Monthly Archives: August 2019

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Muslim Australians read out Islamophobic comments on video

A handful of prominent Australian Muslim people have appeared in a YouTube video that openly mocks Islamophobic posts on Twitter and other statements about their religion.

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@BabsNation @MariamVeiszadeh mariam should be taken to the vets and desexed so that herDNA doesn’t breed into future life forms.

— David Lonie (@DaveL495) July 2, 2015

However some of those in the video read comments that were not on social media at all, like this submission to Cory Bernardi’s pet project, the Halal certification Senate inquiry (Third party certification of food).

“I had been purchasing Vegemite all my life, as did my parents and this Halal Certification has stopped that now,” one reader read during the video, which was originally a comment sent to the Halal Senate inquiry.

Buzzfeed reported on the video but did not verify that the comments were all made on Twitter and that they had actually been sent to the people reading them. The Daily Mail also picked up the story and reported the tweets as having all been sent to the readers.

Some tweets were directed at the readers specifically.

@jihaddibmp Umm given the position you hold & the strange times we are traversing .. Do you think it wise to use ‘Jihad’ as a name?

— Ladywhitepeace (@ladywhitepeace1) September 17, 2015

Other tweets were posted in response to posts about news articles and other tweets.

@Paul_Sheehan_ @smh who the hell do they think they are? This is a democracy, if they don’t like it, F. OFF to the Middle East!

— SusanCH#let downLib (@SCH451) October 12, 2015

Watch the video here:

Motorists gouged at the petrol pump

Petrol retailers have kept prices at the pump high despite cheaper crude oil.

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The Australian Competition and Consumer Commission’s fourth quarterly report into the petroleum industry found retail margins are at their highest level since monitoring began in 2002.

“We will be closely monitoring gross retail margins in the coming months, because high retail margins likely indicate increased profits of the petrol companies at the expense of motorists,” the consumer watchdog said on Tuesday.

ACCC chairman Rod Sims said part of the reason why retail prices did not fall by as much as international prices was the weaker Australian dollar.

Had the dollar been at the same level as it was in January 2013 ($US1.05) retail petrol prices in the quarter would have been around 20 cents a litre cheaper.

Sydney and Brisbane had the highest gross retail margins at around 14 cents a litre – six cents higher than in Melbourne.

The average retail petrol price in Sydney, Melbourne, Brisbane, Adelaide and Perth was 133.2 cents a litre – down 2.6 cents a litre from the June quarter.

Prices remained higher in regional areas due to less retail competition, lower fuel volumes sold, distance and lower convenience store sales.

While monthly average prices in the five largest cities fell by 11.3 cents a litre over the September quarter, regional prices fell by only 6.7 cents a litre – averaging 134.6.

NRMA spokesman Peter Khoury said profit margins had been as high as 26 cents a litre in some cities.

“Not only are oil companies making more profit at the high end but major players are pushing prices up at the lower end of the cycle,” he told AAP.

“The forecast for prices as a result of international factors is in the positive for motorists, but this report shows we are still paying more at the pump because of these profit margins.”

Prices on average needed to fall further and extra scrutiny of fuel companies would be vital to ensure they flow through to motorists, Mr Khoury said.

MONTHLY AVERAGE PETROL PRICES – JUNE AND SEPTEMBER QUARTERS 2015

Sydney – June 140.1, Sept 130.1

Melbourne – June 139.3, Sept 127.6

Brisbane – June 144.6, Sept 130.6

Adelaide – June 140.6, Sept 129.0

Perth – June 138.2, Sept 129.3

Hobart – June 143.1, Sept 137.8

Canberra – June 144.5, Sept 132.8

Darwin – June 134.9, Sept 130.4

(Source: ACCC)

Should you buy into smart beta ETFs?

Smart beta is latest investment trend, marketed as a new way to diversify and reduce risk.

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But is smart beta really the best way to achieve your investment goals?

It’s nearly impossible to read the financial news or an investment newsletter these days without coming across the term “smart beta”.

Smart beta – also known as strategic beta, alternative beta, fundamental beta, advanced beta, enhanced beta, and probably a few other names – aims to combine elements of passive index investing and active fund management to deliver the best of both worlds: transparency, broad diversification, and market-beating returns – all at low cost. What more could you ask for?

But before you throw all of your savings into the latest smart beta product, it’s worth digging a bit deeper into what smart beta really is.

Smart beta is all about index construction which refers to which stocks (or other assets) make up an index and their relative size within that index…

So what exactly is an index?

