Diversified Portfolios - InvestSMART Balanced - 30 November 2016
InvestSMART Balanced Portfolio November Report
Global and Australian equity markets were up over the month of November, returning 4.5% and 2.8% respectively. The US surprisingly performed particularly strongly on the back of Trump's win in the US presidential election on the basis that tax cuts and other stimulatory measures may prove to be inflationary.
The InvestSMART Balanced Portfolio returned 1.15% over the month of November. Despite being underweight US equities which was one of the best returning segments, the portfolio still managed to post a return broadly in line with the composite market benchmark. The main contributors to performance was the overweight to Australian equities and the underweight to fixed interest which were impacted by rising bond yields.
Australian REITs posted a positive return over the month of 0.75% which was a slight rebound from the -7.7% they lost in the previous month. The portfolio's global property exposure returned 1.2% for the month.
Within fixed interest the portfolio's exposure to Australian government bonds returned -1.5%. The exposure to Macquarie Income Opportunities Fund outperformed the broader bond market, returning -0.5%%, which was a key contributor to the portfolio's overall return. Cash returned 0.16% for the month.
Since inception the portfolio is slightly behind its cash 2% objective by around 0.1�ter investment fees.
The investment objective is to achieve a return of 2% above the RBA Cash rate perannum over five year rolling periods by investing in a diverse mix of asset classescovering Australian equities, international equities, property, infrastructure,alternatives, fixed interest and cash.
The portfolio remains overweight Australian equities on the basis that valuations 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 also underweight REITs. 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 do well.
Current market pricing implies that the portfolio's RBA Cash Rate 2% objective is achievable over the long-term but only through a reasonable allocation to relatively volatile equity investments. This means that investors should be comfortable with above average volatility, which could result in a short-term fall in the portfolio's value of around 20%.
Growth of $10,000
Asset Allocation as at 30 NOVEMBER 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.
|PERFORMANCE TO 30 NOVEMBER 2016||1 MONTH||3 MONTH||6 MONTH||1 YEAR||SI* (P.A.)|
|InvestSMART Balanced Portfolio||1.15%||-0.71%||0.72%||3.50%||4.07%|
|Morningstar Multisector Balanced Index||1.10%||-0.85%||0.78%||4.42%||4.82%|
|Excess to Benchmark||0.05%||0.15%||-0.06%||-0.92%||-0.75%|
|RBA Cash Rate 2%||0.29%||0.87%||1.80%||3.84%||4.00%|
|Excess to Objective||0.86%||-1.58%||-1.08%||-0.33%||0.07%|
Peformance Summary to 30 November 2016
Contribution to Return 1 Month to 30 November 2016
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