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 High Growth portfolio returned -0.6% 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 High Growth 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.
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 27 October 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. The portfolio is also underweight US equities and holds an exposure to emerging market equities. Therefore, the portfolio is expected to do well in an environment where Australian equities outperform other asset classes and US equities underperform other equity markets.
|PERFORMANCE TO 29 FEBRUARY 2016||1 MONTH||3 MONTH||6 MONTH||1 YEAR||SI* (P.A.)|
|InvestSMART High Growth Portfolio||-0.56%||-5.07%||-3.76%||-7.55%||3.89%|
|Morningstar Multisector Agressive Index||-1.19%||04.32%||-3.23%||-5.21%||6.09%|
|Excess to Benchmark||0.63%||-0.76%||-0.52%||-2.34%||-2.20%|
|RBA Cash Rate 4%||0.47%||1.49%||3.00%||6.17%||6.26%|
|Excess to Objective||-1.03%||-6.56%||-6.75%||-13.71%||-2.37%|
Peformance Summary to 29 February 2016
The InvestSMART Diversified High Growth portfolio returned -0.6% over the month of February, outperforming the benchmark but underperforming the RBA Cash Rate 4% objective. Since inception the InvestSMART Diversified High Growth portfolio is behind its benchmark by 2.20% and its cash-plus objective by 2.37%.
The investment objective is to achieve a return of 4% above the RBA Cash rate per annum over rolling ten year 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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