market overview - public trustee · web viewthe strategy’s return for the quarter was 1.33%...

F U N D S

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

QUARTERLY INVESTMENT

REPORT

30 June 2017

Produced by 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

Quarterly Investment Report, 30 June 2017

This Quarterly Investment Report presents the results of the Public Trustee’s Funds Management Service performance and commentary for the quarter ended 30 June 2017.

Public Trustee is a statutory entity founded in 1881. At the end of the June 2017 quarter, it had approximately $1 billion in funds under management. Public Trustee’s Funds Management Service has a distinguished record of high quality, proven and consistent investment performance. We are proud of our long-standing reputation for trust and reliability, and the vital role we play for our customers and their financial affairs.

Investment returns for the June quarter and the financial year were very good for Public Trustee customers. For the last 12 months Public Trustee investment strategies have delivered returns ranging from 1.85% for cash to 15.93% for equities. Over the longer term (3-5 years) Public Trustee’s investments are all exceeding benchmark.

SIS Performance versus Benchmark to 30 June 2017

Performance* Last 3 months

Last 12 months 3 years 5 years

Cash 0.42% 1.85% 2.25% 2.76%benchmark 0.19% 0.80% 1.22% 1.52%variance 0.23% 1.05% 1.03% 1.24%

Capital Stable 0.88% 4.48% 4.25% 5.68%benchmark 0.58% 3.26% 3.68% 4.98%variance 0.30% 1.22% 0.57% 0.70% Balanced 1.33% 7.05% 6.10% 8.53%benchmark 0.75% 5.81% 5.41% 7.79%variance 0.58% 1.24% 0.69% 0.74% Growth 1.67% 9.71% 7.30% 10.61%benchmark 0.69% 8.56% 6.30% 9.72%variance 0.98% 1.15% 1.00% 0.89% Equities 2.41% 15.93% 9.19% 13.88%benchmark 0.42% 14.45% 7.78% 12.92%variance 1.99% 1.48% 1.41% 0.96%

*After fees

If you would like to add to your portfolio, you may do so at any time. Please contact Cosi Capozzo (08) 8226 9177 for more information.

Debra ContalaPublic TrusteeAugust 2017


Market OverviewGlobalThe June quarter saw continued expansion of global economies.

Chinese economic growth exceeded expectations yet again, with the world’s second-largest economy expanding 6.9% from a year earlier.

In the US economic conditions continued to improve and share markets responded accordingly. In June, the US Federal Reserve raised official interest rates for the second time this year from 1.00% to 1.25%.

In Europe there were positive signs that an economic recovery is underway and that some of the risks have dissipated.

AustraliaThe Reserve Bank of Australia kept official interest rates on hold during the quarter at 1.50%.

The Australian Dollar appreciated against the US dollar, finishing the quarter at $0.77US.

Share MarketsThe Australian share market had a weaker quarter, with the S&P/ASX 200 Accumulation Index closing down 1.6%.

Global shares were stronger, with the MSCI World Index finishing up 3.6% on an unhedged basis.

Key DevelopmentsKey developments over the quarter were:

Global share markets were strong The US Federal Reserve increased interest rates for the second time this year The US Dollar weakened against most major currencies

Since 1990, funds invested through Public Trustee Common Funds 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 0.42% for the quarter was above the benchmark return by 0.23%. The strategies 3 and 5 year returns remain at 2.25% and 2.76%, which are 1.03% and 1.24% respectively ahead of benchmark.

Crediting Rate:The investment return for this fund is calculated daily, based on the net earnings of the fund.

The average crediting rate for the quarter was 1.70%, and the daily rate at 30 June 2017 was 1.70%.

Fund size: $354 million.

Objective:Funds assigned to the cash investment strategy are invested in the Public Trustee's Cash Common Fund. The objective of the Cash Common 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 0.88% outperforming the benchmark return by 0.30%. The strategy’s 3 year and 5 year returns of 4.25% and 5.68% are 0.57% and 0.70% respectively ahead of benchmark.


Performance Quarter % 1 year % 3 year %* 5 year%**Return (after fees) 0.88% 4.48% 4.25% 5.68%Benchmark** 0.58% 3.26% 3.68% 4.98%Difference 0.30% 1.22% 0.57% 0.70%

*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 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 StrategyThe strategy’s return for the quarter was 1.33% outperforming the benchmark return by 0.58%. The strategy’s 3 year and 5 year returns of 6.10% and 8.53% are 0.69% and 0.74% respectively ahead of benchmark.


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

Return (after fees) 1.33% 7.05% 6.10% 8.53%

Benchmark** 0.75% 5.81% 5.41% 7.79%

Difference 0.58% 1.24% 0.69% 0.74%*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 1.67%. This underperformed the benchmark by 0.98%. The strategy’s 3 year and 5 year returns remain at 7.30% and 10.61%, which are 1.00% and 0.89% ahead of benchmark.


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

Return (after fees) 1.67% 9.71% 7.30% 10.61%

Benchmark** 0.69% 8.56% 6.30% 9.72%

Difference 0.98% 1.15% 1.00% 0.89%*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 2.41%, which outperformed the benchmark by 1.99%. The strategy’s 3 year and 5 year returns remain at 9.19% and 13.88%, which are 1.41% and 0.96% respectively ahead of benchmark.


Performance Quarter % 1 year % 3 year %* 5 year%**Return (after fees) 2.41% 15.93% 9.19% 13.88%Benchmark** 0.42% 14.45% 7.78% 12.92%Difference 1.99% 1.48% 1.41% 0.96%

*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.

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 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. Public Trustee strongly recommends that you contact the Office to discuss your particular circumstances. Public Trustee does not accept any liability whatsoever for any direct or consequential loss arising from any usage of information herein contained.

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 | www. publictrustee.sa.gov.au

market overview - public trustee · web viewthe strategy’s return for the quarter was 1.33%...

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