Mainstream Separately Managed Accounts allow clients to follow Rivkin’s proven investment strategies without having to trade themselves. Our four portfolio options have been designed to suit various different investor goals.
Monthly Update May 2021
During the month of May, the general theme for equity markets both in Australia and the US was that weakness in the middle of the month was reversed by decent rallies into month-end. Locally, the ASX200 sold off towards the 6900 level before rallying to close the month at 7161, which is back at the highs from February 2020, meaning that after 14 months of gains, the benchmark index has finally recouped the sharp falls from February to March 2020, which occurred because of the outbreak of the Covid-19 pandemic. The performance in the US during May was not as positive as witnessed in Australia, with the S&P500 gaining 0.5% for the month, while the Nasdaq100 closed 1.3% lower, demonstrating that tech-based businesses remain out of favour with investors. A move away from technology companies has been a theme in play for the past 2-3 months.
With the post-pandemic recovery firmly in place across major economies following rounds of monetary and fiscal stimulus, the focus is increasingly switching to the tapering of accommodative policy by central banks, especially in the United States and Australia, which have led peers in their recoveries. A key concern for markets remains inflationary pressures following spikes in demand, the impact of base effects, as well as supply bottlenecks, with the debate continuing as to whether these pressures will prove transitory or not. These concerns have eased somewhat in May, evidenced by declining breakeven expectations in the United States following Federal Reserve officials signalling they are open to discussing tapering asset purchases and Australia, where the market is forecasting the RBA to gradually wind back stimulus. This has the effect of keeping a lid on interest rates, which remains supportive for risk assets as withdrawal of support will likely be gradual depending on economic progress.
Looking at the performance of the Rivkin SMA strategies, of which there are six individual strategies. Overall, it was a relatively quiet month. Nevertheless, of the three strategies focused on ASX listed stocks, the ASX Momentum and ASX Income strategies were the better performers, gaining 1.40% and 0.83%, respectively. In contrast, the ASX Value strategy closed the month lower by 0.86%. With the ASX Momentum strategy, there were several changes to the portfolio this month, most notably the additions of Westpac Bank (WBC) and National Australia Bank (NAB), which when we include ANZ, takes the exposure to the large retail banks to approximately 30% of this portfolio. It has been some time that the large banks have been so well represented in the ASX Momentum Strategy. Oz Minerals (OZL, +5.6%) and Domino’s Pizza (DMP, +3.4%) contributed the most to the performance of the strategy, while Seek (SEK) has also performed well since entering the portfolio mid-month. Mineral Resources (MIN) was the largest detractor on the portfolio, declining 5.0% in May. With the ASX Income portfolio, activity in the Event Strategy portion of the portfolio was slightly lower than in recent months. Still, we saw the bidding wars for Mainstream (MAI) and Vitalharvest Freehold Trust (VTH) continue with gains of 6% and 3.2% for the month, respectively. Both stocks still have upside potential, while our other holdings have yet to see bidding tension but are looking to be small profits in a worst-case scenario.
The US strategies were mixed, with the US Value strategy gaining 1.82%, with Target (TGT, +9.5%) and Ebay (eBay, +8.4%) the major drivers, while US Momentum was lower for the month by 0.07%. Decent rallies in Capital One Financial (COF, +8.1%) and General Electric (GE, +7.2%) were not enough to offset an 11.90% drop in Tesla (TSLA) and 6.8% decline in Pinduoduo (PDD).
Finally, Capital Stable gained 2.14% for the month, with a strong rally in the Australian dollar gold price the major contributor. The GOLD ETF makes up approximately 25% of the portfolio and gained 8.5% for the month, while US equities and bonds were modestly firmer.
Looking ahead, as we close in on the end of the financial year, the broad uptrends for equity markets remain in place. This biggest macro threat is likely an uptick in inflation that proves to be more stubborn and last longer than what Central Bankers currently foresee, which would likely flow through to an increase in interest rates. It is sometimes easy to forget that interest rates are now at historic lows and that a return to more ‘normal’ levels could potentially impact economic growth and risk assets. While we do not believe there is an immediate danger, it remains a future risk.
All performance data presented in this document relates only to the start date of the SMA portfolios on June 12, 2019. The performance below refers to the model portfolios, net of fees, which will not match exactly everyone’s account while providing an accurate representation. Please use the investor portal or call us to check your account-specific performance.
*Past performance is not indicative of future performance
The above table shows the returns of each portfolio over various time periods after brokerage, management and performance fees. Individual account performance may vary from the results above due to a number of factors including, but not limited to, rounding, small variations in stock weightings and account start date.
Please log in to your Mainstream Account to have the most accurate picture of your accounts performance.
The table below presents performance on a monthly basis for each of the portfolio options. Again, results in this table are after brokerage and fees.
Returns for June represent performance from the launch date of 12 June 2019 to the end of month.
*Past performance is not indicative of future performance
Rivkin also offers its original investment strategies on the SMA platform. The table below shows the returns of these strategies.
*Past performance is not indicative of future performance
Note: All returns in this document are net of fees, 1.5% management fee (1% for capital Stable); and 10% performance fee where applicable with high watermark ( 5% for capital stable) for the complete list of the fees please refer to the PDS issued by The Trust Company (RE Services) Limited a part of the Perpetual Group.
**5.0% for Capital Stable
*1.0% for Capital Stable
This product PDS is issued by The Trust Company (RE Services) Limited a part of the Perpetual Group, ABN 45 003 278 831,AFSL No 235150.
Please search our website or request the PDS to understand full risks and costs of the product before taking decision to invest in it.
All opinions and estimates constitute judgments of Rivkin and are subject to change without notice. These statements should therefore not be relied upon as an accurate representation or prediction as to any future matters.
To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital. Past performance is not indicative of future performance.
Important Notice:
Performance data shown represents past performance. Past performance is not a guarantee of future performance. Investing and trading carry financial risk, when judging performance please consider the different types of investments and levels of risk associated.
All information and data on this post are provided in good faith and are believed to be accurate and reliable at the time of publication. However, the returns shown in this post might differ from yours due to various reasons such as the time you have entered the market and the amount invested. If you are seeking for clarification, please contact us on 1300 748 546.
