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.

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

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