How to invest $1 million for growth today

Plus, MLC Asset Management's CIO shares why there's an 80% chance that the US is headed for a recession.
Chris Conway

Livewire Markets

If you had $1 million in cash lying around, how would you put it to work today? 

That's the question I put to MLC Asset Management's Chief Investment Officer Dan Farmer, who openly shared his asset allocation playbook for growth in today's markets. 

While Farmer noted that inflation had come down a long way over the past 12 months, he believes it's likely that the rate of this fall will slow going forward. 

"Given that view of inflation, we think cash rates will hold at this level for quite a period of time. I actually don't see cash rate cuts until well into 2024. Essentially, we think the economy will slow - there's a reasonably high chance of a recession next year," Farmer argued. 

That said, he's still backing equities both locally and abroad and is finding compelling opportunities in private equity, property and infrastructure, and high-yield credit. He also believes investors should have some cash on the sidelines in case any opportunities arise over the next 12 months. 

In this interview, Farmer shares his macro base case, the art and science of picking good managers, as well as some of the returns he is seeing across a range of asset classes today. 

For some background, in 2021, IOOF acquired MLC Wealth from NAB to create a powerhouse business with more than $295 billion in funds under management and administration, ranking it among the largest super fund providers in Australia. The group was also rebranded Insignia Financial (ASX: IFL) in 2021.

MLC Asset Management is the investment business of Insignia Financial that manages over $130 billion on behalf of its clients. The team provides a "multi-manager" approach - i.e. it invests in various funds (rather than individual stocks, for example) across a range of asset classes.

Dan Farmer's ultimate growth portfolio for today's markets

Note: This interview took place on 30 August 2023. 


Timecodes: 
  • 0:00 - Dan Farmer's investment philosophy and four keys to success
  • 3:20 - The art and science of selecting fund managers 
  • 4:05 - The biggest changes since the IOOF, ANZ P&I and MLC Wealth investment teams came together   
  • 6:09 - Dan's thinking behind the allocations for the hypothetical growth portfolio (see above) for today's markets - Equities exposures
  • 8:23 - There's an 80% chance of a recession in the US 
  • 9:55 - The appeal of private equity 
  • 11:10 - There is still opportunity in property - you just need to know where to look
  • 12:48 - High yield credit and the threat of impairment within mezzanine financing
  • 13:28 - What needs to change for Dan and his team to become more bullish
  • 16:02 - The main questions Dan is receiving from clients today.

Learn more

MLC Asset Management applies its knowledge and experience, with the aim of delivering the best possible investment results for institutional and retail clients in Australia and globally. For more information, please visit their website.


........
The information in this communication is provided by Daniel Farmer, a representative of MLC Asset Management Pty Limited ACN 106 427 472, AFSL 308953 (‘MLCAM’), part of the Insignia Financial group of companies (comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate) (‘Insignia Financial Group’). No member of the Insignia Financial Group guarantees the repayment of capital, the performance of, or any rate of return of an investment. Any investment is subject to investment risk, including possible delays in repayment and loss of income and principal invested. This communication is not an offer, invitation or recommendation to buy, hold or dispose, any assets, undertakings, securities or any other financial products in any jurisdiction or to otherwise participate in any investment opportunity. The communication is of a general nature only and has been prepared without taking into account the objectives, financial situation or needs of an investor. Before making an investment decision, investors should consider their objectives, financial situation and needs. Past performance is not a reliable indicator of future performance. Any opinions expressed constitute our judgement at the time of issue and are subject to change. We believe that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made at the time of compilation. However, no warranty is made as to their accuracy or reliability (which may change without notice) or other information contained in this communication. Any projection or forward-looking statement (‘Projection’) in this communication is provided for information purposes only. No representation is made as to the accuracy or reasonableness of any such Projection or that it will be met. Actual events may vary materially. This communication is directed to and prepared for Australian residents only. Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

1 stock mentioned

1 contributor mentioned

Chris Conway
Managing Editor
Livewire Markets

My passion is equity research, portfolio construction, and investment education. There are some powerful processes that can help all investors identify great opportunities and outperform the market, and I want to bring them to life and share them...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment