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 February 2021

Equity markets were somewhat choppy through February and followed a similar path as what occurred in January, that being initial gains being negated by a swift sell-off into the end of the month. The ASX200 closed at the end of February at 6673.29, up 1.45%. In the US, equities also sold off into month end, with the S&P500 closing at 3811.15 (+2.61%), after reaching a new all-time closing high of 3,934.83 mid-month. Technology stocks sold off more aggressively, evidenced by the performance of the Nasdaq100, which closed 0.12% lower in February, some 6.5% lower than the closing high for the month.

It was not just technology stocks, but ‘growth stocks’ in general which suffered the most through February. This was partially due to the recent surge in bond yields (interest rates), with the yield on the US 10-year bond gaining 33.6% in February, ending the month at 1.46%. While the level itself is not overly concerning, it is more the speed of the change that has caught some off guard. At current levels, the yield on the US 10-year bond has returned to pre-COVID-19 levels. The move higher in yields has been driven partially by increasing inflation expectations, which has been showing itself in higher commodity prices such as oil and copper. The link to equities is twofold, firstly as interest rates rise the cost of debt financing increases, and secondly, the effect on valuations decreases, as the discount rate used in discounting future cash flows is now higher. This tends to impact growth companies to a much higher degree compared to more defensive companies, such as banks, insurers, and telecommunication companies. All in all, however, we do not believe that current interest rate levels pose a significant problem for the broader economy, and more so, we believe that any surge in inflation is likely to be transitory until economies are weaned off government stimulus.

Looking now at the performance of the Rivkin SMA strategies, of which there are six individual strategies. It is not surprising that the ASX Income strategy was the best performer for the month, gaining +1.62%, given its larger weighting to ASX Blue Chips companies, with the portfolio comprised of around 50% to large bank stocks. For the other ASX focused strategies, the ASX Momentum portfolio gained 0.92%, with OZ Minerals (OZL) and Nine Entertainment (NEC) the best performing stocks for the month, while Value ASX declined by 7.28%, with Appen (APX) and Kogan (KGN) having the largest negative impact on the portfolio. In the US, the US Momentum portfolio declined 4.11%, impacted by its relatively large weight to technology stocks at present, while US Value declined by 0.46%. Lastly, the low volatility portfolio declined 3.07% in February. This portfolio was impacted by not only falling bond prices (bond prices move inverse to bond yields) but also a weaker gold price, which together make up approximately 50% of the low volatility portfolio. Based on the historical modelling of the Low Volatility portfolio, drawdowns, which means the decline in portfolio value from the high-water mark, have been limited to a maximum of approximately 10%, which is considerably less than that of equity markets, so the current drawdown we are seeing is nothing out of the ordinary.

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, while providing an accurate representation, will not match exactly everyone’s account. 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.

Important Notice:

Performance data shown represents past performance. Past performance 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.

All information and data on this post are provided in good faith and are believed to be accurate and reliable at the time of publication. However, the returns shown in this post might differ from yours due to various reasons such as the time you have entered the market and the amount invested. If you are seeking for clarification, please contact us on 1300 748 546.