by David Blumenthal Equity markets capped off the 2021 year with another month of strong returns. While worries over the rapid spread of the Omicron variant rattled confidence initially, these concerns largely subsided by year-end as investors grew increasingly confident that global economic growth would not be derailed by rising caseloads.
The Six Park portfolios gained between 1.1% to 1.9% for the month, taking our annual returns to +7.7% to 20.4%. Our longer-term returns now stand at +5.1% to 14.1% over 3 years and +4.1% to +10.1% per annum over the past 5 years. These 5-year results represent gross overall gains of +22.3% to +62.8% (after fees) over the period, exceeding the returns of more than 90% of all managed funds in the Morningstar database and further highlighting the benefits of our focus on low-cost, diversified investing.
Six Park Essential Portfolio Performance – December 2021
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | 1.1% | 1.3% | 1.5% | 1.7% | 1.9% |
| 3 months | 1.6% | 2.2% | 2.8% | 3.4% | 3.9% |
| 1 year | 7.7% | 10.8% | 14.7% | 17.6% | 20.4% |
| 3 years | 5.1% | 7.7% | 10.7% | 12.8% | 14.1% |
| 5 years | 4.1% | 5.9% | 8.0% | 9.4% | 10.2% |
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) 1 and 3-year returns are annualised
Asset class performance
Almost all asset classes recorded gains in December. Infrastructure was the standout performer, adding +4.1%, while Australian shares and global property also advanced +2.8%.
The 2021 calendar proved to be a strong year for growth assets generally. Global property was the best performing sector overall, surging +38.3% and reversing the situation in 2020 when the sector was the weakest overall performer (down -19%). This stark contrast in performance highlights the unpredictability of markets and is a key reason why we seek to diversify our portfolios across multiple asset classes and geographies.
Read more 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.
Infrastructure soared +4.1% in December, taking the sector’s return to +16.8% for the year. Gains were generally widespread, with infrastructure real estate trusts (8% of our chosen ETF) adding +10% for the month and electricity and transportation stocks (55% of our holding) adding more than 5%.
Global property advanced +2.8% in December, cementing its position as the strongest performing asset class in 2021 (+38%). US REIT stocks were the main contributors to the monthly gain, with industrial stocks proving especially strong as investors bet that continued growth in e-commerce and consumer confidence would drive further warehousing demand.
Australian shares outperformed their global counterparts over the month, closing +2.8% higher. The local market was buoyed by a stronger than expected rebound in employment growth and growing expectations that the surge in the new Omicron cases was unlikely to derail the ongoing reopening of the major eastern state economies. Overall, the local sharemarket ended the year up almost 17%, a strong result albeit lagging the returns of overseas equities for a fifth consecutive year.
Hedged international shares rose +2.2% during the final month of the year. Although global markets were initially rattled by the rising rates of Omicron variant infections, by year-end these worries had largely subsided with investors drawing support from signs of ongoing economic stability and corporate earnings growth. Returns on unhedged international shares were lower for the month (up just +0.7%) due to a 1.6% appreciation in the AUD. Over the full year, unhedged global shares were up +29.6%, outperforming their hedged counterparts (+24.1%) in their best performance in 9 years.
Emerging markets registered a slight fall in December (-0.1%). Chinese and Russian equities were the major drags on monthly performance, with the former falling sharply on concerns over slowing economic growth and the rapid spread of the new COVID-19 variant (increasing fears of new lockdowns and restrictions) and the latter impacted by rising geopolitical tensions over Ukraine. Over the full year, emerging markets lagged significantly behind developed market equities (gaining just +6.4%) partly due to their higher sensitivity to rising interest rates and elevated COVID-19 concerns.
Both fixed income and cash yield assets eked out marginal gains in December, rising just +0.3% and +0.04% respectively. Returns for both asset classes continue to be impacted by the ongoing low-interest rate environment and expectations of an inevitable tightening in monetary policy by central banks over the course of the next 12-18 months.