemarkets around the world as the sovereign debt and financial sector issues in Europe continue. Sharemarkets and bond yields have fallen due to the increased uncertainty surrounding the world growth outlook. In Australia, it was a dramatic month in politics with the Labor Party replacing Kevin Rudd with Julia Gillard as prime minister.

Performance scorecard to 30 June 2010

Index	1 Month (%)	3 Months (%)	1 Year (%)
Australian shares	-2.6	-11.2	13.1
Australian real estate investment trusts	-1.0	-1.5	20.3
International shares (AUD)	-4.1	-4.8	5.2
International shares (hedged)	-3.9	-10.9	14.1
Australian fixed interest	1.4	3.6	7.9
International fixed interest (hedged)	1.1	3.5	9.3
Cash	0.4	1.1	3.9
AUD/USD	0.7	-8.0	4.5

Indexes used: Australian shares: S&P/ASX 300 Index, Australian listed property: S&P/ASX 300 A-REIT Index, International shares: MSCI World ex-Australia Index (net dividends reinvested), Australian fixed interest: UBS Australian Composite Bond Index, International fixed interest: Barclays Capital Global Treasury Index (hedged into Australian dollars), Cash: UBS Australian Bank Bill Index.

Financial year sharemarket performance could best be described as a story of two halves. While the year started off on a positive note with optimism returning to markets, rising sovereign debt concerns in Europe rattled markets over the second half of the year. Overall, the Australian sharemarket delivered a positive return with the S&P/ASX 300 Accumulation Index returning 13.1 per cent over the full financial year.

While the global economy has been expanding at around trend levels, growth levels are patchy with growth strong in Asia and more subdued in the more advanced economies. Chinese economic growth looks like it is moderating to more sustainable levels, while US growth has strengthened despite continued low employment levels.

The Australian Government's proposed Resource Super Profits Tax caused additional volatility in the Australian sharemarket over the June quarter with investors concerned about the impact it would have on the thriving resources sector. Concerns proved to be short-lived when Julia Gillard negotiated a more palatable arrangement with the large mining companies in the form of a scaled down Mining Resources Rent Tax.

While Australian Real Estate Investment Trusts delivered negative performance over the month and quarter to 30 June, the sector outperformed the broader sharemarket.

The Reserve Bank of Australia left interest rates on hold at their June meeting with interest rates for borrowers now sitting at more average levels. Both international and local bond yields fell over the month as the risk of lower than expected world growth increased and investors flocked to safe-haven assets.

Looking forward while the global economy is expected to continue its recovery, growth is likely to be subdued in some areas. Financial risks in the global economy remain and investors remain cautious as they wait for optimism to return to markets.

The Market Commentary has been sourced from Vanguard Investments Australia Ltd.

Financial Planning Q&A

Financial Planning Q&A includes the best question from the public each month and my answer, to give readers an introduction into the benefits of financial planning advice. If you would like a question about your financial situation answered, click Financial Planning Q&A. The best question will also receive a MOVIE TICKET.

Question

I'm inquiring about life insurance for my husband who is the sole provider of the family. The issue is that he has had cancer in the past (approximately 4 1/2 years ago) and I know it's probably impossible for him to get insurance cover. So my query is, do you think he can get insurance cover? He's 28 years old.

Answer

This is a common issue for people who have had health issues in the past.

It's possible your husband may have some life insurance cover within his superannuation fund.

The process of underwriting someone for insurance cover is complicated and takes into account a lot of factors. What an insurer is checking for is the risk of claim in the future. In the circumstances you have described, an insurer would contact your husband's doctor to fully understand the cancer he had, the treatment provided and the chance of the cancer returning. They will then make a decision if they wish to offer insurance cover. If they do, they may charge extra or exclude certain claims. As the time since the cancer occured increases, the chance of insurance cover being offered also increases.

I recommend you seek financial advice and review the insurance cover for your whole family.

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Past Issues

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Important Information

Information provided in this newsletter is general in nature and does not constitute financial advice. While I have taken reasonable care in providing this information, it should not be construed as being specific to your investment objectives, financial situation or particular needs. It's important for you to consider these matters before making any financial decision and I recommend you seek financial advice.

Monthly Newsletter - July 2010

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