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 April 2020
Equity markets have rebounded throughout the month of April, retracing a portion of the significant falls from March. In Australia, the ASX200 Accumulation index rallied 8.78%, while in the US, the S&P500 Index posted its largest monthly gain since 1987, gaining 12.68%.
In terms of the current economic climate, Australia has done an extremely good job of reducing the spread of Covid-19, evidenced by the very low rate of new daily cases. As such, the Morrison government is preparing the economy to reopen from next week. Given that it has been approximately 6 weeks since the restriction measures were first implemented, we believe many aspects of the Australian economy should be able to recover rather quickly. We would imagine that economic data will continue to look very pessimistic over the coming months however, as it is important to recognise the difference between backwards looking economic data, and stock market performance, which is always forward looking. Put another way, stock prices will bottom well before the economic data shows improvement. In the US, President Trump is also eager to reopen the US economy, despite daily new case numbers still more than 25,000. While this may seem premature on the health front, with over 30 million Americans becoming unemployed over the past six weeks, he is clearly concerned about the economic cost of a continued shutdown.
As a reminder, Rivkin offers four different portfolio options for SMA investors, two of these ‘Smart Growth’ and ‘Defensive Income’ are focused on ASX investments. For the month of April, Smart growth returned 11.19%, while Defensive Income returned 7.60%, both net of fees. Since inception, both strategies are down, at -13.83% and -13.05% respectively, which compares to the performance of the ASX200 Accumulation of -14.50% over the corresponding period, meaning a slight outperformance in relative terms. As a reminder, 50% of the Smart Growth portfolio is allocated to the ASX momentum strategy, which has the potential to go to a 100% cash position should market conditions warrant it. As of the end of the month, the ASX momentum strategy is currently holding 69% in cash, meaning the cash weighting for the Smart Growth portfolio sits at approximately 34.5%. The Global Growth portfolio gained 5.85% for the month of April, after fees, taking the since inception performance to -12.20% after fees. Within Global Growth, the US Momentum portfolio remains fully in cash, and will continue to do so until the S&P500 can move back above its 200-day moving average, which is what is used as a determinant of the long term trend in US equity prices. Lastly, the Capital Stable portfolio gained 1.74% throughout April, thanks largely to the strong rebound in US equity prices, while 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.
Regarding both Global Growth and Capital Stable, it is important to remember that both strategies are partially unhedged to the AUD/USD exchange rate, meaning that a rising AUD will adversely impact returns, while a falling AUD relative to the USD will boost returns, when expressed back into AUD. For the month of April, the Australian dollar gained quite strongly against the USD, rallying by 6.1% to close at 0.6510.
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 imagine equity and gold prices to do quite well, while bond prices would likely suffer.
All performance data presented in this document relates only to the start date of the SMA portfolios on June 12. 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.
