Investment update for January 2011

Share market performance was mixed in January. Global shares produced strong returns, with unhedged shares aided by a weaker Australian dollar, whilst Australian shares struggled under the influence of climactic events and ended the month with a small positive.

Global bonds benefited from improving economic signals out of the US and Core Europe, despite rising inflation fears in China. The US economy recorded growth of 3.2% in the December quarter, reinforcing signs of a recovery. However the effect on the Australian market has been mixed, with a fall in the Gold price resulting in a sell-off in domestic Gold shares.

In the Australian market, Consumer staples and Financials were the top performing sectors with IT and Materials lagging. Small resources being sold off resulted in small companies’ shares being negative, while Industrial shares outperformed Resources and Listed Property Trusts enjoyed a good month with a 2.4% return. Unlisted Property returns largely reflected their income stream with little change in capital values.

Global shares continued to improve with developed markets rising by 5.4% over the month, but emerging markets were flat in January and negative for the December quarter, with Egypt being the weakest. Due to some recovery in sold off markets, European shares have performed well.

Australian Bonds outperformed Global Bonds which were adversely affected by improving economic data and beliefs that cash rates won’t stay at these record low levels for much longer. Some investors are buying the Bonds in their weakened state in the hope of a rally instead of the bonds defaulting.

Looking ahead

Key economic indicators show solid growth in the USA, UK and Core Europe. Japan, however, is struggling with weak domestic growth rates, a high Yen and increased Asian competition on key exports.

With investor and consumer sentiment still fragile, we expect continued volatility in most liquid markets.

Broad stock market performance – January 2011

Performance (income and capital gain or loss) %
Australian Shares (S&P/ASX 300 Accumulation) 0.1
International Shares (MSCI AC World ex-Aust) hedged 5.4
Global Bonds (Barclays Global Aggregate (Hedged)) 2.5
Cash (UBS Bank Bills) 0.4
Unlisted property 0.5
Appreciation of $A against $US -2.7
Check out AvSuper’s weekly returns and quarterly performance results Please note that past performance is not always a reliable indicator of future performance.

 Source – JANA, FactSet, S&P, MSCI, Mercer, UBS, Barclays

We trust you find this information useful in understanding how your AvSuper investment is performing and welcome your feedback on how we can improve the information we provide to you.

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