It’s going to be another Super Melbourne Cup – managing longevity risk is still the key to being a winner
Since Archer won in 1861, it’s the race that stops the nation. The first Tuesday in November, Australians pause when they run the Melbourne Cup. Each year, across the full spectrum of investor, from professional punter to once a year novices, punters attempt to decipher the form guide to determine who will win our famous Cup.
The other race that literally stops the nation is superannuation.
The question for members is, “will I still have sufficient funds in my superannuation account to live a comfortable lifestyle in retirement until I reach the finish line”. All everyone is hoping for is to get down the final stretch of that (hopefully) long straight in a dignified manner.
Unlike life, where life expectancy is varied and uncertain, at least in the Melbourne Cup, we know the finish line is at 3,200 metres. The question though is still the same – which horse will manage the longevity risk so they are still strong on the line.
So, how do you determine who will stay a strong 3,200 in a fast high pressure race on what (assuming we don’t get any rain) will probably be a Good 3 Track (track with good grass coverage and cushion).
Breeding is a good indicator. Whilst there are always exceptions, unless a horse has stamina bred on at least one side of its pedigree, preferably two, then they will be little chance to stay a strong 3,200.
Past performance, whilst not necessarily an indicator of future performance, is also a good guide. What I look for is a consistently strong performance at races from 2,400 plus.
For those horses that have never been tried at the trip before, the manner in which they race and how they have finished off lead up races, particularly if they are strong to the line and running through the line, are good indicators.
Finally, a bit like leadership, investment management, and fees and charges, there are all the other factors that can tilt the dial one way or the other. These include: weights, barriers and jockeys.
High weights are a bit like high fees, horses with them can win as long as they actively select the best returns. Wide barriers may mean a horse being posted wide, such that they end up running 3,400 metres. A good jockey, like a good CEO or investment function, can improve a horse many lengths.
So where does that leave us? Well, unfortunately, it won’t be Who Shot the Barman. He was like a TRIS (transition to retirement investment scheme) member with a reversionary beneficiary. He got struck down with a cold whilst still in work and was scratched with his place being unable to be taken by another horse. So we only have 23 to choose from this year.
My tips, for what it is worth are:
- Marmelo – did you see his final 300 metres of the Caulfield Cup
- Almandin – still Australia’s best stayer, although up in weight from his victory last year
- Red Cardinal – Has a feel of Protectionist about him
- Wall of Fire – like the way he finished off for his second in the Herbert Power
Good luck and happy punting.
Cheers, Damian Ryan and the KPMG Super Tax team!
Please read the Super MelbourneCup product disclosure document
This guide is of a general nature only and should not be relied on.
Individual investors should seek their own advice specific to their financial circumstances
The winners were:
1. Rekindling (22)
2. Johannes Vermeer (7)
3. Max Dynamite (9)
Horse racing is an unpredictable sport – but we’ll be back again next year for another run.