Christmas 2018

Posted by: Alan Rimmer 1 month, 1 week ago

With the festive season almost upon us, a quick note to update you on the progress of your investments, and to take care of some pre-holiday housekeeping.

Investment Funds

It has not been an easy time of late to extract much of a return from investment markets. Most things outside of bank deposits are struggling in the current financial year, and even one-year returns are lukewarm at best.

Return to end November 2018

Market*

Financial Year To Date

1 year

Bonds & Fixed Interest

0.5%

1.0%

Listed Property

-1.4%

1.6%

Australian Shares

-8.0%

-1.1%

International Shares (exc Aust.)

-0.1%

1.9%

ARA IF Defensive

0.9%

2.9%

ARA IF Growth

0.5%

3.3%

ARA IF Equities

0.5%

3.1%

In that context, while our returns in isolation don’t look that flash, it’s a pretty good result to be even above water this year, let alone ahead of all the major market indices. We can thank excellent performance from a couple of our fund managers, notably Sterling Equities, and a level of cash and term deposits in all portfolios that is intentionally high. 69% of Defensive, 46% of Growth and 34% of Equities is made up of cash and TDs.

Cash is often derided by investment blowhards experts as being a waste of space and a ticket to low returns. But we’ve said many times over the years that it is not the role of cash to provide a stellar return. Its role in a portfolio is to provide protection against the impact of falls in other investment markets – nothing does that job as well as cash – and to be available to buy up assets that have become cheap, courtesy of those same market falls.

So right now is exactly the time to be holding lots of cash. Let it do its job, even though it requires a bit of patience with the low nominal returns. In time we will be able to use that cash to good effect – in fact we’ve already added a little to our holdings with Sterling. In the meantime it provides some peace of mind in a period of volatility that looks like it could be with us for a while.


Christmas Closure

 ARA’s offices will close on Friday December 21 at midday, and re-open on Wednesday January 2.

Please note, if you wish to make a withdrawal from your Retirement Fund or Investment Fund account prior to Christmas and the shutdown period, we will need to receive your signed request by close of business on Wednesday December 19.

It has been a privilege to again be of service this year, and we wish you and your families the very best for the festive season and a safe and happy New Year.

On behalf of us all at ARA

Alan Rimmer

Managing Director.

 

* Benchmarks used:

Market

Benchmark

Bonds & fixed interest

Composite 30% Bloomberg Ausbond/70% Bloomberg Barclays Global Aggregate (exc currency)

Listed Property

S&P/ASX 300 A-REIT Index

Australian Shares

All Ordinaries Accumulation Index

International Shares

MSCI World Index ex Australia (exc currency)

Source:    Vanguard & ARA

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