After starting the year with two negative months local equity markets rebounded in the month of March up 4.8% (as measured by the S&P/ASX 300 TR Index) while global equity markets continued their downward trajectory in March, down 1.0% (as measured by the MSCI World ex Australia NR AUD Index). Emerging market equities (as measured by the MSCI Emerging Markets NR Index AUD) posted a positive return for the month of 5.1% outperforming their developed market counterparts.
Property continued to post solid returns in March. Australian property posted a return of 2.50% (as measured by the S&P/ASX 300 A-REIT Accumulation Index) over the month, while global property posted a positive return of 7.6% (as measured by the FTSE EPRA/NAREIT Developed REITs AUD Hedged NR Index).
Within fixed interest, Australian bonds posted a return of -0.2% over the month of March (as measured by the Bloomberg AusBond Composite Bond Index) while global bonds returned 0.9% (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 1.6% over the month of March, outperforming the benchmark by 0.5%. Of the 1.6% return, 1.0% was attributable to the allocation to Australian equities with another 0.3% attributable to property. The international equity and fixed interest exposures detracted -0.2% and -0.1% from the portfolio respectively.
Within the InvestSMART Diversified Balanced portfolio the Australian equity exposure via the MSCI Australia 200 ETF returned 4.6% over the month which was the single biggest contributor to performance in the portfolio. Within international equities, the exposures to US equities via the iShares Core S&P 500 ETF and iShares Core S&P Mid-Cap ETF returned -0.7% and 0.8% for the month respectively. The emerging markets exposure performed better than developed market equities with the iShares MSCI Emerging Markets ETF returning 6.3% for the month. The Vanguard All World ex US Shares Index ETF and the iShares Europe ETF returned 1.6% and -0.1% respectively.
Within property, global property (via the SPDR Dow Jones Global Real Estate Fund ETF) returned 1.5% for the month while the Australian property exposure (via the Vanguard Australian Property Securities ETF) performed better returning 2.7% for the month.
Within fixed interest, the iShares Composite Bond ETF returned -0.1%, while the Macquarie Income Opportunities Fund returned 0.8%. The BetaShares Australian High Interest Cash ETF returned 0.2% over the month.
Growth of $10,000
Asset Allocation as at 31 MArch 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 emerging markets outperform US equities.
|PERFORMANCE TO 29 FEBRUARY 2016||1 MONTH||3 MONTH||6 MONTH||1 YEAR||SI* (P.A.)|
|InvestSMART Balanced Portfolio||1.61%||-1.26%||0.99%||-2.84%||2.95%|
|Morningstar Multisector Balanced Index||1.14%||-0.62%||1.56%||-0.94%||3.50%|
|Excess to Benchmark||0.46%||-0.64%||-0.58%||-1.90%||-0.55%|
|RBA Cash Rate 2%||0.34%||1.00%||2.02%||4.10%||4.15%|
|Excess to Objective||1.27%||-2.25%||-1.03%||-6.94%||-1.21%|
Peformance Summary to 31 March 2016
The InvestSMART Diversified Balanced portfolio returned 1.61% over the month of March, outperforming the benchmark by 0.46% and the RBA Cash Rate 2% objective by 1.27%. Since inception the InvestSMART Diversified Balanced portfolio is behind its benchmark by 0.55% and behind its cash-plus objective by 1.21%.
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 31 March 2016
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