Indices and index funds

The first share market indices were designed to measure the broad market and serve as a point of comparison for ‘active’ (stock picking) fund managers. They typically weighted stocks by size – the stocks with the biggest market value made up a larger portion of the index. Examples of size-weighted indices include popular ones you’ve probably heard of like the the S&P 500 (started in 1957) or S&P ASX/200 (started in 2000).

When John Bogle launched the first index fund in 1975, it was intended as a sensible, low-cost way for individuals to invest into these such indices. The Vanguard 500 Index was not intended to beat the market, but simply ensure investors kept up with the stocks in it.

Over 40 years, Vanguard has now grown into the largest mutual fund manager in the world with over US$3 trillion under management and index investing has become so popular that an entire industry has emerged on the back of it.

Emergence of smart beta

All index funds, by definition, are passive investments. This includes smart beta. There’s no fund manager making trading decisions and all buying and selling is done according to a strict set of rules.

However, smart beta indices aim to fix some of the believed shortcomings of weighting investments by market size when building an index. One example is that during a bubble, some shares can make up a larger and larger share of the index, like technology stocks did during the ‘tech boom’ in the late 1990s, or mining stocks when commodity prices rocketed in 2006-2011. This can cause traditional size-weighted indices to ‘overshoot’ during booms and busts.

To address this and other similar observations about size-weighted indices, new ways of constructing indices have emerged – with weights determined by different approaches such as dividends, research ratings, simple averages, or consistency of cash flows. This is what’s meant by smart beta.

Common smart beta strategies

There are 4 common smart beta approaches to building indices:

High dividend strategies that aim pick stocks with higher dividend yields to boost investor income.

e.g. Vanguard Australian Shares High Yield ETF (VHY)

Other fundamental indices that focus on measures like sales revenue or free cash flow as a more accurate measure of economic contribution rather than using market capitalisation.

e.g. Russell Australian Value ETF (RVL) or

BetaShares FTSE RAFI Australia 200 ETF (QOZ)

Equal weighting – the simplest form of index construction that just averages an entire universe of stocks, thus giving each stock the same importance.

e.g. Market Vectors Australian Equal Weight ETF (MVW)

Low volatility strategies which target a smoother ride by carefully selecting less risky stocks.

e.g. ANZ/ETFS S&P 500 High Yield Low Volatility Fund (ZYU)

While some of these funds may advertise a new paradigm of investment thinking, they all use fairly transparent, rules-based approaches to prioritise exposure to certain market factors. These factors include style (growth and value), size (large, mid, small), or momentum (consistency). The challenge for investors is in deciding which factors to want exposure to (if any).

Smart beta bets on market factors

At their core, all smart beta ETFs are taking a bet on certain market factors being more important than others:

Low volatility and high dividend stocks tend to have a bias towards value stocks that have lower growth and more stable earnings since they tend to be less volatile than companies with less predictable profits like mining businesses or biotechnology. However, when investors crowd into low-volatility or high dividend stocks, as they’ve been doing over the past few years, it can push valuations in some sectors (e.g. telecommunications, utilities, and property) to the point they actually become more risky. This can, perhaps counterintuitively, make low volatility or high dividend strategies dangerous after a period of good returns.

Fundamental indices may use operating cash flow as a better indication of economic size. Analysis shows these approaches have a strong value stock bias as well.

An equal weighting methodology introduces a significant bias towards small companies because the stocks that have a lower market size have the same weight in the index as bigger businesses like Commonwealth Bank (CBA). The portfolio will likely also have a value bias because equal weighting will expand the weight of value stocks, which tend to trade at lower price compared to their profit.Shortcomings of smart betaHow smart is it really?

By offering enhanced exposure to some factors, like value and size, smart beta strategies must also be de-prioritising other factors. Because current price reflects every factor used by any investor to estimate a company’s value, a market-size-weighted index also represents an all-factor approach to investing. On the other hand, smart-beta is essentially taking a bet that a few select factors are more important than an all factor (market value) approach.

Source: Vanguard

Backtesting can give false confidence

Smart beta strategies are often marketed as being able to ‘beat the market’. However the truth is often a lot more murky. Many have only outperformed from backtesting over a select, historical time period which introduces a few significant issues.

Think of an index like a deck of cards. Backtesting lets you shuffle a deck of cards thousands of times until a favourable “shuffle” emerges to match the order you want to show. In essence, backtesting lets the smart beta strategies and ETFs ‘stack a deck’ of stocks in a way that outperformed the index in the past. But there’s no guarantee that the same strategy will work going forward. As a result, many smart beta strategies could have simply worked in the past by chance.

