Diversified Portfolio - Balanced - 29 February 2016
The volatility surrounding Australian and global equity markets experienced in December and January continued in the month of February. The local equity market was down 1.7% for the month, as were global equity markets. Emerging market equities were down 1.1%, performing better than their developed market counterparts.
Australian REITs were the standout performer over the month, returning 2.8% for February (as measured by the S&P/ASX 300 A-REIT Accumulation Index). Global property was relatively flat for the month, posting a return of 0.1% (as measured by the FTSE EPRA/NAREIT Developed REITs AUD Hedged NR Index).
Within fixed interest, Australian bonds posted a return of 1.0% over the month of February (as measured by the Bloomberg AusBond Composite Bond Index) while global bonds returned 1.1% (as measured by the Barclays Global Aggregate Bond Index AUD Hedged). Cash returned 0.2% over the month as measured by the Bloomberg AusBond Bank Bill Index.
The InvestSMART Diversified Balanced portfolio returned -0.2% over the month of February, outperforming the benchmark. The exposure to Australian equities was the main drag on the portfolio as was exposure to credit securities within the fixed interest portion of the portfolio. Exposures to US equities and cash contributed to performance relative to the benchmark.
Within the InvestSMART Diversified Balanced portfolio the Australian equity exposure via the MSCI Australia 200 ETF returned -1.87% over the month which was the single biggest detractor to performance in the portfolio. Within international equities, the iShares Core S&P 500 ETF and iShares Core S&P Mid-cap ETF were the best performing securities, while the Vanguard All-World ex US Shares Index ETF and iShares Europe ETF dragged on performance. The MSCI Emerging Markets ETF was relatively flat over the period.
Within property, global property (via the SPDR Dow Jones Global Real Estate Fund ETF) returned 1.5% for the month of February. The Australian property exposure (via the Vanguard Australian Property Securities ETF) also returned 1.5% for the month.
Within fixed interest, the iShares Composite Bond ETF returned 0.9%, while the Macquarie Income Opportunities Fund returned -0.3%. The BetaShares Australian High Interest Cash ETF returned 0.3% over the month.
Growth of $10,000
Asset Allocation as at 29 February 2016
Source: Praemium, RBA
Returns are before expenses and fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 29 December 2014.
The portfolio continues to remain overweight Australian equities on the basis that valuations continue to appear reasonably compelling when compared to other asset classes and given the attractive yield characteristics of the asset class. Within fixed interest the portfolio holds Australian government bonds and has an exposure to Australian credit and overseas securities. The portfolio is expected to do well in an environment where Australian equities outperform other asset classes and where credit outperforms government bonds.
|PERFORMANCE TO 29 FEBRUARY 2016||1 MONTH||3 MONTH||6 MONTH||1 YEAR||SI* (P.A.)|
|InvestSMART Balanced Portfolio||-0.18%||-2.74%||-1.82%||-4.05%||1.73%|
|Morningstar Multisector Balanced Index||-0.31%||-1.63%||-0.67%||-1.69%||2.75%|
|Excess to Benchmark||0.13%||-1.11%||-1.15%||-2.36%||-1.02%|
|RBA Cash Rate 2%||0.32%||1.00%||2.00%||4.12%||4.16%|
|Excess to Objective||-0.49%||-3.73%||-3.82%||-8.16%||-2.43%|
Peformance Summary to 29 February 2016
The InvestSMART Diversified Balanced portfolio returned -0.2% over the month of February, outperforming the benchmark but underperforming the RBA Cash Rate 2% objective. Since inception the InvestSMART Diversified Balanced portfolio is behind of its benchmark by 1.02% and its cash-plus objective by 2.43%.
The investment objective is to achieve a return of 2% above the RBA Cash rate per annum over five year rolling periods by investing in a diverse mix of asset classes covering Australian equities, international equities, property, infrastructure, alternatives, fixed interest and cash.
Contribution to Return 1 Month to 29 February 2016
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