Prime SMA Performance Summary – November 2019

Global equity markets climbed higher in November with the MSCI World Index adding +2.7% in USD terms.

Trade tensions between the US and China continued to ease with markets becoming more optimistic a phase 1 trade deal was imminent.

The US equity market outperformed rallying +3.4% following trade negotiations and strong growth in the US manufacturing sector.

Asian and emerging market markets were weaker as ongoing civil unrest in Hong Kong continued to create further instability in the region.

China was weak following softer than expected industrial production numbers and poor retail sales data. However, the improvement in trade negotiations offset some of this weakness.

The ASX200 Accumulation Index added +3.3% as the RBA kept interest rates on hold at 0.75%.

The RBA flagged further cuts in 2020 and Governor Lowe raised the possibility of Quantitative Easing (QE) should further rate cuts not see an uptick in economic activity. Australian 10-year bond yields fell to 1% as a result.

Commodity prices rallied with oil and iron ore gaining +2.5% and +4.8% respectively.

Contributors to performance were Pendal (PDL) and Webjet (WEB) which added +19% and +11% respectively. PDLs FY19 NPAT of $154m was well received whilst WEB provided good guidance to the market.

The major detractor was Nufarm (NUF) which fell -16% having warned 1H 2020 earnings would be significantly lower as a result of disappointing sales North America. We continue to think there is significant earnings growth ahead for NUF through its omega-3 canola seed.

Activity across the SMAs was relatively subdued in November. The Growth SMA added to its APT position and the Defensive Income SMA added to its existing Ardea holding. The Diversified Income and International Growth SMAs went unchanged. On a risk profile performance basis our 5-year numbers continue to perform well against their respective benchmarks.

Portfolio Performance Figures

Risk Profile Portfolio Performance Figures as at 30 November 2019

Prime SMA – Model Portfolio Performance Figures as at 30 November 2019

About the Portfolio

Portfolio Objective
To achieve capital growth with moderate tax-effective income via franked dividends through investment in listed Australian securities.

Model Portfolio
The Model Portfolio is managed by selecting primarily those securities with moderate growth potential but robust cash-generating capacity. These securities are expected to deliver an above-market average income yield, together with a relatively moderate level of capital growth. The portfolio benchmark is the S&P/ASX200 Accumulation Index.

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