Six Park Director of Strategy and Analytics Dave Blumenthal by David Blumenthal

US share markets rallied strongly in July, boosted by better-than-expected earnings particularly among large technology stocks. Local and emerging shares also closed higher, despite concerns over rising COVID-19 infections. 

The Six Park portfolios gained +0.5% to 1.3% for the month. On a rolling 12-month basis, our returns stand at -2.7% to -5.5%, slightly down from last month due to the drop-off of July 2019 from the calculation window (which was a strong month for equities). All our portfolios continue to outperform the ASX200, down -9.5% over the same period. 

Period Conservative Conservative Balanced Balanced Balanced Growth Aggressive Growth
1 month 0.5% 0.7% 1.0% 1.2% 1.3%
3 months 1.3% 1.9% 2.7% 3.1% 3.6%
1 year -2.7% -3.2% -3.9% -4.7% -5.5%
3 years 2.6% 4.0% 5.3% 6.3% 6.2%

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) Returns are annualised.

Asset class performance

Hedged international shares were the best performing asset class in July, advancing 4%.  All other sectors registered gains, with the exception of global property which fell -1.4% for the month, primarily on the back of currency movements. Read more about Six Park’s selected ETFs.

Six Park performance July 2020

Hedged international shares (VGAD) gained +4% in July as US investors shrugged off the country’s worst GDP decline on record (-32.9% on an annualised basis) and focused instead on robust earnings releases from technology and consumer discretionary stocks. Among the key movers were Amazon (which reported a doubling of profits) and Apple and Facebook (which also recorded better than expected sales figures). Overall, the S&P500 index rose +5.5% for the month while the tech-heavy Nasdaq surged +6.8%. Markets were weaker across Europe and Japan, but not by a large enough margin to offset the gains made by US equities.  Unhedged international shares (VGS) were up only +0.9% for the month. This was a function of the AUD’s 5% rise against the USD over the month, its highest level in 1.5 years.

Emerging markets (VGE) rallied strongly for the second month running, advancing +3.6% in July.  Chinese equities registered solid gains after the country reported a stronger-than-expected recovery in Q2 GDP (up +3.2% year on year) while Taiwanese equities also benefited from a resurgence in technology stocks. Despite a rise in local COVID-19 infections, both Brazilian and Indian equities (which represent a combined 15% of our chosen ETF) also outperformed, boosted by progress on government reforms (in the case of Brazil) and signs of a recovery in manufacturing (in India).

Infrastructure (IFRA) clawed back some of its prior month losses, rising +1.6% in July. Electricity, telecommunications and water providers were the strongest performers, each advancing over 4% for the month. 

Australian shares (STW) rose +1% in July, although underlying results were mixed with only 11 of the market’s 22 sub-industry sectors recording gains for the month.  The strongest performing sectors were consumer durables (+13.9%), which gained on strong May retail sales figures, and materials (+5.8%) while household and personal products fell the most (down -9.6%), partly on concerns of the economic impact of stage 4 restrictions in Victoria.

Returns across fixed income (IAF) and cash yield (AAA) were positive but muted (up +0.5% and +0.1% respectively, reflecting the ongoing low interest rate environment.

Global property (DJRE) fell -1.6% in July. Although underlying real estate stocks posted solid gains (US REITS were up +3% while European and Asian REITS added +2.2%), these advances were offset by the strong appreciation in the AUD (which reduced the value of offshore holdings in local currency terms).

Get started with Six Park

Published August 18, 2020

You may also be interested in

Investment philosophy Thoughtful asset allocation