Investment update for November 2010

November started positively with equities rallying around the anticipated US Reserve’s quantitative easing (ie printing money and buying US Treasuries to boost the economy, but it was short lived. The US announcement mid month, sovereign debt concerns (especially in Spain and Portugal) at news that Ireland needed an €85billion bailout and speculation over Chinese interest rate rises all contributed to generally flat returns during the month. On the other hand, quantitative easing had a positive impact in Australia and the AUD traded above parity with the USD in the first half of November. Rising interest rates were priced into Australian markets, leading to a negative result (-1.0%) for the ASX300. Consumer Staples, Consumer Discretionary and Utilities sectors delivered the largest underperformance, with Financials, Information Technology and Industrials sectors also struggling throughout the month. In contrast, Healthcare and Telecommunications showed strong performances as investors moved to defensive sectors. Global share markets (in local currency terms) ended the month little changed overall. The Financials sector materially underperformed on fears of European sovereign debt contagion, and the Utilities, Telecommunications, Healthcare and Consumer Staples sectors also delivered negative performance. Consumer Discretionary, Energy, Materials and Information Technology sectors however performed well. Yields on both 10 year US Treasuries and 10 year Australian Government finished the month higher, while credit spreads finished the month wider due to risk aversion following the Irish debt crisis.

Looking ahead

Economic data released over the month has been mixed, which has led to uncertainty in markets for both equity and bonds investors. Global economic growth is expected to be modest, with the developed world expected to struggle in the short term. Market sentiment changes have been driven by QE2, with some doubts about its effectiveness.

Broad stock market performance – November 2010

Performance (income and capital gain or loss) %
Australian Shares (S&P/ASX 300 Accumulation) -1.0
International Shares (MSCI AC World ex-Aust) hedged 0.0
Global Bonds (Barclays Global Aggregate (Hedged)) -0.8
Cash (UBS Bank Bills) 0.4
Unlisted property 0.5
Appreciation of $A against $US 1.2
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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