Monthly market review

The below is a short overview of asset class movements over the month, we leave the detailed notes to other posts. It is also one day post 30 June, and it can take a little while for NAV’s and unit prices, where relevant, to be struck and calculated correctly. So bear that in mind as you read through the below. Normally, it is only a modest problem at the turn of the month, but with distributions and accrued interest and what not, it is worth reminding ourselves (although for the most part we are just looking at global benchmarks which are not effected).

Value, infrastructure, small cap and mining were relatively poor performers over the month, with growth equities at the other end, and fixed income with modest gains sitting in the middle.

Almost all of those asset and sub-asset classes mentioned above have meaningfully underperformed over the last 5 years. Often, from a DAA perspective, you are looking in the bottom right of the below graph, for ideas on where to hunt for potentially mispriced pockets of the market.

France, with fears of the election overhanging markets, and China, where macro fundamentals continue to remain pressured, were amongst the weaker end, whilst the Nasdaq continued to rally (notwithstanding a very small bit of selling pressure at the very end of the month).

In our local market, defensives performed well, with staples, utilities, and healthcare all outperforming. Materials and energy underperformed; both are linked to China, which as the long running source of marginal global growth, disappointed. Within that, several commodities, most notably aluminium and copper, had run aggressively in prior months, without what we would regard as solid fundamental drivers, and thus (mainly in the case of copper) pulled back.

You can see the materials stocks well represented in the “worst performers for the month” list.

And a more diverse group for the winners, generally driven by idiosyncratic rather than macro drivers.

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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