Global equity markets closed higher in November, with currency fluctuations providing a strong tailwind for unhedged assets. This helped overshadow the impact of the emergence of a new COVID-19 variant of concern, which weighed heavily on market sentiment towards month-end.
The Six Park portfolios gained between +1.1% and +2.2% in November, with rolling annual returns remaining high at +6.4% to +18.8%. These are slightly lower than prior months as a result of the drop-off of November 2020 from the calculation window (which keen readers of this blog will recall was a month in which equity markets surged 7-10% on COVID-19 vaccine breakthroughs and the removal of US election uncertainty).
Our longer-term returns continue to edge higher, standing at +4.6% to 12.7% over three years and +4.1% to +10.8% per annum over five years (after fees).
We’re pleased to note that our five-year performance would have placed us in the top 9% of all managed funds in the Morningstar database, a result that underscores the benefits of our focus on low-cost, diversified investing.
Six Park Essential Portfolio Performance – November 2021
|Period||Conservative||Conservative Balanced||Balanced||Balanced Growth||Aggressive Growth|
(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
International shares and property were the standout performers in November, surging +5.8% and +5% respectively for the month, predominantly on the back of a sharp fall in the Australian dollar. Infrastructure was the weakest performer, falling back -0.8%.
(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.
International shares soared +5.8% in November, although the majority of this gain was due to a -5.3% fall in the AUD rather than underlying market movements. The AUD’s sharp depreciation was driven largely by higher-than-expected US inflation figures and a growing expectation that the US Federal Reserve would look to increase interest rates as early as Q2 2022 (adding to the appeal of holding US-denominated assets). Without the currency impact, hedged international shares gained just +0.7%, with initial market strength across the US, Europe and Japan undone by concerns over the emergence of the new “Omicron” variant of COVID-19 later in the month.
Global property surged +5.0% over November, cementing the sector’s position as the strongest performing asset class over the past 12 months (+33%) and completely reversing the situation this time last year when property was the weakest overall performer (down -21%). While most of the monthly gain was currency-driven, US REIT stocks gained +1.3% on the back of renewed merger and acquisition activity and solid earnings results.
Emerging markets added +2.2% for the month with currency tailwinds masking weakness across most underlying exchanges. Chinese equities declined on fears that the rapid spread of the new coronavirus variant would lead to new lockdown measures. Meanwhile, falls in commodity and oil prices weighed heavily on energy and resource-dependent economies.
Fixed income returned +1.5% in November, with the emergence of the Omicron variant puncturing risk sentiment and driving demand for government bonds. Meanwhile, cash yield continued to eke out a very marginal gain (0.002%) reflecting the ongoing low-interest bank rate environment.
Australian shares edged -0.3% lower for the second month in a row. The biggest declines were across the energy and financials sectors (down -8.4% and -8% respectively) while materials and telecommunications bucked the trend, rising 6.2% and 5.2% respectively.
Infrastructure fell -0.8%. Transportation and pipeline stocks (which represent 35% of our chosen ETF) were the main drag on performance (down -1% and -1.7% respectively), falling on concern that the new COVID-19 variant would impact economic reopening and recovery.