Six Park’s Essential portfolios were up from 1.6% to 3.2% in November. This is a strong monthly result, but we note that volatility remains high and we continue to see magnified swings up and down over short timeframes.
The Australian share market (STW) and Emerging Markets (VGE) fared very well in November, up 6.6% and 6.8% respectively. The only asset class in our portfolios that was down for the month was international shares (VGS), down slightly (0.2%). By comparison, the US S&P 500 was up 5.4% in November.
Although the timeframe has been short by investing standards, we have started to see less volatility in our bond asset class (IAF) over the past several months after the initial and turbulent period of rapidly rising interest rates at the beginning of 2022. We remain pleased with the overall investment diversification of our portfolios, noting that on December 1, we implemented slight adjustments to our asset allocations (see our recent Investment Advisory Committee update).
Six Park Essential Portfolio Performance – November 2022
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | 1.6% | 1.9% | 2.6% | 2.9% | 3.2% |
| 3 months | 0.2% | 0.5% | 1.1% | 1.1% | 1.4% |
| 1 year | -4.5% | -4.8% | -5.4% | -6.5% | -6.0% |
| 3 years | 0.2% | 1.0% | 2.0% | 2.4% | 3.3% |
| 5 years | 2.0% | 3.3% | 4.7% | 5.5% | 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) 1 and 3-year returns are annualised
Asset class performance – November 2022
All but our International Shares (VGS) asset classes used in Six Park’s portfolios were up in November. Australian and Emerging Market shares were up 6-7%. Read about Six Park’s selected ETFs.
Although there has been a rebound over the past two months from recent market lows, most major asset classes have had negative returns over the past year given the magnitude of the market declines earlier in 2022.
As noted last month, this performance is symptomatic of the current market environment. Negative market cycles tend to occur every four to five years, though the exact timing and duration are almost always highly unpredictable.
History demonstrates that markets do eventually recover, which is why we preach patience for medium and long term investors.
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 – November 2022
In November our Sustainable portfolios performed slightly below the Essential portfolios for the growth focused portfolios. This is mainly due to the fact that our Sustainable portfolios do not hold an Emerging Market ETF, which was a strong performer in November.
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 | 1.5% | 1.8% | 2.1% | 2.3% | 2.4% |
| 3 months | -0.2% | -0.1% | 0.3% | 0.3% | 0.5% |
| 1 year | -5.6% | -6.6% | -8.3% | -9.8% | -10.0% |
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.
Investment Advisory Committee Market Commentary
Our Investment Advisory Committee (IAC) recently met to assess current market conditions and consider any prudent portfolio construction adjustments.
After making some adjustments to asset allocations on 1 December 2022 in light of evolving market conditions, the IAC did not recommend any additional asset allocation changes at this point in time.
Volatility remains high, driven largely by the impact of uncertainty surrounding where inflation and interest rates (globally) are headed in the near-future, and the commensurate impact on global economies due to both factors.
We view the prospect of a recessionary environment to now be likely, particularly in Europe and the US, but the depth and duration remain unclear.
Australia is somewhat shielded from recessionary pressures due to its commodity-based economy and relatively low levels of government debt – but Australia would not be immune to a more significant shock to the global economy.
On balance, we remain of the view that there are no current long-term, structural changes to the asset class risk/reward profiles since our last review, and feel our portfolio constructions are appropriate for the bumpy conditions that are likely to persist into 2023.
As always, our IAC will continue to monitor market conditions closely and make adjustments if and when they are deemed appropriate for our clients.