Prime SMA Performance Summary – December 2019

Global equity markets moved higher in December, however a stronger AUD (+3.7%) resulted in negative returns as represented by the MSCI World Index which fell -0.89% in AUD terms.

The Trade War between the US and China abated somewhat with a Phase 1 deal agreed to. The terms see China purchase an additional $200bn of US goods and services over the next two years in exchange for the US reducing tariffs on $120bn of Chinese products.

Elsewhere, the Conservative Party victory in the UK election alleviated concerns over a ‘’Hard Brexit’ and some of the more radical policies proposed by Labour.

The US equity market outperformed rallying +2.9% as a preliminary trade deal took form. US economic data remained strong with unemployment at a 50-year low of 3.5%.

Locally, the ASX200 Accumulation Index underperformed falling -2.2% as major bank Westpac (WBC) became embroiled in an anti-money laundering saga that looks likely to cost the bank close to $2bn in civil penalties.

Australian bond yields widened with 10-year Government bonds yielding back over 1.3% at month end.

Oil rallied strongly on the back of a decline in US crude stocks as well as rising tensions in the Middle East.

The major contributor to performance was Nufarm (NUF) which bounced +17%. NUF held its AGM during the month but other than that there was little news flow. Much of NUFs strength was a reversal of the previous month’s weakness.

Two portfolio holdings were weaker during the month with Boral (BLD) and Regis Healthcare (REG) falling -13% and -17% respectively. BLD flagged some financial irregularities in its North American windows business and REG downgraded guidance citing falling occupancy rates. Whilst frustrating, both stocks yield roughly 4% and appear oversold at these levels.

Activity across the SMAs was relatively subdued in December. The Growth SMA added to its WEB position after the company announced it entertains takeover offers occasionally. The International Growth SMA rotated out of longstanding positions in Antipodes and Platinum Asia in favour of a new Emerging Market Fund Trinetra, and the T.Rowe Price Global Equity Fund. The Defensive and Diversified Income 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 31 December 2019

Prime SMA – Model Portfolio Performance Figures as at 31 December 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.

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.


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