Diversified Portfolio -Balanced - 30 April 2016
After a rocky start to the year Australian equity markets rebounded strongly during the month of March and April, up 4.8% and 3.3% respectively, bringing the calendar year return to April to 0.6%. International equity markets are yet to recover their losses experienced since the start of the year but rebounded 2.4% during April but are still down -3.6% since December. Emerging market equities were up 1.4% in April and up 1.3% for the year to April, performing better than their developed market counterparts since the start of the year.
Australian REITs continued to be a solid performer over the month, returning 2.8% for April and are up 9.3% for the year so far (as measured by the S&P/ASX 300 A-REIT Accumulation Index). Global property was negative for the month, posting a return of -1.0% (as measured by the FTSE EPRA/NAREIT Developed REITs AUD Hedged NR Index).
Within fixed interest, Australian bonds posted a return of 0.3% over the month of April and 2.3% since the start of the year. (as measured by the Bloomberg AusBond Composite Bond Index) while global bonds returned 1.1% for the month and 4.0% for the calendar year to April (as measured by the Barclays Global Aggregate Bond Index AUD Hedged). Cash returned 0.2% over the month and 0.8% since the start of the year as measured by the Bloomberg AusBond Bank Bill Index.
The InvestSMART Diversified Balanced portfolio returned 1.6% over the month of April, ahead of its benchmark. The exposure to Australian equities was the main contributor to outperformance as were credit exposures in the fixed interest part of the portfolio. Exposure to the US and emerging markets detracted from performance relative to the benchmark.
Within the InvestSMART Diversified Balanced portfolio the Australian equity exposure via the MSCI Australia 200 ETF returned 4.0% over the month which was the single biggest contributor to performance in the portfolio. Within international equities, the exposure to US equities via the iShares Core S&P 500 ETF returned 0.9% which dragged on performance while the iShares Core S&P Midcap ETF returned 1.9%. The Vanguard All-World ex US Shares Index ETF and iShares Europe ETF returned 1.9%and 2.8% respectively. The MSCI Emerging Markets ETF was up for the month returning 0.7% but dragged on performance relative to the benchmark
Within property, the Australian property exposure (via the Vanguard Australian Property Securities ETF) returned 2.8% for the month, while global property (via the SPDR Dow Jones Global Real Estate Fund ETF) returned 0.2%.
Within fixed interest, the iShares Composite Bond ETF returned 0.1%, while the Macquarie Income Opportunities Fund returned 1.0%. The BetaShares Australian High Interest Cash ETF returned 0.2% over the month.
Growth of $10,000
Asset Allocation as at 30 April 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. Within international equities the portfolios have a bias towards emerging markets and an underweight to US equities, therefore the portfolio will benefit when US equities underperform broader equity markets and emerging markets.
|PERFORMANCE TO 30 APRIL 2016||1 MONTH||3 MONTH||6 MONTH||1 YEAR||SI* (P.A.)|
|InvestSMART Balanced Portfolio||1.55%||3.05%||-0.67%||0.15%||3.97%|
|Morningstar Multisector Growth Index||1.51%||2.35%||0.08%||1.40%||4.44%|
|Excess to Benchmark||0.04%||0.70%||-0.74%||-1.25%||-0.46%|
|RBA Cash Rate 3%||0.33%||0.99%||2.00%||4.08%||4.15%|
|Excess to Objective||1.22%||2.06%||-2.67%||-3.92%||-0.17%|
Peformance Summary to 30 April 2016
The InvestSMART Diversified Balanced portfolio returned -2.67% over the month of Janaury, underperforming the benchmark and the RBA Cash Rate 1% objective. Since inception the InvestSMART Diversified Balanced portfolio is behind of its benchmark by 1.20% and its cash-plus objective by2.12%.
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 30 April 2016
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