Market Overview - publictrustee.sa.gov.au€¦ · Web viewThe equities strategy offers 100% exposure to the world’s share markets. Over the long term, it offers the prospects

F U N D S

MAN A G E M E N T S E RV I C E

QUARTERLY INVESTMENT

REPORT

31 March 2019

` Quarterly Investment Report – 31 March 2019


Produced by THE P U B L I C T R U S T E EGPO Box 1338 Adelaide South Australia 5001 T 08 8226 9200 | F 08 8226 9350Country freecall 1800 673 119 (landline only)www.publictrustee.sa.gov.au


This Quarterly Investment Report presents the results of the Public Trustee’s Funds Management Service for the quarter ended 31 March 2019.

The Public Trustee is a statutory entity founded in 1881. At the end of the March 2019 quarter, it had approximately $1 billion in funds under management. The Public Trustee’s Funds Management Service has a record of high quality, proven and consistent investment performance. The Public Trustee is proud of its long-standing reputation for trust and reliability, and the vital role it plays for our customers.

Following the particularly challenging December 2018 quarter, markets staged a sharp rebound in the March 2019 quarter, with share markets posting some of the largest quarterly gains on record. The Public Trustee’s investment strategies benefited from the sharp rebound in markets although they lagged benchmark due to our conservative investment style. Over the long term the Public Trustee’s investment strategies continue to perform well and outperform their objectives.

For any enquiries regarding your investments please contact Princess Premkumar on 08 82269223.

Nicolle RantanenActing Public TrusteeMay 2019


Market OverviewGlobalFollowing the steep falls in late 2018, equity markets worldwide rebounded sharply in the first three months of the calendar year, posting some of the largest quarterly gains on record.

During the quarter, investors gained confidence in response to the US Federal Reserve’s decision to slow the pace of interest rate hikes for 2019. Markets also benefited from positive progress made in the US-China trade war with both leaders working towards a final deal to resolve their disputes.

Listed property was the top performer for the March quarter, with Australian Listed Property gaining 14.4% in value for the quarter, and Global Listed Property gaining 14.5% in value.

AustraliaDuring the quarter, the Reserve Bank of Australia (RBA) continued to maintain the cash rate at the historic low of 1.50%, maintaining this rate for 31 months. The Australian Dollar appreciated against most major currencies, finishing the quarter at $0.71 US.

Share Markets

International Shares had a strong quarter with the MSCI World Index gaining 11.5% in Australian Dollar terms.

Australian shares rose 10.9% during the quarter, slightly underperforming global markets. Technology and mining were the best performing sectors. Strength in the mining sector was driven by a dam collapse in Brazil that reduced iron ore production. In turn, due to the reduction in world-wide supply, iron ore prices rose.

Key DevelopmentsKey developments over the quarter were:

The US Federal Reserve held official interest rates at 2.5% during the quarter Global share markets rebounded sharply Positive progress in the US-China trade war working towards a final deal

Since 1990, funds invested through the Public Trustee have grown from $160 million to $1 billion today.


Cash Investment StrategyThe Reserve Bank kept interest rates on hold during the quarter at 1.50%. The fund’s return of 0.48% for the quarter was above the benchmark return by 0.21%. The strategy’s 3 and 5 year returns of 1.87% and 2.14% are 0.97% and 1.01% respectively ahead of benchmark.

Crediting Rate:The investment return for this fund is calculated daily, based on the net earnings of the fund. The daily crediting rate as at 31 March 2019 was 2.0% p.a which was increased in February from 1.9%.

Fund size: $381 million.

Performance Quarter % 1 year % 3 year %* 5 year%**

Return (after fees) 0.48% 1.88% 1.87% 2.14%

Benchmark** 0.27% 1.00% 0.90% 1.13%

Difference 0.21% 0.88% 0.97% 1.01%

*Annualised ** Index return on Strategic Asset Allocation

Objective:

Funds assigned to the cash investment strategy are invested in the Public Trustee's Cash Fund. The objective of the Cash Fund is the preservation of capital. The strategy is intended for investors who are seeking secure returns at prevailing short term interest rates.

Capital Stable Investment StrategyThe strategy’s return for the quarter was 2.66%, underperforming the benchmark return by 1.25%. The strategy’s 3 year and 5 year returns of 3.91% and 4.01% are respectively 0.17% behind and 0.01% ahead of benchmark.




