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ON THE economic front, Australians will be largely unaffected by the change of federal government — at least in the near term, says Pendal’s Anna Hong.
That’s because key economic policies between Australia’s two major parties are mostly aligned, says Hong, an assistant portfolio manager from Pendal’s Income and Fixed Interest team.
However, there will be an increase in fiscal spending by the Albanese government.
Labor will increase fiscal spending by a net $7.4 billion in areas such as home equity schemes and electric car discounts, as you can see in this table:
Labor’s Fiscal Plan
Net Budget Impact | -$7.4bn | |
Revenue + Savings | $11.5bn | |
Spending | $18.9bn | |
Key Spends | Childcare subsidies | $5.4bn |
Aged care | $2.5bn | |
Medicare | $0.75bn | |
Electric car discount | $0.47bn | |
Home equity scheme | $0.31bn |
“This will prop up demand without fixing the supply issues, nudging inflation higher,” says Hong. “It will make the RBA work harder to counter the loose fiscal policy.”
The federal budget will remain in deficit for the rest of the decade — under either party.
“The stumbling block to Labor’s policies may be in generating planned revenue and savings.
“Many items on their list — such as multinational tax revenue — are easy to promise but notoriously difficult to achieve.
“Overall, the change of government is more of the same for the economy and the budget.
“The difference will be in the changes many Australian voters are focused on – climate policy, federal integrity, and gender equity — as Pendal’s Rajinder Singh outlines here.
“Australians want action and will watch this space closely.”
Find out about
Pendal’s Income and Fixed Interest funds
Anna Hong is an assistant portfolio manager with Pendal’s Income and Fixed Interest team.
Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. In 2020 the team won the Australian Fixed Interest category in the Zenith awards.
With the goal of building the most defensive line of funds in Australia, the team oversees A$22 billion invested across income, composite, pure alpha, global and Australian government strategies.
Find out more about Pendal’s fixed interest strategies here
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at May 26, 2022. PFSL is the responsible entity and issuer of units in the Pendal Monthly Income Plus Fund (ARSN: 137 707 996) and Pendal Dynamic Income Fund (ARSN: 622 750 734) (Funds). A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com