Key Themes for the Quarter
It is hard to start the September 2021 quarterly review without mentioning the COVID-19 pandemic. In Australia, the two largest cities were in lockdown for most of the quarter as the Delta variant took hold, and Australians raced to get vaccinated after a slow start to the program.
For many, the last quarter felt like “Groundhog Day”, with the same day repeating over and over. It was similar in financial markets as well. Equities and bonds rose day after day throughout the quarter, until the last days of September.
Despite rising yields, Australian and global bonds had small positive returns for the quarter.
The Australian equity market (S&P/ASX 300 Index) returned a modest 1.8% for the quarter but over the course of the last 12 months has returned just over 30%.
International markets continued their strong run returning 4% for the quarter and nearly 28% for the 12-month period. Over a 10-year period the global markets have returned approximately 5% p.a. higher than Australian shares.
Emerging Markets (EM) are dominated by China (approximately 40% of the EM). With the Chinese market down -15%, EM returned -4.5% for the quarter but still returned over 17% for the 12 months.
Global REIT’s have had a strong quarter returning 4%.
Enhanced Asset Class - Equity Factors
The Small Cap premium (small cap less large cap stocks) was 1.6% over the quarter. Over the last 12 months Small Caps slightly underperformed Large by 0.5%.
The Value premium (value stocks less growth stocks) underperformed for the quarter, but returned over 41% for the 12 months to 30 September, outperforming the growth by 14%.
In the chart below, outperformance of the factors is represented by a green arrow and relative underperformance by the blue arrow.
Small Caps underperformed the market by 1.6% in the quarter, but strongly outperformed the market over the last 12 months by 11.6%.
Value stocks underperformed growth stocks by 1.7% in the quarter, but over the last 12 months there has been a resurgence in the Value Premium and value stocks have outperformed growth stocks by 5%.
Again, in the chart below, outperformance of the factors is represented by a green arrow and relative underperformance by the blue arrow.
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Important Information: WARR HUNT Pty Ltd is an Authorised and Credit Representative of WH Capital Pty Ltd (AFSL & ACL 469418). Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice from WARR HUNT prior to acting on this information. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is often not indicative of future results.