Diversified Portfolios - International Equities Portfolio Report - 31 March 2017

InvestSMART International Equities March Report

Australian and International equity markets were buoyant throughout the March quarter.

In the US, the S&P 500 had its best quarter since late 2015, increasing 5.5% on rising optimism from businesses and consumers. Technology was the best performing sector, gaining 12%, with Google, Facebook and Amazon all hitting record highs. The consumer discretionary, health care and utilities sectors also performed well, with energy the weakest sector, losing 7%.

The US market continued to benefit from expectations that Donald Trump will move forward with his pro-growth agenda of deregulation, corporate tax cuts and increased infrastructure spending. This was backed up by strong economic data and good corporate results. Prices are beginning to look stretched, however, with the forward price-earnings multiple of the S&P 500 now at 18, compared to its long-run average of 15.

With a brightening economic outlook in China, Europe and Japan, world markets (ex-US) also posted strong gains with the MSCI World ex-USA index rising 6.9% during the quarter. China’s economy grew at an annualised rate of 6.9% in the first quarter, which was supported by strong infrastructure spending and a fast-rising property market.

Europe’s economy moved forward with good economic data and strong job growth. Adding to the positive mood were the results from the recent election in the Netherlands. The poor performance of Geert Wilder’s far right party reduced fears of further euro-zone departures, at least for the time being.

For Australian investors, though, the effect of rising world equities was largely offset by a strong rise in the Australian dollar, which increased 6.2% against the US dollar during the quarter.

InvestSMART International Equities Portfolio 1.11% 0.51% 7.80% 13.36% 10.71%
MSCI World ex Australia NR AUD Index 1.82% 0.85% 8.60% 15.55% 13.06%
Excess to Benchmark 0.70% -0.34% -0.79% -2.19% -2.34%


Source: Praemium, RBA. Returns are after investment fees and admin fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 24 October 2014.


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