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 May 2020 Equivalent Unit Price – A$1.2765
Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for May 2020. It was a largely uneventful month for the LV strategy, with the portfolio declining by 0.11% in May. This takes the return for the 2020 calendar year to 5.31% after 5 months, while the return over the past 12 months is 13.49%. As a comparison, the ASX200 Accumulation over the past 12 months has declined by 6.70%.
| PORTFOLIOS | LOW VOLATILITY |
|---|---|
| Latest Month | -0.11% |
| QTD | 1.68% |
| Calendar YTD | 5.31% |
| Financial YTD | 9.80% |
| 12m | 13.49% |
| Inception | 27.65% |
Monthly Commentary
We need to mention a change in our performance reporting regarding this strategy. Investors will note that the current equivalent unit price stated is 1.2765, quite a jump from what we reported last month at 1.2319. This is not because the strategy gained in May (in fact the return was -0.11% as stated), but because we have changed the start date for performance reporting purposes. We had initially used March 2018 as this was when we began reporting performance in this format, as it was when we started the Australian and Global Equity funds. However, investors have been in LV before that date, and as such, we have gone back as far as possible with the reporting available to us on the Praemium platform, which is September 2017.
In terms of what transpired over the course of the month, equity markets continue to rebound following sharp falls earlier in the year, with the S&P500 in the US gaining 4.5%. The LV strategy allocates approximately 25% to an ASX listed ETF (ASX: IVV), which tracks the S&P500, the one big difference being that it is unhedged, meaning we are exposed to currency fluctuations. For the month of May, IVV gained 1.16%, with the gains in equity prices being partially offset by a 2.41% rally in the AUD/USD exchange rate. The stronger Australian dollar also weighed on the other unhedged portion of the portfolio, being the exposure to gold, with the gold ETF (ASX: GOLD) declining 1.46% for the month. This leaves the performance of cash (ASX: AAA) and bonds (ASX: VAF), which gained 0.08% and 0.19% respectively.
While equity prices have rebounded strongly of late, with the real economy both locally and in the US still experiencing significant contraction, it is not a forgone conclusion that the prior bull market simply continues from current levels. As such, we remain of the opinion, that a multi-asset approach remains very enticing for many investors, particularly those with a lower tolerance for risk and/or a lesser time horizon, which occurs as one approaches retirement age.
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
