This commentary has been prepared from a general investor perspective and may not directly relate to AvSuper’s specific assets, although it provides an overview of how the sectors in which AvSuper investments are performing generally. You can bookmark this page or subscribe below to be notified when we add a new Investment Update.

Investment update for November 2015

US Fed rate rise speculation continues

Global context

Despite a mid-month sell off in many developed markets, November was a fairly steady month for most global markets, in the wake of a significant spike in volatility in August and September.  The Australian market began the month well as investor sentiment improved and the Reserve Bank of Australia (RBA) indicated some possibility of a further rate cut.  This was short lived as US-led weakness eroded early gains.  The sell-off was also driven by falling commodity prices.

International markets

The timing of an interest rate rise by the US Federal Reserve remained a talking point.  Geo-political tensions—such as the Paris terror attacks—reduced consumer confidence, but continuing employment and income growth increased the likelihood of a rate rise in December.  US markets saw minor improvements on October’s gains with the S&P500 returning 0.2% for the month.

European markets performed reasonably well in November, compounding on strong growth in October. The terror attacks in Paris and Mali and the shooting down of a Russian jet had minimal impact on European markets.  Continued speculation that the European Central Bank would enhance its existing quantitative easing program was also a positive for European financial markets.

The Chinese Shanghai Composite Index rose 1.9% despite falling approximately 5% in the last days of the period.  This volatility was enough to drive most Asian markets into negative territory. The Nikkei 225 index was a notable exception, which rose 3.5% despite the release of slightly disappointing Japan GDP figures.

The MSCI World ex-Australia Index (hedged into AUD) rose by 0.9% over the month.  The Australian Dollar appreciated against most currencies in November.  Across developed markets, Belgium (9.8%), Denmark (7.9) and Ireland (7.6%) outperformed while Greece (-21.8%) and Singapore (-4.8%) were the weakest performing countries in local currency terms.  The MSCI Emerging Markets Index (-5.4%) underperformed developed markets.

Australian markets

Locally, the S&P/ASX300 Accumulation Index posted a slightly negative monthly performance of -0.7%, after strong growth in October.  Small Caps stocks were flat (0.0%), outperforming the broader market while Large Caps stocks (-0.8%) underperformed.  Health Care (5.2%) and IT (4.5%) stocks outperformed, while Materials (-12.2%) was the standout worst performing sector.

Currency

Most currencies fell against the US dollar, with two notable exceptions. The Australian dollar (up 1.3%) curiously rallied in spite of falling iron ore prices and a strong US dollar, and likely got a boost from the RBA’s decision to hold rates. The Malaysian ringgit (up 1.0%) rallied alongside Brent prices and although the rally lost momentum mid-month, the currency managed to hold onto some gains.

 

Graph of asset class returns for November 2015

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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