by David Blumenthal The Six Park portfolios returned +0.5% to +4.7% in December 2016, with our higher risk, growth orientated portfolios gaining most from the rally in global sharemarkets during the month.
Overall, we are very pleased that our portfolios were up +3.8% to +9.3% (after management fees) for the year. Our growth orientated portfolios returned 7.0% to 9.3%, which compares favourably with averages for similarly constructed industry super funds. Our monitoring of asset allocations and asset classes, with periodic adjustments, continues to benefit our investors, and differentiates Six Park from other automated investment services.
Returns on our more conservative portfolios also outperformed a pure fixed income strategy with bank deposit rates averaging +2.8% for the year compared to the +3.8% and +5.4% gains in our Conservative and Conservative Balanced portfolios respectively
Notes (1) Past performance is not indicative of future performance. (2) No rebalancing, cash holdings or trading costs are included. The calculations are based on the published closing prices for each ETF, not NAV. They assume dividend reinvestment.
The strongest performing asset classes for 2016 were Australian shares and Emerging Markets.
Australian Shares gained +4.4% for the month, boosted by advances across the mining and industrial sectors. The local market ended the year up +11.8%, capping off a volatile year which first saw the ASX200 touch multi-year lows in February (on China “hard landing” and US recession fears) and then see-saw its way through several major geopolitical events (notably Brexit and the US presidential election) before ending the year at 16-month highs.
Emerging Markets had a strong year, gaining +12% on the back of a recovery in oil and commodity prices. Returns for the month of December were somewhat muted, with the surge in the US dollar outweighing the prospect of further oil price rises following OPEC’s decision to cut production from 1 January.
International Shares rose strongly again in December, adding +4.5% for the month. All key bourses across North America, Europe and Asia posted solid gains, with the US Dow Jones, S&P 500 and UK FTSE all hitting record highs during the month. Markets were generally buoyed by optimism surrounding the global growth prospects and the US Fed’s unanimous decision to raise interest rates. International stocks ended the year up +8%, with the November/December helping to offset earlier market weakness.
Our recent switch into International Listed Property proved fortuitous, with our new ETF (ticker code: DJRE) posting a strong gain of 5.8% in the last two weeks of the year. Our Australian listed property ETF ended the year 6.2% for the year (up until our allocation switch in mid-December). This gain masked a tale of two halves, with the sector posting very strong gains in the first part of the year which were then steadily eroded during the second half of 2016.
Returns across our bond and bank deposit ETFs were muted for year (+2.7% and +2.2% respectively). This reflected the prevailing low interest rate environment, and in the case of the local bond markets, expectations of rising interest rates and rising inflation concerns.