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 January 2021
Broadly speaking, equity markets have begun 2021 reasonably subdued, with the ASX200 Accumulation Index gaining 0.31% in January, while in the US, the S&P500 declined 1.01% over the course of the month. Prices have been drifting higher for much of January before a small but sharp sell-off occurred into month-end. After the first week of February, this sell-off has been reversed, with both major equity indices recovering to new highs. In Australia, much of the weakness has related to commodity-related stocks, with the ASX200 Energy and Materials Indices being the worst performers, declining 8.9% and 5.9% respectively. There were no significant gains across the other sectors, with the utilities (+1.3%) and consumer staples (+1.1%) indices the top performers.
Government policy, both locally and in the US, continues to provide a positive tailwind to equities, and asset prices more broadly. In the February RBA meeting, Governor Philip Lowe stated that the current RBA cash rate of 0.1% was likely to remain unchanged for up to 4 years. More so, the RBA has committed to buying another $100 billion in bonds to get long-term interest rates lower. Interestingly, despite the RBA extending its quantitative easing (QE) program, the yield on the Australian 10-year bond has ticked up to its highest level since March last year. Nevertheless, with interest rates likely to remain at low levels for the foreseeable future, asset markets should continue to perform strongly. Signs are already beginning to emerge across property prices in Sydney and Melbourne, and we expect equity markets will also benefit over the months to come. In the US, government stimulus is coming more from the fiscal side, with the Biden administration pushing to get their Covid-19 Stimulus package, currently in the order of around US$1.9 trillion, through the House. This is planned to include direct payments to Americans of US$1400, in addition to funding to states and cities.
Looking now at the performance of the Rivkin SMA strategies, of which there are six individual strategies. The first thing to note was there was a rather large spread of returns. Starting with the negative, the ASX Momentum strategy was down 4.51% for the month of January, thanks partly to its holdings in iron ore stocks, Fortescue Metals (FMG, -7.0%), and Mineral Resources (MIN, -8.3%), which corrected, following strong rallies over prior months. Xero (XRO) was another of the weaker performers from the portfolio, declining 11.5% in January. On the positive side, the US Momentum strategy was particularly strong, rallying 7.38% for the month, with Moderna (MRNA) the major contributor, up 65.8% for the month, followed by Tesla (TSLA), which gained 12.5% in January.
Both the Value strategies were positive for the month, with ASX Value gaining 3.83%, while US Value gained 1.58%. For the ASX, Pro Medicus (PME) was the standout performer, with the stock rallying 25.4%, which along with strong gains for ARB Corp (ARB, +14.1%) and Breville Group (BRG, +13.5%), made up for decent declines in Altium (ALU, -9.6%), Appen (APX, -9.6%), and Kogan (KGN, -5.3%). To the remaining two strategies, and ASX Income was down 0.37% for the month of January, while Capital Stable was 0.19% higher.
It is important to remember that the US and ASX Momentum and Value portfolios each only contain 10 stocks, which means on a month-by-month basis, their returns can deviate from the broader indices. This is one of the reasons that we recommend that investors follow our model portfolios. As a reminder, the ASX Growth portfolio combines two strategies for a total of 20 stocks, while Global Growth includes four strategies, for a total of 40 stocks. Finally, Defensive Income covers two strategies for a total of between 25-30 stocks.
Looking ahead, February has begun in a rather bullish fashion, with prices quickly recouping the late January decline. And with positive monetary and fiscal tailwinds, not to mention, the continued economic recovery, we believe equity markets remain an attractive option for investors with a three to five-year time horizon.
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, while providing an accurate representation, will not match exactly everyone’s account. 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.
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.
