by David Blumenthal The Six Park portfolios enjoyed a strong start to the 2020 year, posting gains of +2.4% to +4.2% for the month. While global equity markets seesawed between initial investor optimism (following agreement of a phase one trade deal between the US and China) and growing concerns around the impact of the coronavirus, our portfolios benefited from their diversified exposures across multiple asset classes, markets and currencies.
On a rolling 12-month basis, the Six Park portfolios are now up +8.9% to +23.0% while over the past three years, the portfolios have posted annualised gains of between +5.3% to +12.6% per annum. These figures would have placed Six Park in the top 3% of all equivalent risk profile multi-asset managed funds tracked by Morningstar, underscoring the benefits of our offering and approach.
Global property surged +6.3% in January. Most of this advance was currency-related, with the AUD falling -4.2% over the month against the USD (and hence boosting the value of overseas assets in local currency terms). US real estate stocks were the strongest underlying performers, boosted by a better-than-expected start to the local reporting season.
International equities returned +5.4% for the month, although without the benefit of the falling AUD, underlying gains were only +1.7%. US shares rallied to record highs in the first two weeks of the week (buoyed by easing US-China trade tensions and solid economic data releases) before giving back most of those gains by month-end on mounting fears surrounding the coronavirus. European and Japanese stocks ended the month slightly down, with escalating Middle East tensions (with assassination of an Iranian General leading to an Iranian missile response) and concerns over the coronavirus weighing on investor confidence.
Australian shares posted their best start to a new year since 2012, gaining +4.9%. While coronavirus concerns took some of the shine off the local bourse in the final weeks of January, all sectors ended the month in positive territory. Healthcare and technology stocks led the way, with gains in excess of +11% for the month.
Infrastructure rose +4.5% in January. Utilities were among the strongest performers, benefiting from their perception as safe haven assets. Port and transport operators also registered strong gains on the back of the signing of the US and China’s first phase trade agreement midway through the month.
Fixed income added +2.2% for the month. The sector benefited from rising investor caution and the RBA reaffirming its accommodating monetary policy stance.
Emerging markets ended January up +0.2%, with the tailwind from a falling AUD helping to mask underlying price declines. Chinese shares ended the month down, although losses were largely contained due to the market closures over the Chinese New Year (which spanned from 24th January to month-end). Broader concerns over the impact of the coronavirus on Chinese (and global) growth saw sharp declines in commodity prices, and this weighed heavily on sentiment towards agricultural economies including Brazil, Mexico and South Africa.
Our cash yield ETF posted another marginal gain of 0.1%. This subdued return reflects the prevailing low-interest rate environment. Despite these low returns, this sector continues to be an important asset class in our portfolio given its high level of capital security and low risk correlation with our other ETFs.