InvestorDaily

On Tuesday 18 December, the prudential regulator announced that Xinja Bank Limited has been officially authorised as a restricted deposit-taking institution (RADI). Xinja is only the second Australian neobank to receive this status. Volt Bank was granted a RADI in May, literally days after APRA finalised the framework, which was created in response to the government’s push for greater innovation and new entrants to the banking industry.

However, as its name suggests, a restricted ADI licence has significant limitations. A RADI is really a stepping stone on the journey to acquiring a full banking licence. It allows neobanks like Xinja and Volt to conduct limited banking capabilities for a maximum period of two years while they develop their capabilities and resources. It also gives them time to raise the significant levels of capital required to meet APRA’s demands for a full banking licence.

The rest of this article can be found at investordaily.com.au.

InvestorDaily

InvestorDaily

InvestorDaily

Many investors are reflecting on the lessons from 2018. It was a year characterised by volatility, trade tensions and a number of geopolitical events, all of which have left many investors wondering what they should expect next year.

1. Expect volatility 

If 2018 taught us anything, it is that expecting volatility is the safest course of action. While there has been a lot of noise about what is driving volatility, ultimately the two key factors responsible are the tightening US Federal Reserve (the Fed) monetary policy, and the impact of trade tensions. These two factors are set to play a significant role in 2019 as well.

2. Consider defensive sectors

In 2016-17, the world enjoyed relatively smooth conditions for markets, largely due to highly accommodating central banks globally. This means new investors, or those guilty of having a short memory, are surprised by the volatility present in 2018. It’s important to keep in mind that this level of volatility is highly unusual, and reflects the market adjusting from an ‘accommodating Fed’ to a ‘tightening Fed’. Markets are only now shifting from a liquidity driven market to one driven more by fundamentals.

3. Seek deep valuation sectors

Over the last five years, growth sectors have taken centre stage. Technology, in particular the FAANG stocks of Facebook, Amazon, Apple, Netflix and Google, have been the growth drivers of US markets.

4. Diversify across the yield spectrum

The benefits of diversification for generating healthy returns are well-known. In an environment of volatility, bond investors are encouraged to diversify across the yield spectrum. This will mean that if there is an eventual rate hike in Australia, the investor will be better protected as they will have a range of investment options, instead of holding all their eggs in one basket.

Full detail of this article can be found at investordaily.com.au.

InvestorDaily