FY 2014 - another strong year for Australian and international shares
As we move into the new financial year, let’s have a look at how local and international shares, as well as a selection of share fund managers, performed.
According to the latest Mercer Australian and Overseas Shares Survey, the 2013/14 financial year “produced another year of strong share market returns”, with the Australian market returning 17.3% and overseas share markets delivering 20.4% on an unhedged basis.
The report added that these FY 2014 results followed “the formidable returns of 2012/13”, when Australian and overseas shares were up 22% and 33% respectively. The report also noted that most of the fund managers that it surveyed managed to exceed this index performance, although the outperformance margin was higher in Australian than global shares.
Despite what Mercer calls excellent historical returns, it is advising clients to retain a moderate overweight allocation to growth assets, particularly favouring unhedged global shares. It says the continuing strong performance means that many equity markets are no longer especially cheap, “however with GDP growth across most of the major economies poised to become synchronised for the first time since 2010, the long-awaited recoveries in earnings growth should support returns going forward”.
The report found the median Australian shares fund manager delivered an excess return of 1.0% above the market index over the financial year, compared to the previous year’s outperformance of 2.8%. Over a five year period to end June 2014, the median manager outperformed by 1.0% pa. An upper quartile manager would have outperformed by at least 3.1% over the year, and posted long term (5 year) outperformance of 1.9% pa.
Here are FY2014’s best and worst-performing Australian shares fund managers as surveyed by Mercer:
The top five performing Australian shares fund managers for FY 2014
Position | Fund | Return (%) | Position last year |
1 | Regal Australian Long Short Equity | 38.8 | 120 |
2 | Katana Benchmark Unaware | 35.5 | 139 |
3 | Perennial Growth High Conviction | 32.1 | 135 |
4 | Macquarie High Conviction | 27.9 | 134 |
5 | Ausbil Active Extension | 26.7 | 51 |
Source: Mercer
The bottom five-performing Australian shares fund managers for FY 2014
Position | Fund | Return (%) | Position last year |
|
136 | SGH 20 | 10.9 | 138 |
|
135 | Russell Aust Shares Enhanced Income | 13.4 | 132 |
|
134 | CFS Wholesale Equity Income | 13.8 | 120 |
|
132 | CFS WS Aust Share Long Short | 13.9 | 82 |
|
132 | Bennelong Core Equities | 13.9 | 9 |
|
Source: Mercer
Frequently Asked Questions about this Article…
In the 2013/14 financial year, Australian shares delivered a strong return of 17.3%, continuing the positive trend from the previous year.
International shares performed well in the 2013/14 financial year, delivering a return of 20.4% on an unhedged basis.
The Regal Australian Long Short Equity fund was the top-performing Australian shares fund manager in FY 2014, with a return of 38.8%.
Mercer advises maintaining a moderate overweight allocation to growth assets, particularly favoring unhedged global shares, due to the strong performance and potential for synchronized GDP growth across major economies.
The median Australian shares fund manager delivered an excess return of 1.0% above the market index in FY 2014.
Over a five-year period ending June 2014, the median Australian shares fund manager outperformed the market index by 1.0% per annum.
The SGH 20 fund was the worst-performing Australian shares fund manager in FY 2014, with a return of 10.9%.
Mercer recommends unhedged global shares because of the potential for synchronized GDP growth across major economies, which could support earnings growth and returns.
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