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 March 2021 Equivalent Unit Price – A$1.2664

Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for March 2021. The Low Volatility strategy gained 0.16% throughout the month of March, with the Equivalent Unit Price (EUP) ending the month at 1.2664.

Monthly Commentary

Equity markets for the most part continued their slow but steady recovery from the March 2020 lows, but with a noticeable divergence between sectors. The ASX200 closed at the end of March at 6790, up roughly 1.5% for the month. In the US, the S&P500 closed at 3973 points (+160 points) which was a new all-time closing high. Technology stocks, however, were flat overall despite a late month rally, after a big sell-off in February. For the month of March, the Low Volatility portfolio gained 0.16%.

The theme that accelerated in February continued throughout March, with the rotation from ‘growth’ stocks to ‘value’ stocks. The catalyst for this rotation has been the rapid climb in long-term government bond yields (particularly 10-year yields) as global economic growth expectations have improved and the potential impact that could have on inflation. At least towards the end of March, we have seen a ‘buy the dip’ mentality in these names as the growth stories remain unchanged despite the changing long-term bond yields. Our view remains that inflation is likely to be a short-term phenomenon until we see full employment and sustained wage growth in the US and locally, and the picture for equities therefore remains bright with supportive monetary and fiscal environments and rapidly recovering economies.

The Low Volatility component of the portfolio saw a return to favour from the lows in March, with renewed strength in the $USD, in which 50% of the portfolio is priced. With a new infrastructure bill in the works following on from the COVID-relief bill earlier in the year, the ingredients for a strong recovery in the US could lead to continued performance from the $USD and the equities exposures, so there is reason to be optimistic in the short term.

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