InvestSMART High Growth Portfolio - September 2018
• The InvestSMART High Growth Portfolio produced a return of 4.13% (after fees) during the September Quarter.
• No changes were made to the portfolio during the September Quarter
• Estimated yield on the portfolio is currently 3.48%
• Since inception the High Growth portfolio has returned 9.26% p.a. (after fees)
It was a strong quarter for growth assets, in particular US equities. The S&P 500 had its best quarter since December 2013 while the NASDAQ and Dow Jones reached new record all-time highs over the quarter. The Vanguard MSCI Index International Shares ETF (VGS) attributed 3.57% to the High Growth portfolio off the back of the US’ performance – VGS has a 63% exposure to US markets.
US growth is continuing to power ahead, forward-looking momentum indicators continuing to expand, some at record levels, while US corporate earnings are forecasted to grow at ~20% year-on-year in the upcoming earnings season.
The iShares Core S&P/ASX 200 ETF (IOZ) attributed only 0.69% over the quarter. This underperformance compared to the US was due to several factors namely geo-political tensions between the US and China and the Banking Royal Commission. It was noted that while Australia’s full-year reporting season delivered positive returns for August, overall earnings growth is still moderate.
We expect the Australian market will underperform global peers again this coming quarter as bank funding increases and commodity prices moderate. The falling AUD and rising oil prices will provide some upside in local companies with global earnings or energy exposures.
Growth assets are likely to provide strong returns, and international exposures are likely to be the main growth driver of the High Growth portfolio as the AUD continues to fall.