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 January 2020 Equivalent Unit Price – A$1.2158
Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for January 2020. The LV strategy has started the 2020 calendar year on a strong note, with the Equivalent Unit Price (EUP) gaining 4.04% throughout January to close at 1.2158. The trailing 12-month performance of the strategy is 16.70%.
Monthly Commentary
Both the Gold and US Equity positions made meaningful contributions to the overall performance, with these 2 securities gaining 7.59% and 6.49% respectively. While this was partly the result of higher gold and US share prices in their own right, the weaker Australian dollar was also a contributing factor. Throughout the month, the AUD/USD declined 4.7% to close at 0.6686 US cents. As a reminder, both the gold and US equity positions are unhedged to the AUD/USD currency rate, which means that these positions benefit from a weaker AUD. The Bond position was also higher, gaining 2.31%, while Cash gained 0.11%.
Safe haven assets, such as gold and bonds, received a boost towards month end with the emergence of the Coronavirus out of China, which has led to a fairly dramatic curb on global travel. Equity prices have come under pressure as investors begin to assess the flow-on effects the virus will have on global growth and company earnings. This highlights the benefit of holding a mix of different asset classes, in that often an environment that is negative for one, can be positive for others.
Finally, we wish to remind investors that over the past 12 months the LV strategy has performed well above its historic annual performance of 6-7%. While we are not complaining, inevitably a reversion to the mean will occur, meaning a period of flat to down performance for a period of time. Whilst it is impossible to know when it will occur, it is important to remember that it will occur and to consider any short-term underperformance should it come in that context.
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