Let’s say you rebuilt S&P/ASX 200 but weighted the companies according to the birthday of their CEOs and found that this new index outperformed a size weighted index by 20% over 15 years. This would not be because January-born CEOs are better at managing businesses than December ones. This would just be an example of how you can use a random set of data to prove any hypothesis when backtesting.

What about risk?

Some smart beta strategies have been able to outperform over the long-term, but the differences in return can usually be explained simply by risk. For example, equal-weight indices of stocks do tend to outperform market-size weighted indices over the long-term. However this can be explained entirely due to equal weight taking more risk (due to having more small stocks). On a risk versus return basis, you’re no better off owning the equal weight index even though it generated higher returns. Also, there are sometimes lower-cost ways to get the same factor exposure (small companies) and return profile.

Sources: CRSP US Stock and Index Database, S&P Dow Jones Indexes, Federal Reserve

Smart beta follows in-vogue style trends

It’s no coincidence that many of the smart beta funds launched over the past couple of years in Australia have been dividend focused. This is because dividend investment strategies had a great run of performance between 2011 and 2014. ETF issuers know that it’s much easier selling strategies that have done well recently than those that haven’t since people tend to chase returns.

In fact research has shown that on average, new funds launch about 6 months after the peak in their particular strategy compared to the broad index. This is not a coincidence – the product teams launching new funds usually take about 6 months to get them launched so when they decide to launch a fund it’s usually at exactly the point that the particular strategy is showing it’s best results compared to benchmarks. Unfortunately, outperformance tends to end soon after smart beta ETFs are launched.

Source: Research Affiliates

Conclusion

Smart beta ETFs give investors the ability to tilt their portfolios towards certain factors that active fund managers have used for years.

But if you’re considering investing in an smart beta ETF, it’s important to understand that you are actually taking bets on certain market factors beating others. You should be comfortable with what those factor bets are, and why you’re taking them.

If you don’t understand the bets you’re taking and the only reason you’re investing in smart beta is backtesting or recent performance, then what you’re buying into isn’t smart beta as much as it’s smart marketing, and that’s not smart investing.

As any card player will tell you, reshuffling the deck won’t give you better odds of success.

Chris Brycki is the CEO and founder of Stockspot.

A lesson in unity from an Islamic school

It’s just like any other Australian school, but with some noticeable differences.

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The students are Muslim, a majority of the staff are Muslim, religious studies and prayer are crucial. The curriculum, like everyone there, is also Australian.

I’m at Al Amanah College, an Islamic school in Sydney’s south-west. I have been granted exclusive access as part of my work with SBS to see how the 650 pupil-strong campus – one of four in Sydney and Melbourne – is responding to recent terror events and escalating racial divides.

And so here I am, resigned to the last remaining desk at the back of a classroom, hastily scribbling notes as I sit in on a lesson which is addressing those exceedingly important issues.

I raise my head midway through the latest point I’ve jotted down and notice something peculiar. I’m the only one trying to keep up.

I scan the room from left to right: two dozen Year 11 and 12 students, an even mix of boys and girls, are listening intently, but focused on their messenger. No notes, no need. Most are nodding their heads. They’ve heard all this before.

But they are not bothered, rather the opposite. It’s a welcoming look on the faces I can see; almost as if the students have asked to hear the lecture again.

I put my pen down, a difficult task for me while I’m on a story, and now turn my complete attention to our teacher. He is a young man, dressed in a long navy robe and a traditional Islamic cap. His beard is very thick.

This man is the religious studies teacher, and he’s denouncing extremism to a group of young Muslims.

“We live in Australia as Muslims, we are not allowed to harm one another. We are to love each other, Muslim and non-Muslim alike,” he tells the room as he stands next to a slide from his presentation.

He then does something which takes me even further by surprise: he smiles.

An extremely strong yet positive message, from a man some Australians may have judged without bothering to speak to.

“Ignorance leads to a person being vulnerable, then he is obviously easily deceived, and this will obviously explain what happened in Parramatta,” he continues.

It becomes quickly apparent that this one classroom is inadvertently breaking stereotypes and multiple misconceptions left, right and centre.

It’s been a long and testing year for Muslim and non-Muslim Australians.

From the fatal shooting of a NSW Police employee by a 15 year old radicalised boy, to the tragic events in Paris, tensions are at an all time high.

Questions are being raised by certain factions of the Australian community. Among those, the most striking include “do Muslims belong here?” and “how can we trust them?”