Benchmark** 3.91% 5.02% 4.08% 4.00%

Difference -1.25% -1.86% -0.17% 0.01%*Annualised ** Index return on Strategic Asset Allocation

Objective:

The objective of this strategy is to achieve a higher return than cash by strategically allocating 28% of the funds in growth assets and the balance in fixed interest and cash. It is suitable for investors who are seeking higher returns than cash over time and are

Australian Shares 10%Overseas Shares 8%

Property 11%

Long Term Fixed Int

15%

Short Term

Fixed Int 27%

Overseas Fixed Int

12%

Cash 18%


prepared to accept a slight increase in risk in terms of downward movements in the value of their capital from time to time.

Balanced Investment Strategy

The strategy’s return for the quarter was 4.71%, underperforming the benchmark return by 1.84%. The strategy’s 3 year and 5 year returns of 5.97% and 5.78% are respectively 0.62% and 0.21% behind benchmark.




Benchmark** 6.55% 8.00% 6.59% 5.99%

Difference -1.84% -3.42% -0.62% -0.21%*Annualised ** Index return on Strategic Asset Allocation

Objective:

The objective of this strategy is to gain a higher return by strategically allocating 55% of the funds in growth assets and the balance in fixed interest and cash. It is suitable for medium term investors who seek higher returns and are prepared to accept some volatility in the value of the funds invested.

Growth Investment StrategyThe strategy’s return for the quarter was 6.21%, underperforming the benchmark return by 1.87%. The strategy’s 3 year and 5 year returns of 7.47% and 6.80% are respectively 0.69% and 0.05% behind benchmark.



Australian Shares 19%

Overseas Shares 16%

Property 21%Long Term Fixed Int

22%

Short Term Fixed Int 7%

Overseas Fixed Int 12%

Cash 4%

Australian Shares

29%

Overseas Shares

23%Property

21%

Long Term Fixed Int

12%

Short Term

Fixed Int 5%

Overseas Fixed Int

6%Cash 4%



Benchmark** 8.08% 8.91% 8.16% 6.85%

Difference -1.87% -3.82% -0.69% -0.05%*Annualised ** Index return on Strategic Asset Allocation

Objective:

The objective of this strategy is to attain high long term returns in excess of inflation. It has a 73% strategic allocation to growth assets and the balance in fixed interest and cash. It is suitable for long term investors who are prepared to accept high volatility in the value of the funds invested.

Equities Investment StrategyThe strategy’s return for the quarter was 9.46%, underperforming the benchmark return by 1.70%. The strategy’s 3 year return of 10.13% is under benchmark by 0.89% and the strategy’s 5 year return of 8.17% remains ahead of benchmark by 0.03%.


*Annualised ** Index return on Strategic Asset Allocation

Objective:

The equities strategy offers 100% exposure to the world’s share markets. Over the long term, it offers the prospects of high returns but with the likelihood that capital values will fluctuate broadly in line with the fortunes of the share markets. Typically, this strategy may be used as a return booster in conjunction with one of the other investment strategies.

The objective of this strategy is to gain exposure to both domestic and overseas share markets. It has a 55%/45% strategic allocation to the two markets respectively.

Australian Shares

55%

Overseas Shares

45%

Performance Quarter % 1 year % 3 year %* 5 year%**Return (after fees) 9.46% 4.92% 10.13% 8.17%Benchmark** 11.16% 9.68% 11.02% 8.14%Difference -1.70% -4.76% -0.89% 0.03%


NB: All the above investment strategies are exercised through investment in one, or a combination of, the Public Trustee Common Funds.

The investment returns presented in this quarterly report relate to past performances and must not be taken to imply that this predicts future returns of the funds. The information and opinions contained in this report have been compiled or are arrived at by the Public Trustee from sources believe to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness.

The information in this report is of a general nature. The Public Trustee strongly recommends that you contact our Office to discuss your particular circumstances. The Public Trustee does not accept any liability whatsoever for any direct or consequential loss arising from any usage of information herein contained.


Documents

Market Overview - publictrustee.sa.gov.au€¦ · Web viewThe equities strategy offers 100% exposure to the world’s share markets. Over the long term, it offers the prospects