The Point

FAST PODCAST: Where we are in this interest rate cycle

50-point rate rises are probably over for now in Australia, but investors should watch for lag, says Pendal’s Tim Hext in our latest fast podcast.

“Firstly, it takes several months for a rise to feed through to your mortgage. So given they only started in May, the full impact of rate rises won’t be felt until the end of the year around Christmas.

“The RBA will probably do two more 25s this year. They might put in a third to 3.1%, but let’s call it 3%.

“I think then they’ll sit back and see what impact it’s had. Of course in 2023 you’re going to see a lot of fixed-rate mortgages rolling into floating rates, so there’s a hell of a lot of tightening yet to happen.

“Secondly, on the goods inflation side there’s a huge amount of evidence that we’ve seen the peak in the US.

“There’s every chance we’ll get some negative CPI US prints. This doesn’t mean inflation’s over. It doesn’t mean they’re going to cut rates. But that certainly takes the pressure off.”

Sustainable fashion: would you wear socks made from wood pulp?

If you’re like most people, your clothes are made of cotton produced with pesticides, fertilisers and hundreds of litres of water.

Or they might be synthetic, made from petroleum and destined to become ocean-borne micro-plastic.

“The fashion industry has a lot to answer for,” says Maxime Le Floch, an analyst with Regnan’s impact investing team.

“Fashion is responsible for 5 per cent of annual carbon emissions. Some 6 per cent of global pesticide production is applied on cotton crops alone.”

Austria’s Lenzing Group may have an answer. It’s making fabrics from sustainably sourced wood pulp for shirts, shorts, towels, nappies and wet wipes.

Its flagship fabrics such as lyocell (pictured) are made from cellulose, the compound that makes up the cell walls of plants. The process uses 10 times less water and produces fewer carbon emissions than polyester.

Can impact investors really help change the world? Here’s evidence from Regnan

Can investors really help solve the world’s biggest problems?

Regnan’s equity impact investing team says “yes” — and they lay out the evidence in their first annual impact report.

Regnan Global Equity Impact Solutions fund aims to generate market-beating, long-term returns by identifying companies that are innovating and disrupting their way to solutions for the planet’s biggest problems.

The team’s inaugural impact report shows investors in the fund are helping:

Impact investing: Computer simulations are helping solve big problems

You’ve driven a car designed on a computer — but have you driven one designed by a computer?

The rising sophistication of simulation software means your next car — or at least parts of it — will have its performance simulated and tested by computer software, says Regnan’s Maxime Le Floch.

The technology is dramatically cutting the time to create and test new designs, improving manufacturing efficiency and cutting costs and resources.

“We need to speed up innovation across the global economy. This is called out by UN Sustainable Development Goals 9 and 12 which highlight resource efficiency and enhancing scientific research,” says Maxime, an analyst with Regnan’s Equity Impact Solutions team.

The software is also used in the renewable energy industry to design wind turbines.

Regnan’s Global Equity Impact Solutions fund has a position in US-listed simulation software leader Ansys, which aims to “help innovative companies deliver radically better products”.