August 2021 portfolio updates

Below is a short video update on our portfolios for August.

Portfolio commentary

Multi-asset market update

Growth assets were positive again in August, with Australian equities, international equities and property delivering positive returns. Fixed income was mixed, as Australian bonds rose slightly but international bonds fell. In both Australian and international equities growth outperformed value. However, quality equities performed poorly in Australia while they were strong overseas.

The defensive positioning of the portfolios reduced returns somewhat, but was more than compensated for by strong investment selection in the Australian and international equities portions of the portfolios.   

Multi-asset portfolio update

The expectations for growth are strong, given the roll out of vaccines and unprecedented economic stimulus. But risks remain: there is the risk of higher inflation and expectations of higher interest rates, and COVID is resurgent in many countries. The increasingly high valuations in risky assets globally leave little margin of safety for investors if growth disappoints, so we remain defensively positioned and are reducing our exposures to investments with equity and bond market risk. Most recently we have added an allocation to a global macro fund in the alternatives section of the portfolio.

The strong returns in investment markets mean that even with the defensive tilt our portfolios are comfortably above their strategic return targets.

Equities market update

In August growth equities outperformed value and Australian stocks trailed international markets given the extended COVID lockdowns. Iron ore prices fell, and mining stocks posted significant share price falls even as they reported record profits. Tech stocks and other growth companies were well supported by the market.

Our portfolio performed well in this environment, in particular due to our long standing underweights to iron ore companies. And our positioning in financials added value, with strong returns to QBE. 

Equities portfolio update

We see the surge in iron ore prices and bank lending as unsustainable and have positioned the portfolio in more defensive assets and cyclicals that stand to benefit from the return to normal post-COVID but have reasonable valuations.

In August we took profits on CBA as it reached peak valuation, reinvesting in ANZ. At the end of the month we reduced our holdings in several high quality but fully valued stocks, and reinvested the proceeds in PTM which has fallen in value despite stable earnings.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

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