market overview - publictrustee.sa.gov.au€¦ · web viewthe strategy’s return for the quarter...

F U N D S

MAN A G E M E N T

S E RV I C E

QUARTERLY INVESTMENT

REPORT

31 March 2018

Produced by

Quarterly Investment Report, 31 March 2018

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 performance and commentary for the quarter ended 31 March 2018.

Public Trustee is a statutory entity founded in 1881. At the end of the December 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 March quarter were subdued and continued to exceed industry benchmarks. For the last 12 months Public Trustee investment strategies have delivered returns ranging from 1.76% for cash to 9.89% for equities, net of fees. Over the short and longer term (3-5 years) Public Trustee’s investments are all exceeding industry benchmarks.

SIS Performance versus Benchmark to 31 March 2018

Performance* Last 3 months

Last 12 months 3 years 5 years

Cash 0.44% 1.76% 1.99% 2.42%benchmark 0.18% 0.72% 0.97% 1.28%variance 0.26% 1.04% 1.02% 1.14%

Capital Stable -0.22% 3.48% 3.13% 4.64%benchmark -0.47% 2.56% 2.25% 4.01%variance 0.25% 0.92% 0.88% 0.63% Balanced -0.67% 5.35% 4.32% 6.90%benchmark -1.14% 3.75% 3.09% 6.12%variance 0.47% 1.60% 1.23% 0.78% Growth -1.00% 6.86% 5.18% 8.50%benchmark -1.67% 4.48% 3.68% 7.46%variance 0.67% 2.38% 1.50% 1.04% Equities -1.62% 9.89% 6.67% 10.98%benchmark -2.64% 5.97% 4.88% 9.73%variance 1.02% 3.92% 1.79% 1.25%

*After Fees

If you would like to add to your portfolio, you may do so at any time. Please contact Ms Princess Premkumar (08) 8226 9223 for more information.

Nicolle RantanenPublic TrusteeMay 2018


Market OverviewGlobalFollowing a positive start to the quarter for equity markets in January, there was a slow down into February, followed by a recovery later in February. The recovery stalled in March due to market concerns. Overall, there was a return of global equity market volatility over the quarter amid speculation of higher US interest rates, heightened US political uncertainty and concerns that trade wars may affect the global economy.

In the US, the economic data was positive, with US business confidence reaching a high in March. The US Federal Reserve raised rates from 1.5% to 1.75%.

UK economic growth remained sluggish, with further progress in Brexit negotiations, with an initial agreement struck on the terms of a transition period for after the UK formally exits the EU.

The Japanese economy experienced a slow patch during the quarter with many indicators of production and consumption slightly decreasing, likely due to a switch in US policy towards increased protectionism. Investors were also concerned with discussions on North Korea’s nuclear ambitions.

AustraliaDuring the quarter, the Reserve Bank of Australia maintained interest rates at 1.50% for a record equaling 18th consecutive meeting, indicating strengthening economic growth and continued low inflation.

The Australian Dollar depreciated against most major currencies, finishing the quarter at $0.77 US.

Share MarketsThe Australian share market had a subdued quarter, with the S&P/ASX 300 index closing down 3.8%. The heavyweight big four banks dragged on the overall market as the stocks wilted under the pressure and the potential impact of the Banking Royal Commission into the sector began to emerge.

Global shares were also subdued, with the MSCI World ex Australia Net Accumulation Index falling by 2.2% during the March quarter with UK, Japanese and European Shares posting some of the largest declines.

Key DevelopmentsKey developments over the quarter were:

Global share markets were subdued Volatility in share markets The US Federal Reserve increased interest rates by 0.25%

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


Cash Investment Strategy

The Reserve Bank kept interest rates on hold during the quarter at 1.50%. The fund’s return of 0.44% for the quarter was above the benchmark return by 0.26%. The strategies 3 and 5 year returns remain at 1.99% and 2.42%, which are 1.02% and 1.14% 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 2018 was 1.90% p.a.

Fund size: $369 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 -0.22% outperforming the benchmark return by 0.25%. The strategy’s 3 year and 5 year returns of 3.13% and 4.64% are 0.88% and 0.63% respectively ahead of benchmark.


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

Return (after fees) -0.22% 3.48% 3.13% 4.64%

Benchmark** -0.47% 2.56% 2.25% 4.01%

Difference 0.25% 0.92% 0.88% 0.63%

*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.


Australian Shares 11%

Over-seas

Shares 9%

Property 10%

Long Term Fixed

Int 15%

Short Term Fixed

Int 26%

Over-seas Fixed

Int 12%

Cash 18%

Balanced Investment Strategy

The strategy’s return for the quarter was -0.67% outperforming the benchmark return by 0.47%. The strategy’s 3 year and 5 year returns of 4.32% and 6.90% are 1.23% and 0.78% respectively ahead of benchmark.




Benchmark** -1.14% 3.75% 3.09% 6.12%

Difference 0.47% 1.60% 1.23% 0.78%*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 -1.00%. This outperformed the benchmark by 0.67%. The strategy’s 3 year and 5 year returns remain at 5.18% and 8.50%, which are 1.50% and 1.04% ahead of benchmark.




Benchmark** -1.67% 4.48% 3.68% 7.46%

Difference 0.67% 2.38% 1.50% 1.04%*Annualised ** Index return on Strategic Asset Allocation



Overseas Shares 17%

Property 19%Long Term Fixed Int

21%

Short Term Fixed Int 7%

Overseas Fixed Int

11%Cash 4%


Overseas Shares 26%

Property 19%

Long Term Fixed Int

12%

Short Term Fixed Int 4%

Overseas Fixed Int 6% Cash 4%

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 Strategy

The strategy’s return for the quarter was -1.62%, which outperformed the benchmark by 1.02%. The strategy’s 3 year and 5 year returns remain at 6.67% and 10.98%, which are 1.79% and 1.25% respectively ahead of benchmark.


Performance Quarter % 1 year % 3 year %* 5 year%**Return (after fees) -1.62% 9.89% 6.67% 10.98%Benchmark** -2.64% 5.97% 4.88% 9.73%Difference 1.02% 3.92% 1.79% 1.25%

*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


Aus-tralian Shares

54%

Over-seas

Shares46%

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 - publictrustee.sa.gov.au€¦ · web viewthe strategy’s return for the quarter...

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