Investment update for June 2011
During the month, continuing concerns about European sovereign debt, continuing weak economic news from the US, and monetary tightening in China and India all contributed to a poor month for global markets. Fortunately the markets recovered somewhat in late June when the Greek Parliament agreed to a range of austerity measures and tax increases to help manage their debt. In spite of this, the overall picture for the month was a general decline across virtually every major asset class apart from Bonds, Cash, Australian Unlisted Property and the $A exchange rate relative to $US and Pound Sterling.
Australian equities finished the month down on the back of declining commodity prices and poor market sentiment globally. The main theme driving markets was a ‘risk off’ sentiment where areas of perceived risk such as Resources, Consumer Discretionary and small companies performed poorly in comparison to defensive positions such as Consumer Staples and Utilities. In fact, Consumer Staples and Utilities were the only sectors to post positive returns for the month. Listed Property Trusts were down for the month reflecting the poorer sentiment within the broader listed stock market while Unlisted Property posted a positive return for the month with returns largely reflecting income.
Global equities were down on a hedged basis, and with the $A slightly strengthening against the $US, unhedged returns fared slightly worse for the month. The broader indices for Asia ex-Japan, North America, Europe and Emerging Markets all posted negative returns on an unhedged basis (in $A). The only developed markets to reach positive territory for the month in local currency terms were Austria, Germany, Ireland, and Japan.
Amongst the all country market sectors, Information Technology, Energy, and Financials fared the worst, while Utilities was the only sector to post a positive return for the month.
Short-term interest rates in developed economies remain low, although China and India continue to raise their short-term rates in response to emerging inflationary pressures. Further rate tightening in China is likely. Australian bonds and Global bonds achieved moderately positive returns due to investors’ continued risk aversion.
Subsequent to the end of June, global stock markets have generally stabilised following the Greek Parliament agreeing to a range of austerity measures and tax increases to help manage their debt. Volatility continues with the mixed data out of the US and continuing European sovereign debt concerns. All of these uncertainties will keep investor and consumer sentiment fragile, and investors can expect continued volatility in most liquid markets.
Broad stock market performance – June 2011
|Performance (income and capital gain or loss) %|
|Australian Shares (S&P/ASX 300 Accumulation)||-2.0|
|International Shares (MSCI AC World ex-Aust) hedged||-1.5|
|Global Bonds (Barclays Global Aggregate (Hedged))||0.2|
|Cash (UBS Bank Bills)||0.4|
|Appreciation of $A against $US||0.5|
|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.