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.
30 April 2020 Equivalent Unit Price – A$1.2319
Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for April 2020. After a small negative monthly return in March, the LV strategy gained 1.79% during the month of April, to end the month at 1.2319. The LV strategy has returned 5.42% so far in 2020, and 13.80% over the trailing 12-month period. While the 12-month return is pleasing, it is even more so when we compare this to the performance of equities, with the ASX200 declining over 9% over the corresponding period.
Monthly Commentary
The month of April has been characterised by a substantial rebound in equity prices both in Australia and overseas. The ASX200 gained 8.78% for the month, while the S&P500 in the US gained 12.68%. It was this lift in equity prices which was the major contributor to the LV strategy posting a positive return for the month. As a reminder, the LV strategy keeps a 23 – 27% exposure to the S&P500 via an ASX listed ETF. This ETF (ASX:IVV) gained 7.06% throughout April, which is considerably less than the 12.68% for the underlying index, the difference being that IVV is unhedged to the AUD/USD currency, which rallied higher over the course of the month. Both AUD gold and bond prices lifted marginally, gaining 0.17% and 0.35% respectively, while cash gained a small amount, which can be expected with cash rates stuck at 0.25% for now.
In terms of the broader economic picture at present, equity markets have recovered rather well considering the sharp contraction in economic activity that is currently occurring due to the government-imposed lockdowns. Looking further ahead, the unprecedented fiscal stimulus that has been unleashed runs the risk of leading to inflationary pressures once global economies again find their feet. In an environment of rising inflation, we would expect bonds to be sold off quite aggressively, however any impact this would have on the portfolio should be countered by higher gold, equity, and cash prices.
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
