Strategy Objective: The Rivkin Low Volatility Strategy aims to provide steady, stable returns, which have a low correlation to the broader equity market. The Strategy involves allocating equal weighting to four different asset classes, via ASX listed ETFs.
31 October 2020 Equivalent Unit Price – A$1.3068
Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for October 2020. The LV strategy lifted higher in October, with the Equivalent Unit Price ending the month at 1.3068, for a gain of 0.82%. Over the past 12 months, the LV strategy has returned 8.89%, net of fees.
| PORTFOLIOS | LOW VOLATILITY |
|---|---|
| Latest Month | 0.82% |
| QTD | 0.82% |
| Calendar YTD | 7.82% |
| Financial YTD | 3.00% |
| 12m | 8.89% |
| Inception | 30.68% |
Monthly Commentary
The bulk of investments held in the current Low Volatility portfolio edged higher throughout the month of October, meaning that the gain of 0.82% was not the result on one holding doing particularly well. As investors should be aware, we have recently expanded the number of ETFs held within the LV portfolio, to be currently at seven. The best performing ETF for October was IAA, which is the iShares ASIA 50, which aims to track the S&P500 Asia 50 index. This index consists of 50 leading blue-chip companies that are listed across four major Asian markets, being Hong Kong, Korea, Singapore, and Taiwan.
To reiterate how we now manage the 25% allocation to equities within the LV portfolio, one third of this allocation (approximately 8.33% of total assets) is held permanently in IVV, which tracks the S&P500. The remaining portion is split into two, and apply a relative momentum ranking across a pool of 10 potential ETFs. In short, relative momentum is a market phenomenon that shows that securities that have performed better in the past, over a six to 12-month period, have the tendency to outperform over the short-term. We assess this ranking monthly. In addition to iShares ASIA 50 discussed above, the other top ranked ETF at present is NDQ, which tracks the Nasdaq100, which is comprised of the 100 largest companies listed on the technology-focused Nasdaq stock exchange in the US.
The major news recently has been the US election, where Joe Biden has taken a commanding position, even though a result may still be some days to weeks away. Equity markets have reacted very positively over the past week – not to mention gold – which after several months of consolidation, appears to be now trending upwards once again.
If you have any questions regarding the above or your investments with Rivkin in general, please call us on 02 8302 3605.
Monthly Returns
Performance
NAV Price Chart
Portfolio Composition
Asset Class Weighting
Strategy Description and Information
The low volatility strategy invests in listed ASX securities (ETFs) that represent multiple asset classes: cash, US equities, bonds and gold. We target asset classes that have a low or negative correlation to each other, with the benefit being a history of lower volatility and higher risk-adjusted returns than equities alone. While the expected return of this strategy will be lower than the long-term average of equity returns, the superior return per unit of volatility makes this an excellent tool to offset some of your more volatile investments. Both the gold and US equity ETF are unhedged, meaning that approximately half the portfolio has exposure to a short AUD/USD position. Given the nature of the AUD as a growth currency to decline during periods of equity market declines, this exposure is advantageous to cushioning the portfolio during periods of equity market weakness.
Important Disclaimer
The Rivkin Low Volatility Strategy is available to wholesale investors only. Past performance is not a reliable indicator of future performance. The value of your investment may rise and fall, and you may not receive the amount originally invested.
Contact
Thomas Silitonga – Director, Rivkin Asset Management
thomas.silitonga@rivkin.com.au – +612 8302 3605
