by David Blumenthal Global equity markets rebounded in September, buoyed by stronger-than-expected US economic data, further reductions in official interest rates (across the US and Europe) and news that US and China officials had agreed to resume trade talks.
The Six Park portfolios advanced +0.4% to +1.7% over the month, taking our rolling 12-month returns to +6.8% to +11.4%. Over the past three years, the portfolios have returned between +4.3% and +11.2% per annum after fees. Pleasingly, all portfolios continue to outperform the median annual returns of equivalent risk profile, multi-asset managed funds tracked by Morningstar. These results underscore the benefits of our low-cost, globally diversified approach.
Asset class performance
Almost all asset classes posted positive returns in September, with global property and Australian shares leading the charge with gains of +2.4% and +2.2% respectively.
Global property was the best performing asset class for a third successive month, adding +2.4% in September and taking its rolling annual return to +20.4%. Gains were widespread, with REITs across all sectors and geographies benefiting from the ongoing investor demand for “bond proxy” assets like real estate and infrastructure (which added +1.4% for the month) which are perceived to be both high yielding and relatively insulated from global economic risks.
Australian shares advanced +2.2% in September, reversing most of their August decline and marking the local bourse’s eighth gain in the past nine months. Underlying sector performances were mixed, with 13 of the 22 sub-industry sectors posting positive returns. Household products and auto components were the best performers, rising +18% and +5.1% respectively.
International shares were up 1.6% for the month. US markets lifted (the S&P500 was up +1.7% and the Dow Jones +1.9%) amid easing trade tensions with China, a cut in interest rates by the Federal Reserve and better than expected economic data (manufacturing PMI lifted to 50.3 in August when it had been anticipated to fall to 49.9). European and Asian stocks also rallied, with the German Dax rising +4.1% on news of a fresh wave of stimulus measures by the European Central Bank and the Japanese Nikkei gaining +5.1% on rising investor confidence.
Emerging markets gained +1.5% in September. Latin American markets were strong, bolstered by moves by the central banks of Brazil, Mexico and Chile to reduce interest rates to record lows. Russian stocks also advanced, boosted by the spike in oil prices following a drone attack at the world’s largest crude production site in Saudi Arabia.
Returns on our cash yield ETF were positive but muted (+0.1% for the month), reflecting the ongoing low interest rate environment across Australian banks.
An uptick in local bond yields (driven in part by stronger-than-expected economic data) produced a slight fall in fixed income returns for the month. This was the sector’s first negative return in more than a year. On a rolling 12-month basis, fixed income has returned +11.2%, outperforming both global and emerging equity markets over the same timeframe.
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