By the end of September, the benchmark US S&P 500 index was down 25% year-to-date after dropping 9% in September. The ASX 200 was also down 13% year-to-date. .
While this may feel unsettling, we offer clients diversified portfolios across multiple asset classes. This means that your portfolio should never perform as poorly as its “worst” asset class over any time period (nor will it outperform the “best” asset classes during any time period).
This is the nature of investment diversification: when some asset classes underperform, others outperform, and vice versa.
This is a very important concept during times of heightened volatility like we are seeing now.
Those who are new to investing in 2022 will have seen declines in the value of their Six Park portfolios. However, such declines are typically not as steep as the declines of some of the core asset classes during this short time frame. For instance, over the past three years, our Australian and international shares ETFs are up 3-5% (annualised) as other asset classes suffered more during the pandemic (global property and infrastructure).
It’s also worth noting that we benchmark our portfolio performance against similar multi-asset class managed funds to validate if we are providing strong risk-adjusted returns versus peers.
We have consistently outperformed a vast majority of such funds. So when markets fall, our portfolios will likely fall as well, but not as much as most other similar funds due to our prudent asset allocation and low fees.
Six Park Essential Portfolio Performance – September 2022
| Period | Conservative | Conservative Balanced | Balanced | Balanced Growth | Aggressive Growth |
| 1 month | -3.6% | -4.3% | -5.2% | -6.1% | -6.5% |
| 3 months | -1.7% | -1.7% | -2.0% | -2.4% | -2.4% |
| 1 year | -7.7% | -8.6% | -10.4% | -11.9% | -11.8% |
| 3 years | -1.0% | -0.4% | 0.4% | 0.6% | 1.4% |
| 5 years | 1.6% | 2.9% | 4.2% | 5.0% | 5.6% |
| 10 years | 3.2% | 4.9% | 6.4% | 7.8% | 8.7% |
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 – September 2022
The asset classes used in Six Park’s portfolios were all down in September, except for our AAA cash yield ETF.
We are now in “bear market” territory, when key asset classes fall more than 20% from recent highs. Bear markets tend to occur every four to five months and they are a normal part of the investment cycle.
What history shows is that markets always recover, though the recovery time frame can vary.
Recoveries also tend to favour those who are able to remain invested, periodically rebalance their portfolios (part of the Six Park service) and, if possible, reinvest dividends so that they are buying shares when markets are at relatively lower prices.
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.
Six Park Sustainable Portfolio Performance – September 2022
In September our Sustainable portfolios slightly underperformed the Essential portfolios. As was the case in August, this was largely due to the slightly higher exposure that the Sustainable portfolios have to the technology sector, which experienced another difficult month in September. We expect the technology sector to recover (relative to other sectors) over time.
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 | -3.8% | -4.5% | -5.6% | -6.4% | -6.9% |
| 3 months | -1.9% | -2.0% | -2.2% | -2.5% | -2.5% |
| 1 year | -8.4% | -9.6% | -11.8% | -13.5% | -13.7% |
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 recently met to assess current market conditions and consider any prudent portfolio construction adjustments. We will shortly circulate an update of our committee’s deliberations and some slight adjustments to some of our portfolio allocations that we deem prudent given the changing interest rate environment. These changes will be implemented in the near future.
If you are feeling concerned about your investments during this period of market volatility we recommend you read this IAC commentary for further insights.