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 December 2021
Firstly, we would like to say a Happy New Year to all our investors, as we conclude 2021, and look forward to the new year. While it has been a trying past two years living and investing during a pandemic, the Rivkin Team is eager as ever to deliver for our investors. On a more personal level, we hope that everyone remains both physically and mentally healthy over the coming months, as best they can.
We noted in our November update, that December tends to be quite a strong seasonal time for equity markets, particularly the last two weeks of the year. This theme indeed played out in 2021, with stock markets both in Australia and the US pushing higher into year end. Locally, the ASX200 gained 2.6% in December, closing the month at 7,444.46, and in doing so, breaking out from a six-month period of sideways trading. With the broader trend remaining up, we believe this bodes well for additional gains in Q1 this year.
In the US, the broader S&P500 closed 4.4% higher at a new all-time monthly high of 4,766.18. The tech-heavy Nasdaq100 gained 1.1%, lagging the S&P500 both in percentage terms for the month, as well as failing to make new highs. Many technology-based stocks, outside of the very large-caps, have performed rather poorly of late, potentially because of the market pricing in a higher cost of capital, in other words, an increase in interest rates. In Australia, the information technology sector was the worst performer in December, down 5.35%, while both utilities and materials did rather well, gaining 6.9% and 6.4% respectively.
Although equity markets remain buoyant, risks remain, including the Covid-19 pandemic, which continues to disrupt economic activity and supply chains, due partly to labour interruptions. This is leading to a flow-on effect into higher consumer prices, with the year-on-year inflation rate in the US remaining stubbornly high at 6.8%. The main risk of persistent inflation to asset prices will come via the inevitable higher interest rates, that typically accompany high inflation. Higher interest rates will not only lead to a higher cost of capital for those companies accessing the bond markets but also lower valuations, based on the higher discount factor that analysts and investors will apply to future cashflows.
To the performance of the portfolios, and Rivkin offers four options on the Mainstream Self-Managed Account (SMA) platform, being ASX Growth, US Growth, ASX Income, and Low Volatility.
The two Australian stock portfolios were the standout performers in December, with ASX Growth gaining 5.13%, while ASX Income increased by 3.23%, both net of fees. With the ASX Growth portfolio, much of the gains came from stocks within the Momentum Strategy, which was holding several commodity stocks, such as Lynas Rare Earths (LYC: +14.7%), South32 (S32: +13.6%), and IGO (IGO: 8.8%). More so, several Quality stocks such as Appen (APX) and Wisetech Global (WTC), which both gained over 10% in December, also helped the portfolio along. Within ASX Income, it was more a story of very consistent results across the portfolio, particularly within the Blue Chips strategy, with the bulk of stocks held outperforming the broader market over the month, with Commonwealth Bank of Aust. (CBA) the best of the bunch, increasing by 8.4% for the month. From the Events Strategy, December is usually a quiet time for corporate activity so there were no new purchases throughout the month. The current investments all continued along expected timelines, with regulatory approvals received for Sydney Airport (SYD) and Ausnet (AST) and scheme documentation sent out for AST and iCar Asia (ICQ). We expect to see ICQ and AST complete in January with SYD complete shortly after.
The US Growth portfolio lifted 0.15% for the month, net of fees, with gains across the Value component of the portfolio being largely offset by falls in US Momentum stocks, let by Advanced Micro Devices (AMD: -9.1%), NVIDIA (NVDA: -10.0%) and Xilinx (XLNX: -7.2%). The Australian dollar was also higher for the month, gaining 1.9%. Lastly, the Low Volatility portfolio was largely flat, increasing by just 0.04%, net of fees, following strong gains of 3.72% in November. It was a mixed bag in terms of the performance of the ETFs held, with gains across the bonds, being Australian fixed interest (VAF: +0.4%) and Investment grade corporate bonds (CRED: +0.7%) being offset by falls in the Nasdaq100 (NDQ: -1.6%) and Gold (GOLD: -0.1%). The portfolio finished out the calendar year with a gain of 6.25%.
Looking to the months ahead, and while 2021 resulted in a strong rally across broad equity markets, lifting all sectors higher, we believe a linear extrapolation of that trend is unlikely in 2022. We have already started to see certain parts of the market, such as technology stocks, underperform, while other sectors, such as commodity and materials do much better. Such a rotation will likely only quicken if inflation remains stubborn and interest rates continue to rise over the coming six months.
All performance data presented in this document relates only to the start date of the SMA portfolios on June 12, 2019. The performance below refers to the model portfolios, net of fees, which will not match exactly everyone’s account while providing an accurate representation.
Please use the investor portal or call us to check your account-specific performance.
*Past performance is not indicative of future performance. The inception date for ASX Growth and US Growth is 1 July 2021. Low Volatility and ASX income inception date is 12 June 2019
The above table shows the returns of each portfolio, being ASX Growth, US Growth, ASX Income, and Low Volatility, 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 account’s performance.
Please note that we don’t have historical data for the ASX and US Growth portfolios, as were included in the SMA offering from 1 July 2021 whereas ASX Income and Low Volatility remain unchanged.
For those interested in the historical performance of the individual strategies, please click here
| 2021 | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec |
| ASX Growth | -0.20% | 11.96% | -3.37% | -2.19% | -0.76% | 5.13% | ||||||
| US Growth | 2.56% | 3.11% | -2.94% | 1.47% | 5.47% | 0.03% | ||||||
| ASX Income | -0.37% | 1.62% | 1.77% | 7.22% | 0.83% | 1.33% | 0.96% | -0.16% | -1.27% | 1.34% | 1.99% | 3.32% |
| Low Volatility | 0.19% | -3.07% | 0.22% | 1.61% | 2.14% | -0.23% | 2.35% | 1.11% | -1.81% | -1.16% | 3.72% | -0.04% |
*Past performance is not indicative of future performance. The inception date for ASX Growth and US Growth is 1 July 2021. Low Volatility and ASX income inception date is 12 June 2019.
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.
*$70,000 for US Growth
**5.0% for Low Volatility
****1.0% for Low Volatility
The PDS and target market determination can be obtained by calling 02 8302 3600 or visiting our website.
This information has been prepared and issued by Rivkin Securities Pty Ltd (ABN: 87123290602, AFSL: 332 802).
Important Notice: Please consider your own financial situation before investing in our products. Rivkin does not provide personal financial advice and does not take anyone’s personal financial situation into account when structuring its model portfolios.
Past performance and/or backtesting is not a guarantee of future performance. Investing and trading carry financial risk, when judging performance please consider the different types of investments and levels of risk associated.
The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235150) (part of Perpetual Group ABN 45 003 278 831 AFSL No 235150) is the responsible entity and the issuer of units in the Mainstream Separately Managed account. It is general information only and is not intended to provide you with financial advice, and has been prepared without taking into account your objectives, financial situation or needs. You should consider the product disclosure statement, available on www.rivkin.com.au, prior to making any investment decisions. If you require financial advice that takes into account your personal objectives, financial situation or needs, you should consult your licensed or authorised financial adviser. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.
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. 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.
PERPETUAL BEING THE ISSUER AND RESPONSIBLE ENTITY UNDER The Trust Company (RE Services) Limited (Perpetual, Responsible Entity, RE, we, us or our), part of the Perpetual Group ABN 45 003 278 831 AFSL No 235150
