Global Shares Quarterly Performance Update: Q4 2015

Transcription

1 Global Shares Quarterly Performance Update: Q Bianca Rose Portfolio Manager Market Commentary The December quarter proved to be an eventful period for financial markets as the Federal Reserve finally lifted U.S. interest rates by 0.25, as expected, at their December meeting. This marks the first rise since 2006 and comes on the back of strong employment numbers, although the Fed is at pains to say that rates remain accommodative. By contrast, the European Central Bank under-delivered, failing to meet market expectations for greater stimulus measures, despite ongoing rhetoric to do whatever it takes. Top Holdings Ibbotson Core International Eqty H (SA) ishares MSCI Japan (AU) ishares MSCI Emerging Markets (AU) Ibbotson Core International Eqty UH(SA) ishares MSCI BRIC (AU) ishares MSCI South Korea Capped (AU) ishares MSCI Taiwan (AU) Cash Account Investment Growth of $10,000 Time Period: 1/07/2012 to 31/12/ , , , , , , ,000.0 Weighting China remained in focus given its deteriorating economic data, a volatile share market and the ongoing devaluation of the Yuan which was recently accepted into the IMF s basket of currencies. OPEC held a nonsensical meeting in December, which resulted in the effective removal of the production ceiling. This means that member nations are free to produce and sell as much oil as they want, into an already oversupplied market. The oversupply of the oil market may be further exacerbated by the looming return of Iranian production. How the Portfolio Performed The Global Shares portfolio delivered a return of 1.51, for the quarter. This is a solid result in what was a challenging period for financial markets. Pleasingly, the portfolio delivered a solid return for the 12 months to 31 December 2015, being up Global equities, for the most part, enjoyed a positive quarter. Developed world equities were particularly strong, especially Japan, which is a key overweight position in the portfolio. Emerging Market equities recorded a slightly negative return, in local currency terms, notwithstanding China having a positive quarter. Returns from global equities were, however, impacted by the effects of currency, with the Australian dollar appreciating significantly against all major peers, over the period. That said, in recognition of the currency getting closer to our fair value, we took the opportunity to increase the level of currency hedging in the portfolio, via the inclusion of the Ibbotson International Shares Core (Hedged) Trust, during October. This decision served us well. Outlook We continue to expect heightened volatility in markets as geopolitical and macroeconomic issues play out. In our view, having a valuation-driven dynamic asset allocation approach in this environment will be crucial to achieving investment objectives, over the longer term. Indeed, and even after the weakness across many asset classes in the previous two quarters, a number of key International equity markets, most notably United States equities, remain expensive, on our analysis (albeit they represent better value than before). That said, the portfolio remains nearly fully invested in global equity opportunities that we consider attractively priced. 8, / / / / / / /2015 MSCI ACWI NR Index Returns Relative to Benchmark As of Date: 31/12/ Return month YTD 1 year 3 years Since Incp p.a MSCI ACWI NR Index

2 As of 31/12/2015 Asset Allocation Equity 98.2 Cash 1.8 Total Transactions in the Quarter IJP-AU ishares MSCI Japan ETF CDI Decreased INT0017AU International Shares Core (Unhedged) Added INT0016AU International Shares Core (Hedged) Added IEM-AU ishares MSCI Emerging Markets ETF Depository Interests Decreased IEU-AU ishares Europe ETF Depository Interests Removed IAA-AU ishares Asia 50 ETF CDI Removed IVV-AU ishares Core S&P 500 ETF Depository Interests Removed IBK-AU ishares MSCI BRIC ETF -CDI Added ITW-AU ishares Taiwan Added IKO-AU ishares South Korea Added MA_CASH Cash Account Decreased Equity Region Exposure Rescaled Weight Equity Sectors (GICS) North America 23.7 Latin America 3.5 United Kingdom 2.4 Africa/Middle East 2.8 Europe dev 5.6 Europe emrg 2.3 Japan 31.0 Asia dev 12.5 Asia emrg 16.1 Australasia 0.1 Total Energy 3.8 Materials 5.1 Industrials 12.9 Healthcare 11.4 Consumer Discretionary 15.3 Consumer Staples 11.2 Financials 15.9 Information Technology 17.4 Telecom Services 5.2 Utilities 1.9 Total Banks Capital Goods Automobiles and Components Technology Hardware and Equipment Materials Telecommunication Services Food, Beverage and Tobacco Pharmaceuticals and Biotechnology Software and Services Insurance Energy Real Estate Semiconductors and Semiconductor Equipment Transportation Diversified Financials Utilities Consumer Durables and Apparel Retailing Household and Personal Products Food and Staples Retailing Health Care Equipment and Services Media Commercial Services and Supplies Consumer Services

