Performance update for the period to 31 March 2013
How did Australian assets do so poorly when the rest of the world collectively did well? And for that matter, how did global markets do so well despite so many negative headlines? Highlights during the month include:
- Italy elected a hung parliament – perhaps Australia is more sensitive than most countries to that! The ASX plunged over 100 points in response to that.
- Cyprus went through a drawn out process of defaulting on much of its bank deposit base. Again, the rest of Europe handled the news remarkably well.
- Another month of gains on the currency (mostly against cross rates) would have affected sentiment, in an environment where the Japanese have reminded us that a weak currency is nirvana. The yen fell from 75 to the $US to almost touch 100 after month end, coinciding with a 50% rally in the Nikkei and apparent stabilisation of the GDP.
- Commodity prices were marginally higher after a solid February (according to the RBA Index), but that did not help commodity stocks which were again punished.
- The US returned nearly 4%, making new record highs – the “sequester” saw automatic spending cuts triggered, but these passed relatively smoothly even if they were considered arbitrary and poorly targeted. The US market has recently rallied even on negative political news, as long as Congress does not live up to worst case expectations.
For the period to 31 March 2013, returns were as follows:
|
Investment Option Performance for WALGSP Superannuation Account
(1) (2) (3)
|
1 month return
|
1 year return
|
|
Diversified Conservative
|
-0.04%
|
7.17%
|
|
Diversified Moderate
|
-0.35%
|
8.11%
|
|
Diversified High Growth
|
-0.58%
|
6.70%
|
|
Australian Listed and Private Equities
|
-1.11%
|
11.33%
|
|
Global Listed and Private Equities
|
0.59%
|
8.15%
|
|
Australian Listed Equities
|
-2.08%
|
17.56%
|
|
Global Listed Equities
|
-0.27%
|
8.76%
|
|
Sustainable Future
|
-2.05%
|
15.72%
|
|
Property & Infrastructure
|
0.28%
|
3.62%
|
|
Bonds & Yield
|
0.41%
|
7.28%
|
|
Cash
|
0.31%
|
4.16%
|
- Returns shown for the 12 months to 31 March 2013 and are net of tax and investment fees.
- WALGSP Retirement Solutions – Income Stream Performance to 31 March 2013 can be accessed at http://www.walgsp.com.au/Investments/Latest-Performance.aspx.
- Performance rates are the Funds “Declared Rate”. Members who have payments from the Fund will have a mixture of “Declared” and Interim” rates applied to their payment.
The Trustee Board has taken measures to protect investors from risk to the maximum extent possible, whilst remaining mindful that superannuation is a long-term vehicle for growing retirement savings and the need to remain “true to label” in providing an allocation to growth assets in options as advertised. These measures have included allocations to assets with a lower exposure to global markets and economies and with lower volatility. Assets which are not as exposed to the day-to-day volatility of stock markets include market neutral investments and unlisted investments.
Positive monthly and annual returns continue for the three diversified options
After months of positive returns, March saw some negative returns across all three diversified options with the worst return coming from the High Growth option.
Over the one year period the order of returns still remains high with the highest return coming from the Diversified Moderate option, followed by the Diversified Conservative and Diversified High Growth options.
Australian Listed and Private Equities
The option has an 80% allocation to Australian listed equities and 20% to Australian private equities. The Australian Listed Equities sector was one of the worst performers; however the sector contributed strongly over the 12 month period. The Australian Private Equity sector was slightly negative for the month, and is negative over the last one year.
Global Listed and Private Equities
The option has an 80% allocation to global listed equities and 20% to global private equities. The Global Listed Equities sector had a negative month in March after a strong month in February. The Global Private Equity sector was slightly negative for the month, with both sectors continuing to positively contribute to the option’s overall return over one year.
Australian Listed Equities Option and Global Listed Equities Option
These options track the index return of Australian shares (S&P/ASX 300 Accumulation Index adjusted for tax) and global shares (MSCI World ex-Australia Index in $A unhedged).
Sustainable Future
The Sustainable Futures option invests in Australian shares which meet sustainability and socially responsible criteria. During the month one of the underlying managers outperformed the Australian Share Index, while the other underperformed, with the same thing occurring over the one year period as well.
Property & Infrastructure
WALGSP’s investments in the Liquid Property and Infrastructure, Direct Property and Direct Infrastructure performed positively over the month. Over the last year, Direct Infrastructure as well as Liquid Property and Infrastructure have been positive however Direct Property is slightly negative.
Bonds & Yield
The Bonds & Yield option is split between the Bonds (75%) and Debt (25%) sectors, both of which performed positively over the month, and have also both contributed strongly to the option’s return for the year to 31 March.
Cash
The Cash option returned 0.31% for the month and 4.16% for the 12 month period. Returns of the option have steadily reduced as The Reserve Bank of Australia has reduced the target cash rate to the GFC lows of 3%. As a consequence, the returns offered by banks on term deposits are also lower, although the option is still in the top quartile of its peer group over the last year.