Six Park Director of Strategy and Analytics Dave Blumenthal by David Blumenthal

Global share markets pushed modestly higher in June as economies began to reopen and further government stimulus boosted investor sentiment. A strong rise in the AUD (driven in part by an upgrade to Australia’s GDP forecasts by the IMF) detracted from these gains.

The Six Park portfolios were broadly flat over the month (down -0.3% to up +0.1%) but have still gained +3.3% to +8.7% for the quarter.

On a rolling 12-month basis, our returns are ‑2.4% to -4.3%. This is down from last month, partly due the drop-off of June 2019 from the calculation window. Keen readers of these reports may recall that June 2019 was a particularly strong month for equity markets (e.g. the S&P surging almost 7%) so its omission from the rolling 12 months has reduced returns.

Nonetheless, we note all our portfolios have outperformed the ASX200 over the year, which was down -7.8%. On a three-year basis, our portfolios have returned +2.3% to +5.5% per annum, which translates to an overall gain of +7.2% to +17.5% (after fees and including the recent market sell-off).

Period Conservative Conservative Balanced Balanced Balanced Growth Aggressive Growth
1 month -0.3% -0.3% -0.1% 0.0% 0.1%
3 months 3,3% 4.7% 6.6% 7.6% 8.7%
1 year -2.4% -2.4% -2.9% -3.4% -4.3%
3 years 2.3% 3.7% 4.8% 5.6% 5.5%

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) Returns are annualised.

Asset class performance

Emerging markets was the best performing asset class in June, surging +5.2% while global property and infrastructure were weakest, falling -3.5% and -3.6% respectively. Read more about Six Park’s selected ETFs.

Six Park performance June 2020 by asset class

After being the weakest asset class last month, emerging markets (VGE) outperformed every other sector in June, adding +5.2% for the month and recording an overall quarterly gain of +9.1%. This was despite a fall in Chinese equities (approximately 40% of our chosen ETF) which were dragged down by the country’s simmering tensions with India and the US.  Almost all other emerging markets posted strong gains. South Africa was the standout performer, buoyed by a recovery in manufacturing activity following its emergence from a strict lockdown. India, Korea and Taiwanese also registered strong gains on the back of fresh stimulus from their central banks and hopes of a continuing recovery in global demand.

Australian shares (STW) added +1.8% in June. Although the worsening outbreak of COVID-19 in Melbourne weighed on investor sentiment, evidence of a bounce-back in domestic retail sales and improved commodity prices saw the market record its third successive month of gains. Although Australian shares recorded an overall rise of 14% for the quarter, they are still down -7.8% for the year.

It was a mixed story for our international equity ETFs in June, with most major stock indices continuing their recent run of positive returns against the backdrop of a 3% rise in the AUD. US and Japanese stock markets registered solid monthly gains of+1.8% while the German DAX soared +6.2% on news of a government €130 billion fiscal package and a €600 billion expansion of the European Central Bank’s bond buying program.  Overall, unhedged returns were -1.6% while hedged returns (which are unaffected by the AUD’s rise) added +1.3%. Despite this performance differential, unhedged global equities are up 4.8% for the year, outperforming both their hedged counterparts (up 0.8%) and the ASX200 (down -7.8%) over a 1, 3 and 5-year basis. This highlights the advantages of being diversified across currencies over time.

Returns across fixed income and cash yield remained positive but muted in June. A new low in government bond yields saw our chosen bond ETF (IAF) marginally outperform cash (AAA).

Global property (DJRE) declined -3.5% in June. While real estate stocks across the US, Europe and Asia actually chalked up modest gains over the month, these rises were more than offset by the AUD’s appreciation (which reduced the value of offshore holdings in local currency terms).

Infrastructure (IFRA) fell back -3.6% in June, reducing its overall quarterly gain to +5.4%.  Key detractors were the travel and tourism sub-segment (down -12.9%, which continues to suffer from a global disruption to business) and the telecommunications sector (down -11.3%).

Six Park has lowered its minimum investment amount to $5,000 until the end of August to help make our service even more accessible. We are also waiving three months of investment management fees for anyone who funds a new account by August 31. 

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Published July 19, 2020

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