Investment update for March 2011

Global shares shaky after the Japan Earthquake

Markets were impacted in early March by the political unrest in the Middle East, a slow down in China, European sovereign debt concerns and increased oil prices. However, markets were overwhelmed with the impact of Japan’s catastrophic earthquake, tsunami and nuclear crisis on 11 March. Japan suffered its worst two day trading loss in 40 years, losing 20% immediately after the quake before recovering to (negative)8.1% by the end of the March quarter.

Australian equities were slightly ahead by the end of March, with the high commodity prices maintaining a strong Materials performance despite recent rate rises in China. Consumer Staples, IT and Financials struggled, but Health Care, Energy, Telecoms and Utilities sectors performed well. Small companies underperformed and Listed Property Trusts had a poor month, while Unlisted Property returns were generally positive through income returns rather than capital value increases.

Global equities were down marginally on a hedged basis, and the Australian dollar strengthened against all major developed currencies (an increase of 2.1% against the US dollar in particular). Emerging Markets, Asia (except Japan) and Latin America performed strongly during the month, but Japan, Europe and North America struggled.

Short-term interest rates in developed economies remain low, although China and India have recently raised their rates in response to emerging inflationary pressures. Australian bonds and global bonds performed solidly. Credit has been surprisingly resilient given the equity market volatility, Japan’s crisis, European Sovereign Debt concerns and the strong US Corporate Bond supply.

Looking ahead

Continuing turmoil in the Middle East and a perception of increased need due to concerns for the nuclear industry kept the oil price above US$105 per barrel. In the USA, housing prices are 30% below their peak in July 2006 and still declining, however most other economic factors for the time being point to a US recovery. With a number of uncertainties, we believe markets will remain fragile and volatility in most liquid markets is to continue to be expected.

Broad stock market performance – March 2011

Performance (income and capital gain or loss) %
Australian Shares (S&P/ASX 300 Accumulation) 0.7
International Shares (MSCI AC World ex-Aust) hedged -1.7
Global Bonds (Barclays Global Aggregate (Hedged)) 0.3
Cash (UBS Bank Bills) 0.4
Unlisted property 0.5
Appreciation of $A against $US 1.6
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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