3 As of 31/12/2015 Performance Relative to Peer Group Peer Group (5-95): All Managed Investments - Australia - Equity World Large Blend Return Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile Month CYTD 1 year 2 Years Since Incp p.a MSCI ACWI NR Risk-Reward Time Period: 1/07/2012 to 31/12/ Return Std Dev Australia OE Equity World Large Blend Market Performance Time Period: Since Inception to 31/12/2015 Up Period Percent Down Period Percent Best Month Worst Month Best Quarter Worst Quarter Risk Time Period: Since Inception to 31/12/2015 Return pa Std Dev Max Drawdown Inv Bmk Inv Bmk Multiple Investment Sector Exposure Chart Basic Materials Consumer Cyclical Financial Services Real Estate Consumer Defensive Healthcare Utilities Communication Services Energy Industrials Technology MSCI ACWI NR USD Core Portfolio - Complete List of Holdings Code Style Box Total Ret 3 Mo (Qtr-End) Portfolio Weight Ibbotson Core International Eqty H (SA) ishares MSCI Japan (AU) ishares MSCI Emerging Markets (AU) Ibbotson Core International Eqty UH(SA) ishares MSCI BRIC (AU) ishares MSCI South Korea Capped (AU) ishares MSCI Taiwan (AU) Cash Account È IJP È IEM È È IBK È IKO Ç ITW È

4 As of 31/12/2015

5 Portfolio Overview An actively managed diversified portfolio of global equities made up of ASX listed ETFs with global equities exposure. Sector Specialist Managed Accounts Asset Allocation Return Objective Time Horizon Risk Profile Growth Assets Defensive Assets Australian Shares Core S&P/ASX 200 Accumulation Index 7 years High Australian Shares High Yield S&P/ASX 200 Accumulation Index 7 years High Australian Shares Small Cap S&P/ASX Small Ordinaries Accumulation Index 7 years Very high Property S&P/ASX 200 REITs Accumulation Index 5 years High Global Shares MSCI ACWI Accumulation Index (Net Dividends Reinvested) 7 years High Cash Bloomberg Australian Bond Bill Index 2 years Very low This document is issued by Ibbotson Associates Australia Limited (ABN , AFS Licence No ) ( Ibbotson ). Ibbotson is a member of the Morningstar group of companies ( Morningstar ) Morningstar, Inc. All rights reserved. In compiling this document, Ibbotson has relied on information and data supplied by Morningstar and other third party information providers. Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Ibbotson, Morningstar nor their third party information providers accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included. Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar or your adviser. Past performance is not a reliable indicator of future performance. Neither Ibbotson nor Morningstar guarantees the performance of any investment or the return of capital. The information provided is general advice only has been prepared without reference to an individual person s objectives, financial situation or particular needs. You should consider the advice in light of these matters and if applicable the relevant disclosure document before making any decision to invest. To obtain advice tailored to your situation, individuals should contact a professional financial adviser. For a copy of the relevant disclosure document, please contact our Distribution Team on Some material is copyright and published under licence from ASX Operations Pty Ltd ACN

6 Diversified Managed Accounts Asset Allocation Return Objective Time Horizon Risk Profile Growth Assets Defensive CPI Rolling 1 year Low Defensive Assets Conservative CPI+ 1.0 Rolling 3 years Low to Medium Balanced CPI+ 2.5 Rolling 5 years Medium Growth CPI+ 3.5 Rolling 7 years Medium to High High Growth CPI+ 4.5 Rolling 9 years High High Growth Plus CPI+ 5.0 Rolling 10 years High 95 5 Diversified Income CPI+ 2.0 Rolling 4 years Medium This document is issued by Ibbotson Associates Australia Limited (ABN , AFS Licence No ) ( Ibbotson ). Ibbotson is a member of the Morningstar group of companies ( Morningstar ) Morningstar, Inc. All rights reserved. In compiling this document, Ibbotson has relied on information and data supplied by Morningstar and other third party information providers. Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Ibbotson, Morningstar nor their third party information providers accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included. Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar or your adviser. Past performance is not a reliable indicator of future performance. Neither Ibbotson nor Morningstar guarantees the performance of any investment or the return of capital. The information provided is general advice only has been prepared without reference to an individual person s objectives, financial situation or particular needs. You should consider the advice in light of these matters and if applicable the relevant disclosure document before making any decision to invest. To obtain advice tailored to your situation, individuals should contact a professional financial adviser. For a copy of the relevant disclosure document, please contact our Distribution Team on Some material is copyright and published under licence from ASX Operations Pty Ltd ACN