Blog – Maddern Financial Advisers

Be ahead of the news in accounting, private wealth and finance

Stability and balanced budgets
Team Maddern
03/Aug/2011

It is interesting that as soon as the US Congress has passed the new debt ceiling limit that we now have a series of new challenges: debt concerns in Italy, Spain, etc, in addition, falls on Wall St were heavy overnight due to a US manufacturing slow down. But we must also note that there is no adverse news out of Northern Europe, e.g. Germany, Norway, etc. There is also no adverse news from the Asia Pacific region. Australia stands as a beacon of how to run an economy – balanced budgets are the norm, there is no requirement or suggestion of a constitutional amendment to balance budgets.

Australian shares according to most experts are at good value on a dividend and PE basis. This could be an excellent opportunity to reduce the average purchase price of a number of shares, we are doing this with many of our clients at the moment, e.g. you may have an average purchase price on a BHP-B share of $48.62. BHP-B are currently trading at $41.57 – if we were to purchase additional shares at the current price of $41.57 then the previous average price of $48.62 would reduce. We have financial models which allow us to reduce an average price (staying with our example) to $43.00. The reduction to $43.00 is achieved by the model telling us how many shares we would need to purchase at $41.57 to achieve a flat average price of $43.00.

Building on this ‘averaging’ opportunity that exists in the current Australian market, we have also created our own broking arrangements which offer share broking to Maddern clients at about a quarter of what most stock brokers are charging.

Maddern clients who have been invited to Private Wealth are able to see all of their circumstances through our innovative Maddern Private Wealth – Direct Portfolio (MPW-DP). Direct Portfolio (DP) is one of our best initiatives where we have virtually removed all platform based admin fees, and have reduced to zero management expense ratios on all managed funds. DP gives Maddern Financial Advisers Pty Ltd a pre-eminent position in the market for SMEs and High Net Worth Individuals. (HNWIs)