Balanced funds post negative returns

Balanced funds posted their first month of negative returns in March since July last year, on the back of weaker share markets.

The median balanced fund lost 0.4 per cent during the month, according to surveys released by Mercer Investment Consulting and Intech Investment Consultants.

Despite the negative March returns, balanced funds have returned 9.5 per cent for the financial year to March 31, which is still on target to meet objectives of 3 to 4 per cent above inflation per annum.

Perpetual was the top-performing fund in both of the researchers’ surveys for the financial year to March 31, with a return of 12.9 per cent. This was nearly 1 per cent ahead of Ausbil Dexia’s returns on Mercer’s survey and just over 1 per cent clear of Invesco’s returns on Intech’s survey.

The March performance of the funds coincided with the end of a 10-month bull run on the Australian share market, with Australian shares returning -0.9 per cent during the month.

International shares returned -1 per cent in March in local currency terms, led by US shares (-1.6 per cent) and European shares (-0.4 per cent). Japan recorded a 0.4 per cent increase.

A weaker Australian dollar came to the rescue for unhedged investors, with a weaker Australian dollar providing a further 1.7 per cent for international shares and 0.7 per cent for international bonds.

The Australian share market began March by posting new record highs, according to a Mercer media release, but succumbed to the falling US equity market, concerns over rising domestic interest rates and profit taking.

Weakness in the Australian share sector was broad based, with materials posting -4.2 per cent, banks -2.1 per cent, large caps -1.2 per cent and small caps -0.8 per cent. Mid caps bucked the trend, returning 0.2 per cent.

Not so for property securities, which returned -1.3 per cent during March, the third month in succession the sector has underperformed the sharemarket, including a 3.2 per cent sell off in February.