In 2022, most major asset classes, and thus most multi-asset class investment portfolios, posted losses for the year. These types of years are scary for investors, especially those new to investing.
Patience is an important part of long-term investing because these ”down” years are in fact a normal part of investment cycles over time. The US benchmark S&P 500 has negative years about once every four to five years.
History suggests that markets perform reasonably well after down years. This of course does not guarantee that markets are going to perform well in 2023, but it does underpin why our investment philosophy includes staying the course and not panicking when markets are volatile, when possible.
What’s more unusual about 2022 was that both local/international shares and bonds had negative returns. It’s rare that both growth and defensive asset classes are down over a year, and speaks to the extremely heightened level of volatility and unpredictability of the past year.
Six Park’s Essential portfolios were down from 1.6% to 2.6% in December, almost reversing the gains from November.
The Australian and international share markets were down roughly 3% for the month. By comparison, the US S&P 500 was down 5.9% in December, and down 19.4% for calendar year 2022.
Six Park Essential Portfolio Performance – December 2022
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | -1.6% | -1.9% | -2.3% | -2.5% | -2.6% |
| 3 months | 2.8% | 3.5% | 4.6% | 5.0% | 5.7% |
| 1 year | -7.0% | -7.7% | -9.0% | -10.4% | -10.2% |
| 3 years | -0.2% | 0.6% | 1.5% | 1.8% | 2.6% |
| 5 years | 1.7% | 3.0% | 4.2% | 4.9% | 5.6% |
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 – December 2022
All but our Cash Yield (AAA) asset classes used in Six Park’s portfolios were down in December. 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 – December 2022
In December our Sustainable portfolios performed in line with or slightly below the Essential portfolios.
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.
Over the one-year horizon, the growth-orientated Sustainable portfolios have underperformed the equivalent Essential portfolios due to the fact that the Sustainable portfolios have a relatively higher exposure to the technology sector, which had a poor 2022. Over time, history suggests that the technology sector is more volatile but offers arguably more attractive longer-term returns, so our hope is that this “drag” on 2022 rebounds when the technology sector recovers.
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | -1.6% | -2.0% | -2.6% | -2.9% | -3.0% |
| 3 months | 2.6% | 3.2% | 4.1% | 4.1% | 4.7% |
| 1 year | -8.1% | -9.6% | -12.1% | -14.0% | -14.5% |
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 past calendar year has been a testing one for investors. It’s easy to look back and wish one had been on the sideline, with funds sitting in cash during this period.
The problem with this thought is that the down years are phenomenally hard to predict or time. So by sitting on cash that could be invested, there is a risk of missing a window of time when markets go up 10%+ in a year (also very hard to predict).
What history and data show is that if you have the time, patience and ability to ride though the rough patches, remaining invested typically yields the optimal long-term investing outcome.
This is one of the pillars of our investment philosophy and we thank you for the opportunity to help you manage your way through these challenging times on the investing front.