Investment update for September 2010

September showed signs of improvement after negative investor sentiment seen in August. It was a particularly strong month for the Australian Dollar, which ended the month at 0.9683 cents USD, and our economy has stayed relatively even and in good shape. Market confidence was also strengthened by the release of Australian GDP data early in September. Concerns about the global economy, particularly the fear of a double dip recession, started to subside, driven in part by strong industrial data that emerged from China, as well as an increase in confidence that the US Federal Reserve will step in if the US begins to struggle. Earnings results released by US companies were positive, which was also good for global equity markets. The ASX300 returned 4.8% for September, largely driven by the Materials, Industrials and Utilities sectors, along with record gold prices leading to strong gold stocks. As investors returned to risk assets, US and Australian credit spreads tightened over the month. Global share markets in local currency terms ended the month up 7.1%, while the strong AUD saw unhedged investments return 0.6%. At the aggregate level emerging markets continued to outperform developed markets. However, the Consumer Discretionary, Industrials, Information Technology and Materials sectors performed well, but the Utilities, Financials (banks especially) Telecommunications and Consumer Staples sectors underperformed.  

Broad stock market performance – September 2010

Performance (income and capital gain or loss) %
Australian Shares (S&P/ASX 300 Accumulation) -1.1
International Shares (MSCI AC World ex-Aust) hedged -3.1
Global Bonds (Barclays Global Aggregate (Hedged)) 2.1
Cash (UBS Bank Bills) 0.4
Appreciation of $A against $US -1.7
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

Looking ahead

As has been the case for many months, the market continues to react to short term macro announcements. Investors remain vigilant for signals that will help indicate the path that the global economy is likely to take and remain divided as to the likelihood of a recovery. Sentiment has recently been positive, however concerns remain around the excessive levels of Government debt, as well as the problems facing the US labour and housing markets. Domestically, the strong economy has led to an expectation of future interest rate rises by the Reserve Bank, and a strengthening of the Australian Dollar. Investors continue to debate the likelihood of it reaching parity with the US Dollar. 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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