As of 30/09/2024

Market Commentary

Markets rallied but experienced a choppy quarter: Global equities, as measured by the MSCI All Country World Index (unhedged), finished Q3 up 2.6% driven by the start of the US Federal Reserve (Fed) easing cycle, resilient economic data, and significant government stimulus measures in China, with stocks rebounding from turmoil in early August following a surprise policy hike by the Bank of Japan and US recession concerns. Fixed income markets, as represented by the Bloomberg Barclays Global Aggregate Index (hedged), rose 4.0%.

Emerging markets outperformed Developed markets: Equity performance diverged across geographies and gains broadened out across sectors, with Emerging market equities posting strong returns following major monetary and fiscal stimulus announcements from Chinese government authorities. Meanwhile, Australian equities (as represented by the ASX 300) outperformed their developed peers, while US equities (as represented by the S&P 500) benefitted from a cut in interest rates by the Fed. Japanese equities, as represented by the Nikkei 225 Index, were an outlier and declined -3.5% in Q3 (in local currency terms), having encountered heightened volatility in early August.

Fixed income markets moved higher: Global bonds rose strongly over the quarter as bond yields declined alongside rate cuts by central banks across several developed economies. The Bloomberg Barclays Global Aggregate index (hedged) finished Q3 up 4.0%, while the Australian composite bond index gained 3.0% across the period. Riskier parts of the fixed income market, namely corporate credit and emerging market debt indices, also performed well over the quarter.

Performance commentary

‍Total portfolio returns were positive in Q3, supported by the positive gains across asset classes. Developed market equities were amongst the largest positive contributors to total returns amid bullish investor sentiment, while Emerging market equities also added value. Within Developed market equities, Australian and US equities rallied strongly while Japanese equities underperformed in Q3. The exposure to hedged US equities was particularly additive over the quarter. Unhedged US equities also delivered positive returns but to a lesser extent as the appreciation of the Australian dollar offset some of the strong US equity gains. Meanwhile, the allocation to Global Listed Infrastructure, Global Listed Property and Gold further contributed positively over the quarter. Fixed income securities also delivered positive returns, with both Global and Australian bonds adding value, as the broad decline in yields pushed bond prices higher across the period.

Tactical positioning relative to the strategic asset allocation modestly detracted from performance, as the preference for US equities and Australian fixed income was offset by reduced exposure to Emerging market equities. Over the long-term horizon (including 2, 5 and 7 years), the strategy has broadly continued to outperform the Morningstar multi-sector peer group median, with both the strategic and tactical asset allocation delivering value over time.

^{Notes: Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. The peer group median refers to the Morningstar multi-sector peer group.}

^{Performance figures represent past performance and are not indicative of future performance. Current performance may be higher or lower than that shown. Performance is estimated and net of underlying fund fees, but gross of platform fees and does not include brokerage and commissions that may be incurred in the trading of financial products within the model portfolios. Actual investment outcomes may vary. Unless otherwise stated, performance for periods greater than one year is annualised and performance calculated to the last business day of the month. The model performance shown is hypothetical and for illustrative purposes only. The performance does not represent the performance of an actual account or investment product and is not the result of any actual trading.}