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 March 2020
March was a tough month for equity markets, both locally on the ASX and in the US. An acceleration in the spread of the Coronavirus across the world has led to many governments introducing strict ‘social distancing’ measures, such as only leaving home for a necessary purpose, limiting gathering of two people or less in public, and in some countries closing schools. This has had a dramatic impact on many businesses, particularly those related to travel and tourism, and services such as restaurants, cafes, and retail.
Despite the strong fiscal response from many governments, including the Australian government, the reality is that many people have found themselves out of work in short order. This is evident in the US, where initial jobless claims spiked to 6.64 million people this week, which is more than ten times the peak from the GFC of 2008-2009. Some economists in the US are already suggesting an unemployment rate of between 15% and 20%.
The situation both on the health front, and economically, is more positive in Australia. Despite reaching 5,116 confirmed cases, the rate of new infection is dropping markedly. Economically, the release of the Job Keeper assistance program, which could total $130 billion in total, should allow for many businesses to continue to retain staff on their books over the coming six months.
Looking at the performance of the broad indices over the month of March, the ASX200 Accumulation Index declined 20.65% for the month, taking the declines for 2020 to -23.10%. In the US, following a decent rally in the last week of the month, the S&P500 finished the month down -12.51% at 2,584.59, taking the decline for the first quarter in 2020 to – 20.00%.
As a reminder, Rivkin offers four different portfolio options for SMA investors, two of these ‘Smart Growth’ and ‘Defensive Income’ focused on ASX investments. While both portfolios were not immune to the sharp declines, it is pleasing to see that the losses were less than the market, with Smart Growth declining 15.96% and Defensive Income declining 14.21% over the course of the month. (Since inception, the performance of Smart Growth is -22.50%, and Defensive Income is -19.19%, which compares to the performance of the ASX200 Accumulation Index over the same period of -21.40%). Defensive Income benefitted from an allocation to both hybrid securities and takeovers, which are both less correlated to market returns, while in Smart Growth, the ASX Momentum strategy has begun building cash as a defensive mechanism, reducing from ten to seven stocks, as less and less stocks show positive price trends. More so, we made a strategic decision to reduce the number of stocks held in ASX Value from ten to eight, and hold the remaining 20% in cash. In an extreme situation, the ASX Momentum strategy can go to 100% cash, which would mean that Smart Growth, as a portfolio, would be 50% in cash and 50% invested. The Global Growth portfolio dropped 17.53%, weighed down by several consumer discretionary stocks which are currently part of the US Value strategy. As of month end, the US Momentum portfolio has gone to a 100% cash position, meaning the portfolio will be insulated should US equity prices continue to move lower. Lastly, the Capital Stable portfolio has done a stellar job in protecting investor capital, declining just 0.57% for the month. Encouragingly, this portfolio remains up 2.98% so far in 2020, and up over 9% since inception in June 2019. As a reminder, only 25% of the Capital Stable portfolio is allocated to equities, with the remaining three quarters of the portfolio allocated across exposure to bonds, Australian dollar gold, and cash.
While 2020 has started out as a turbulent year both in the real economy and across financial markets, the SMA portfolios are currently positioned rather defensively with growing weightings to cash.
All performance data presented in this document relates only to the start date of the SMA portfolios on 12 June 2019. Longer than one-month performance data, therefore, covers the period from 12 June 2019 to 31 March 2020, which is why at present, the 12-month performance data is equal to the since inception performance data. The performance below relates to the model portfolios, so 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.