Some local Islamic community leaders are in many ways failing to quell these small-minded ideologies. Others are quietly succeeding, but they are being drowned out by the much-publicised failures.

Al Amanah College, for example, initiated a programme more than 12 months ago to teach its students that being Australian and being a Muslim are inextricably linked.

Sessions where the principles of Islam are dissected, like the one I just sat in on, run two to three times a week. That’s all years, K-12.

“Being Muslims in Australia, we are Australians and we work for a big cause; to make sure that we are living in harmony with everybody,” Principal Ayman Alman explains. “We are all Australians.”

The programmes are also run to give students a chance to ask questions about their faith and, in light of recent terror acts, a chance to distance themselves from the so-called ‘Islamist Groups’.

Year 12 student Sibal Chams says the discussions don’t just happen during those classes, but any time a young mind is feeling distressed.

“Our teachers, we bombarded them with questions. We asked them questions like, ‘you know who are these people doing this?’, ‘what are the motives behind why they’re doing it?’; and ‘how do they justify it?’” she explains.

“It helps because when you talk about it more, when you express the situations happening, more people are being aware in order to stay away from these devious groups,” adds fellow classmate Hussam El Dana.

“That way we can protect the ones we love and the Australian community,” agrees Ms Chams.

As I walk around the playground while my cameraman Ben shoots some lunchtime overlay, much to the delight of the children, I begin to think of all the anti-Islamic comments I’ve heard in the past. One in particular stood out: “Muslims in this country don’t even sing our national anthem”, a statement most often declared in a manner which offered no chance for one to clarify with the truth.

“Question”, I ask Principal Alman as I turn in his direction. “Does the school sing the national anthem?”

The Principal furrows his eyes like I’ve asked an absurdly obvious question. “Of course, we sing it at the start of every assembly. Would you like to film it?”

Standing on the flanks of that school hall, watching 350 young Australian Muslims sing ‘Advance Australia Fair’ in their various vocal capabilities, was a uniquely humbling experience.

What is common practice for these kids – like any other school nationwide – could prove to be the greatest reminder yet that we are all in this together. Regardless of race, religion, or misconception.

As I’ve been repeatedly told today, we are all Australians. Unity, ultimately, is the most important lesson for us all.

Omar Dabbagh is a reporter for SBS World News. Watch his report on Al Amanah College here.

Liberals open to Macfarlane return

Senior Liberal figures say they will welcome Ian Macfarlane back to the fold after his failed bid to join the Nationals.

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But his would-be Nationals colleagues are still agitating for another seat in Malcolm Turnbull’s cabinet.

Mr Macfarlane’s future in politics is uncertain after the Liberal-National Party state executive quashed the Queensland MP’s attempt to switch party rooms.

Nationals senator Matt Canavan says the junior coalition partner deserved a fourth cabinet spot after an “oversight” in the ministerial reshuffle following Malcolm Turnbull’s elevation to Liberal leader.

“I certainly expect that oversight to be rectified,” he told ABC radio on Tuesday.

Mr Macfarlane’s plan to join the Nationals was a way to improve representation of rural Australia which wasn’t reflected in cabinet, he said.

“Representation in cabinet right now from rural and regional Australia is barely a facade with only three members of the cabinet (living) outside capital cities.”

Nationals deputy leader Barnaby Joyce said allowing Mr Macfarlane to switch camps should have been a formality after the MP received strong support from LNP members in his Toowoomba-based seat of Groom.

“Why would you vote against Queensland getting better representation?” he said of the state executive’s decision.

Finance Minister Mathias Cormann said “of course” he would welcome Mr Macfarlane back to the Liberal party room if the MP decides to stay on after the Christmas break.

“Ian Macfarlane has been a very significant contributor to the Liberal Party over many years,” he told ABC TV.

Senator Cormann said the former minister was understandably disappointed to no longer be in cabinet.

Liberal Scott Ryan echoed the remarks of his ministerial colleague, saying in the spirit of Christmas the party would be welcome his return.

“Occasionally you might have an argument over Christmas with a relative but the following Christmas we always welcome them back with open arms,” he told Sky News.

Labor’s Matt Thistlethwaite said Mr Macfarlane’s attempted defection was symbolic of the “simmering tensions” in the coalition.

Coalition backbencher Ewen Jones said it was unclear how the Liberal party room would respond to Mr Macfarlane’s return.

“He could walk in there and could be treated as this was a brain explosion, and he can move on and rebuild,” Mr Jones told ABC radio.

“Or he could be treated with the same sort of respect and admiration as (previous LNP defector) Peter Slipper.”