Portfolio Quarterly Update - March 2020
The quarterly updates for the InvestSMART Conservative, Balanced, Growth, High Growth, Interest Income, Hybrid Income, International Equities and Diversified Property Portfolios.
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Here are the highlights from each of the portfolios. Further information and commentary can be found in the full reports linked.
Contents
InvestSMART Conservative Portfolio
- The InvestSMART Conservative Portfolio lost 6.48% in the March quarter (after fees).
- No changes were made to the portfolio during the quarter.
- Estimated yield on the portfolio is currently 2.89%.
- All defensive assets gained over the first period, all growth assets declined.
Click to read the full report here.
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InvestSMART Growth Portfolio
- The InvestSMART Growth Portfolio lost 12.54% in the March quarter (after fees).
- No changes were made to the portfolio during the quarter.
- Estimated yield on the portfolio is currently 3.98%.
- All growth assets in the portfolio fell in the first quarter of 2020, all defensive assets gained over the same period.
Click to read the full report here.
InvestSMART High Growth Portfolio
- The InvestSMART High Growth Portfolio lost 13.39% in the March quarter (after fees).
- No changes were made to the portfolio during the quarter.
- Estimated yield on the portfolio is currently 4.58%.
- All growth assets in the portfolio fell in the first quarter of 2020, all defensive assets gained over the same period.
Click to read the full report here.
InvestSMART Balanced Portfolio
- The InvestSMART Balanced Portfolio lost 9.59% in the March quarter (after fees).
- No changes were made to the portfolio during the quarter.
- Estimated yield on the portfolio is currently 3.50%.
- All growth assets in the portfolio fell in the first quarter of 2020, all defensive assets gained over the same period.
Click to read the full report here.
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InvestSMART Interest Income Portfolio
- The InvestSMART Interest Income Portfolio gained 1.34% in the March quarter (after fees).
- Several changes were made to the portfolio during the quarter to better align to its benchmark (see performance section).
- Estimated yield on the portfolio is currently 2.01%.
- All corporate bond holdings fell in the first quarter of 2020 while all sovereign bond holdings gained.
Click to read the full report here.
InvestSMART International Equities Portfolio
- The InvestSMART International Equities Portfolio lost 9.71% in the March quarter (after fees).
- No changes were made to the portfolio during the quarter.
- Estimated yield on the portfolio is currently 2.54%.
- All facets of the portfolio fell in the first quarter of 2020.
Click to read the full report here.
InvestSMART Diversified Property & Infrastructure Portfolio
- The InvestSMART Diversified Property & Infrastructure Portfolio declined 22.91% in the March quarter (after fees).
- No changes were made to the portfolio over the quarter.
- Estimated yield on the portfolio is currently 5.15%.
- All facets of the portfolio declined in the quarter as COVID-19 restrictions shattered the normal operations of the property and infrastructure sector.
Click to read the full report here.
InvestSMART Hybrid Income Portfolio
- The InvestSMART Hybrid Income Portfolio total portfolio return was -5.31% for the month including franking credits. The estimated running yield is over 5.0% , and estimated yield to call/maturity is 6.75% including franking credits.
- The total portfolio return was -6.57% and -3.70% for the quarter and 12-month period. Since inception the total portfolio return is 1.53% including franking credits, which is -2.85% under its return objective of the RBA Cash rate plus 3%.
- The trading margin of ASX-listed hybrids increased substantially during March as gross yields increased on most securities as prices traded lower. This resulted from liquidity issues in all credit markets including hybrids, as evidenced by the major fixed interest funds increasing their buy sell spreads.
- The selling came from two places: investors switching from hybrids to take advantage of lower equity prices, and fund investors seeking liquidity to fund redemptions. Hybrids were one of the few credit issues that had liquid markets
- The RBA cut the official Cash rate on 2 March to 0.50% and again on 18 March to 0.25%.
- March had all the securities in the portfolio trading ex-distribution, with payments expected in April.
- Macquarie and NAB cancelled their respective issues before allotment, citing the yield expansion in the hybrid market as their reason.
- Challenger were unable to issue new securities to raise capital to redeem CGFPB at the first call date in May 2020. These securities will remain on issue until May 2022 but may be redeemed or resold prior to that date at APRA’s discretion. We expect Challenger to refinance this issue prior to May 2022, though this highlights that redemptions of any hybrid issue may be delayed in unusual market circumstances.
- At end of March the portfolio had a 4.75% allocation to cash.
