Prime SMA Performance Summary – January 2018

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 Prime SMA Performance Summary – January 2018

Portfolio Objective

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

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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Portfolio Commentary & Positioning

January proved a strong market for global equities, but less so for local share-markets. The ASX200 Accumulation index finished down -0.45% for the month, trailing all of
its major global competitors. The S&P 500 rose 6%, the global emerging market jumped 8% and Asian share-markets similarly jumped.

Economic confidence was the flavour of the month, with US consumer confidence rising to its highest level since 2001 and Australian consumer confidence jumping to a 4
year high as well. This strong economic backdrop drove a continued climb higher in global bond yields, with Australian 10-year bonds rising from around 2.5% in mid-
December to be 2.80% at the close of January.

The Australian Dollar also benefited from the economic backdrop, rising to a 3 year high near 81.50c before easing to close the month near 80c, but still well ahead of the
78c it started January at.

Clearly with the strength in foreign share-markets, the PRIME International SMA performed well rising 0.89%, however the underlying strength of fund performance was
eroded by the Australian Dollar’s niggling rise.

Locally, outperformance was felt in holdings such as Macquarie Group (MQG), SEEK (SEK), Crown Resorts (CWN) and Telstra (TLS). CWN continued to benefit from
news surrounding its decision to sell non-core assets, and both SEK and MQG pushed higher on investor confidence surrounding their near term earnings momentum.

On the flipside, Healthscope (HSO) was a major disappointment, falling -8% on little news flow. The stock seemed to ease back after what had been a strong run into year
end. AMCOR (AMC) also lagged, falling -6% in the month as investors punished the stock for its significant Australian Dollar leverage due to its material offshore earnings
streams.

In terms of portfolio changes made during January, the PRIME Australian Equities Growth portfolio added some domestic Australian cyclical exposure via APN Outdoor
(APO) and Downer (DOW), and trimmed a modest amount of its position in Macquarie Group (MQG). The PRIME Defensive Income & PRIME Diversified Income portfolio’s
both made a substantial investment in the Latrobe Australian Mortgage Fund – 12 month account, whilst the Diversified Income portfolio also added the RARE
Infrastructure Value fund and trimmed its equity holdings in Sonic Healthcare (SHL) and Macquarie Group (MQG).

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DOWNLOAD the Prime Separately Managed Account (SMA) Report, January 2018

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Disclaimer: This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.

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By | 2018-03-22T09:51:59+11:00 March 6th, 2018|Active Management Performance, Uncategorized|0 Comments

About the Author:

As the Chief Investment Officer (CIO) for Prime Financial Group, I work closely with the national advisory team, high net worth individuals, family groups and Prime’s broader accounting network to provide considered and pro-active investment advice.