Benchmarks

Year on year there’s not a huge split between World Value and Growth, but it masks a dramatic, repeated rotation between both. The past month has crunched growth, further rises in reals should exacerbate that recent run of underperformance, relatedly as we move past Omi’s peak.

Bonds are off to their worst start in many years as yields rise. We continue to be modestly underweight Fixed Income across our diversified portfolios for this very reason, noting that we continue to have a large absolute SAA exposure given the negative correlation to equity market risk.

The factor rotation is clear across ASX sectors, with tech, health and staples selling off over the past month, and higher beta cyclicals (materials, financials, energy) outperforming.

At the stock level, the returns over the past month give a stronger flavour for how growth stocks have fared.

Iron ore continues to be stronger than we expect. The top down macro call appears correct, in general, with China’s property sector undergoing a material correction (we would say a structural shift as the PBOC remains intent on taming property related excess and mal-investment through curbing credit growth) and indeed iron ore fell from ludicrous levels to present pricing.

However we expect prices to range from $60-$80tn, rather than finding a floor in the low 100s.

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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.

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