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 December 2019 Equivalent Unit Price – A$1.1685
Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for December 2019. Following November’s 1.44% gain, the LV strategy declined in December, with the Equivalent Unit Price (EUP) dropping 0.44% to end the month at 1.1685. The LV strategy has performed very well in 2019, up 13.56% for the year
Monthly Commentary
The Low Volatility portfolio has rounded out 2019 with an above average performance of 13.56% for the year. This is 8.26% above the target return of the RBA cash rate + 4%. A fortuitous combination of a strong gold price, coupled with strength in equities and a solid performance from bonds contributed to the outperformance for the year. While we don’t expect all three of these asset classes to rise in unison in the long term, we are certainly happy to take advantage of the present favorable correlation.
The Australian dollar has an indirect effect on performance through the gold price since we have exposure to the Australian dollar gold price. The AUD/USD exchange rate moved from 0.7043 at the beginning of the year to 0.6996 at the end and therefore had only a minor effect on overall performance for the year.
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
