The BFG Report

Welcome to the 2018 Summer Edition of the BFG Report

The Rising Cost of Cyber Crime 

Last year, more than six million consumers fell victim to identity theft, credit card fraud or had their passwords compromised. This cost the Australian economy more than $2.3 billion, and, at an individual level, cost each victim an average of approximately $195 and more than two business days to rectify. We explain a few common traps that you should watch out for to protect yourself online.

Phishing Emails

Phishing is an attempt to trick you into supplying personal information, such as passwords and credit card  details. Often, the email looks like it has come from a well-known company like a bank, energy company or even Australia Post or PayPal. Remember, no matter how credible the email appears, most companies will never ask for this type of private information over email.

Social Networking Scams

Through a phishing email, scammers  will ask you to enter your account details into a copy of a login page of a social networking site, such as, Facebook. Once they have your login  details, they will take control of your  profile to ask for money from your friends or family by pretending to be you in need of financial help.

Golden Opportunity Investment Scams 

These scams involve a fraudster offering you a fake investment opportunity that is ‘not to be missed’, ‘high return’ or ‘guaranteed’. The fraudsters advertise themselves as a person or company that helps people invest in Cryptocurrency. If you show interest, you are directed to a website that looks very professional and encourages you to sign up. Once they receive your ‘investment’ the scammer becomes difficult to contact or disappears completely. You receive no return and your investment funds are gone for good.


Ransomware is a type of malicious software (malware) that locks your computer so you can’t access your files until you pay a fee. Ransomware can be an attachment or link in an email or on a website.

There are a number of steps you can take to protect yourself online.

  • Passwords: To keep your passwords safe consider using a password manager, such as, Dashlane, LastPass, KeePass or RoboF
  • Back it up: remember to use a portable hard drive, USB or cloud service to back up your documents and photos on your computer or phone on a regular basis.
  • Suspicious contact: Don’t open suspicious texts, popup windows or emails and don’t click on links or open attachments. If in doubt, always delete the email or text. Be aware that scammers can use all forms of communication.
  • Antivirus: ensure you run antivirus software with the latest antivirus signatures to scan for malicious code.


Investment Market Review – Quarter Ended 30 September 2018

Asset Class – Australian Shares
1 year is   14.0% p.a.
5 year is     8.2% p.a.
10 year is   7.7% p.a.


The S&P/ASX 300 Accumulation Index underperformed global markets in the September 2018 quarter, rising 1.5%. On a sector level, the best performers were telecommunications (up 22.6%), technology (up 9.9%) and health care and industrials (up 3.4%). Utilities were the worst-performing sector (down 5.7%), due to rising bond yields and the threat of a Royal Commission inquest into industry pricing. This was followed by the materials sector (down 2.8%) and the financials sector (down 1.4%). The strength in the telecommunication sector reflected that shares had arguably been oversold on concerns of mobile phone competition which was alleviated by the prospect of a TPG-Vodafone merger. So, instead of four mobile phone plan options there are now three with less competition implying better profits. The financials sector continued to struggle owing to disclosures in the Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry and the prospect of a tougher regulatory environment in the future.

Asset Class – Listed Property Trusts
1 year is  13.2% p.a.
5 year is  12.6% p.a.
10 year is  6.5% p.a.


The Australian real estate investment trust (A-REIT) sector generated a strong return of 1.3% during the September 2018 quarter, however, a headwind for the sector was the increase in bond yields. A-REITs are viewed as a proxy for bonds, which means rising bond yields (in this case because of strong US growth) can result in poor performance for this asset class. However, valuations heading into the September 2018 quarter were closer to reaching their fair value because their price increases during the June 2018 quarter meant these trusts were not particularly undervalued.

Asset Class – International Shares
1 year is  20.6% p.a.
5 year is  15.0% p.a.
10 year is  9.5% p.a.


International share markets had a strong quarter with the MSCI World Index in Australian dollar terms recording a gain of 7.4%. The strength can be attributed to improved corporate earnings and economic fundamentals, particularly in the US. To be specific, the synchronicity of these factors has faded in recent months, led by a weakness in China and Europe while the US goes from strength to strength. Given US shares still dominate global indices, their ongoing strength helped the global index finish the quarter higher. That strength was driven by the ongoing leadership of major US technology companies. Apple and Amazon crossed the threshold of companies valued at more than US $1 trillion, driven by strong iPhone sales and Cloud services. Chinese shares, especially those on the mainland Shanghai exchange, entered another bear market (a decline of over 20% over the quarter) weighed down by a combination of US trade war concerns and tightening credit conditions exacerbated by the People’s Bank of China striving to reduce excessive leverage in the Chinese economy. The concern over trade wars, in addition to the rising US dollar, affected emerging markets during the quarter. Emerging markets produced a small positive return of 1%, which obscured weakness not only in China but also in Turkey and Argentina.

Asset Class – Fixed Interest
1 year is    3.7% p.a.
5 year is    4.3% p.a.
10 year is  5.6% p.a.


At the end of the September 2018 quarter the Australian 3-year bond yield was 1 basis point (bp) lower at 2.05% and the 10-year rose by 4bps to 2.63%. The US yield curve rose with the 3-year bond yield increasing 26bps to 2.88% and the 10-year rising by 20bps to 3.06%. Global trade concerns continued to be a feature of the quarter with new tariffs implemented by the US and China against one another in both July and September. This contributed to volatility in yields but US yields increased overall. Over the coming months, we may see additional volatility in bonds and other asset classes as investors adjust to the prospect of better risk-free returns.  This may encourage investors to reduce their shareholdings and increase their holdings of bonds because bonds offer a more competitive return. The Australian outlook remained broadly flat during the quarter due to trade war concerns and weaker inflation with continued low wage growth pointing towards the Reserve Bank of Australia (RBA) being on hold for longer. A further contributor is the out-of-cycle increase in interest rates by several major banks which will curb consumer spending and  achieve a similar effect to an RBA interest rate hike.

Asset Class – Cash
1 year is    1.9% p.a.
5 year is    2.2% p.a.
10 year is  3.2% p.a.


The RBA left the cash rate unchanged at a historical low of 1.5% in the September 2018 quarter, as it remained concerned about low wage growth and high levels of household debt. Rising job vacancies should see wage growth and inflation rise, which should lead to a gradual increase in interest rates, but this is not expected until late 2019. June 2018 quarter economic growth surprised to the upside, with 3.4% growth for the year, which was mainly attributable to a strong contribution from an increase in consumer spending. The household savings rate also declined to a record post-global financial crisis (GFC) low, which implies consumers are using their savings to maintain their standard of  living in the absence of wage growth.


High Yielding Internet Savings Accounts

Financial Institution and Interest Rate

RaboDirect Bank – Rate 3.05% p.a.

Citi Online Saver – Rate 3.05% p.a.

St George – Maxi Saver – Rate 2.85% p.a.

ME Bank Online Saver- Rate 2.85% p.a.

ING Savings Maximiser – Rate 2.80% p.a.

Rams Saver – Rate 2.80% p.a.

Rates are subject to conditions and change.

Rates are correct as at 3/12/2018.