Broadly speaking, markets rose in April 2023 on the heels of (among other things) reasonably strong economic data that suggested a recessionary environment may not be as likely or severe as some have feared. That said, the future remains very unclear as it can take time for the impact of higher interest rates to be felt in overall economic conditions.
The anticipated softening of central bank interest rate increases (arguably a positive for markets) is tempered by concerns about a possible slowdown of economic growth. Additionally, the impact of stress in the banking sector (primarily in the US) remains unclear.
Worth noting, too, is that much of the recent US share market gains have been driven by a relatively small number of large technology companies. This highlights the benefits of ‘owning the index’ versus trying to time if and when specific sectors may outperform the broader market.
Data on inflation, labour markets/employment and economic growth will continue to drive markets, and we expect volatility to remain high.
For the month of April 2023, Six Park’s diversified Essential portfolios were up from 1.1% to 2.3%. The US S&P 500 was up 3.5% in April 2023, and the ASX 200 index was up almost 2%.
Six Park Essential Portfolio Performance – April 2023
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | 1.1% | 1.4% | 1.8% | 2.0% | 2.3% |
| 3 months | 1.5% | 1.8% | 2.4% | 2.5% | 2.8% |
| 1 year | -0.2% | 0.0% | 0.3% | -0.1% | 0.2% |
| 3 years | 2.8% | 4.4% | 6.5% | 7.5% | 9.2% |
| 5 years | 2.4% | 3.8% | 5.2% | 5.9% | 6.7% |
Notes:
(1) Past performance is not indicative of future performance.
(2) All figures are illustrative in nature based on notional $50,000 portfolios, which are assumed to have been fully invested at the start of the relevant period. Your actual investment performance may vary depending on factors such as the timing of your investment with us.
(3) All figures are pre-tax but net of Six Park’s and applicable ETF fees. The results are based on closing prices for each ETF, not NAV. They assume dividend reinvestment (at month end) but do not include dividend imputation, cash holdings or annual rebalances.
(4) 3 and 5-year returns are annualised
Asset class performance – April 2023
Optimism that global economic conditions may not deteriorate as much as feared drove risk assets (domestic and international shares) to strong gains in April. We would note, however, that this optimism has ebbed and flowed materially over the past six to twelve months, so we anticipate high ongoing volatility as data is released to inform investor sentiment. Read about Six Park’s selected ETFs.
Notes:
(1) Results reflect ETF closing prices, not NAV, so may differ from those published by the ETF issuers.
(2) Results reflect asset class performance for ETFs used in Essential portfolios. Performance for sustainable ETFs is broadly in line with the results shown.
Six Park Sustainable Portfolio Performance – April 2023
In April, our Sustainable portfolios performed slightly ahead of our Essential portfolios. This outperformance is primarily driven by the strong performance of the technology sector over the past three months, as the Sustainable portfolios have a slightly higher allocation to technology companies. Note that while our Sustainable portfolios are designed to perform in line with our Essential portfolios, over time, there may be periods of relative outperformance and underperformance.
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | 1.2% | 1.6% | 2.2% | 2.5% | 2.9% |
| 3 months | 1.9% | 2.4% | 3.6% | 4.1% | 4.7% |
| 1 year | -0.3% | -0.3% | 0.2% | -0.2% | 0.1% |
Notes:
(1) Past performance is not indicative of future performance.
(2) All figures are illustrative in nature based on notional $50,000 portfolios, which are assumed to have been fully invested at the start of the relevant period. Your actual investment performance may vary depending on factors such as the timing of your investment with us.
(3) All figures are pre-tax but net of Six Park’s and applicable ETF fees. The results are based on closing prices for each ETF, not NAV. They assume dividend reinvestment (at month end) but do not include dividend imputation, cash holdings or annual rebalances.
Final Comments
The coming month will see the release of data related to global economic, inflation and employment conditions from the first quarter of calendar 2023. This data will also contribute to investor sentiment regarding the direction of interest rates (lower/flat/higher).
A reasonable case can be made that the adjustment to a higher interest rate environment may be relatively smooth and that the market decline in the first half of calendar 2022 accounted for the higher rate environment. That said, there are concerns on several fronts, as noted above.
We continue to preach diversification and patience as the best way for most investors to navigate through such unpredictable times.
Now more than ever, Warren Buffet’s quote rings true: “The stock market is a device for transferring money from the impatient to the patient.”