How to invest $1 million for growth today

If you had $1 million in cash lying around, how would you put it to work today? 

That's the question I put to MLC Asset Management's Chief Investment Officer Dan Farmer, who openly shared his asset allocation playbook for growth in today's markets. 

While Farmer noted that inflation had come down a long way over the past 12 months, he believes it's likely that the rate of this fall will slow going forward. 

"Given that view of inflation, we think cash rates will hold at this level for quite a period of time. I actually don't see cash rate cuts until well into 2024. Essentially, we think the economy will slow - there's a reasonably high chance of a recession next year," Farmer argued. 

That said, he's still backing equities both locally and abroad and is finding compelling opportunities in private equity, property and infrastructure, and high yield credit. He also believes investors should have some cash on the sidelines in case any opportunities arise over the next 12 months. 

In this interview, he also shares his macro base case, the art and science of picking good managers, as well as some of the returns he is seeing across a range of asset classes today. 

For some background, in 2021, IOOF acquired MLC Wealth from NAB to create a powerhouse business with currently over $295 billion funds under management and administration, and one of the largest super fund providers in Australia. The new group's name was also changed to Insignia Financial (ASX: IFL) in 2021.

MLC Asset Management is the investment business of Insignia Financial that manages over $130 billion on behalf of its clients. The team provides a "multi-manager" approach - i.e. it invests in various funds (rather than individual stocks, for example) across a range of asset classes.

Dan Farmer's Ultimate Growth Portfolio for Today's Markets

Note: This interview took place on 30 August 2023 and originally published for Livewire Markets.

Timecodes: 

• 0:00 - Dan Farmer's investment philosophy and four keys to success

• 3:20 - The art and science of selecting fund managers 

• 4:05 - The biggest changes since the IOOF, ANZ P&I and MLC Wealth investment teams came together  

• 6:09 - Dan's thinking behind the allocations for the hypothetical growth portfolio (see above) for today's markets - Equities exposures

• 8:23 - There's an 80% chance of a recession in the US 

• 9:55 - The appeal of private equity 

• 11:10 - There is still opportunity in property - you just need to know where to look

• 12:48 - High yield credit and the threat of impairment within m

  ezzanine financing

• 13:28 - What needs to change for Dan and his team to become more bullish

• 16:02 - The main questions Dan is receiving from clients today