by David Blumenthal It wasn’t just accountants who were celebrating the end of the 2018 financial year. Six Park clients had plenty to cheer about too, with all portfolios making strong gains in June (+0.8% to +1.8%) on the back of advances across local equities, global property and infrastructure.
Over the course of the financial year, the Six Park portfolios returned between +3.5% and +10.8%. Pleasingly, all portfolios outperformed the median annual returns of equivalent risk profile, multi-asset managed funds tracked by Morningstar.
These results highlight the benefits of our low-cost, globally diversified approach and the combination of our passive investment focus and thoughtful asset allocation strategies (under the expert guidance of our Investment Advisory Committee).
Six Park Portfolio Performance – June 2018
| PERIOD | CONSERVATIVE | CONSERVATIVE BALANCED | BALANCED | BALANCED GROWTH | AGGRESSIVE GROWTH |
|---|---|---|---|---|---|
| 1 mth | 0.8% | 1.3% | 1.5% | 1.8% | 1.8% |
| 3 mths | 2.0% | 3.3% | 4.3% | 5.3% | 5.8% |
| 1 year | 3.5% | 5.7% | 8.2% | 10.0% | 10.8% |
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.
ASSET CLASS PERFORMANCE
Global property was the strongest performing asset class for consecutive months, rising +3.6% in June and adding +7.8% for the year overall. Emerging markets was again the weakest segment, falling -3.6% and reducing its rolling annual gain to +8.7%.
These performances are in stark contrast to the situation six months ago, when global property was the weakest asset class (down -0.8% for the preceding 12 months) and emerging markets was the strongest (up +21% for prior year). This performance inconsistency highlights just how unpredictable markets can be and is a key reason why our portfolios are diversified across multiple asset classes and geographies.
Global property added +3.6% in June, driven mostly by US real estate stocks that lifted +2% on the back of strong performances by retail and healthcare properties. Returns were also bolstered by a -2.3% decline in the AUD, which increased the value of overseas assets in local currency terms.
Australian shares gained +3.2% over the month. While the market rally was broad-based, the strongest performing sectors were energy stocks, which climbed 7% on the back of rising oil prices, and consumer discretionary companies, which were boosted by the Federal Government’s new income tax cut legislation. The Australian sharemarket has now recorded successive years of double-digit growth (up 12.8% for FY2018) and reached a 10-year high during the month.
Infrastructure stocks rose +2.6% in June, with rising global trade concerns (see below) boosting demand for defensive assets. A combination of strong earnings releases across utility stocks further bolstered returns.
Global equities rose 1.6% for the month. A fall in the AUD was the main reason for the gain, although US markets ended the month up +0.6% on the back of better-than-expected job numbers and manufacturing data. European and Japanese shares fell, weighed down by rising trade tensions with the US (which announced further tariffs on a range of imports from China, Canada, the EU and Mexico).
Fixed income and cash yields were both positive but subdued, reflecting the RBA’s decision to keep cash rates at a record low of 1.5% for a 20th consecutive month.
Emerging markets fell a further -3.6% in June. A combination of slowing domestic growth momentum and escalating trade tensions contributed to weakness in Chinese equities. A stronger US dollar also weighed heavily on Latin American markets because of its impact on the US dollar denominated loans owed by these countries.
Six Park publishes its performance returns monthly, including by portfolio and by asset class. You can view past performance reports by visiting the “Insights” section and selecting “Performance updates”.