Aussie broad-cap funds slide in market correction
Terrible October lived up to its reputation and the market correction saw Australian broad-cap funds slide, with only two passive funds managing to stay above the line.
Wealth Within’s chief analyst, Dale Gillham, said the All Ordinaries Index fell around 4.5 per cent as heavy sell-offs of US tech stocks rippled through to the Australian market.
The only funds to rally during the month were the BetaShares’ Australian Equities Strong Bear Hedged and BetaShares’ Australian Equities Bear Hedged, which returned 15.58 per cent and 6.56 per cent in the month.
The funds aim to help investors profit from, or protect against, a declining Australian share market, and seek to generate magnified returns that are negatively correlated to the returns of the share market (as measured by the S&P ASX 200), so it’s no surprise they outperformed.
While the negative returns produced by all other funds in the sector didn’t significantly affect their long-term performance, the leader board for the year to last month’s end has slightly changed, with Sandon Capital Activist sitting high with returns of 16.90 per cent.
DDH Selector Australian Equities is still in the top five, returning 14.94 per cent for the year to last month’s end, and Lincoln Australian Growth was similarly a stalwart, returning 14.22 per cent.
Gillham said the energy sector was hit the hardest, which was down 8.5 per cent, IT was down 6.1 per cent and consumer discretionary was down 7.6 per cent, but the declining market could actually present some great opportunities.
“I personally get excited at times like this because the bigger the decline, the bigger the opportunity to profit from the next rise,” he said.
“Is it possible that we may see further falls? Yes, but any fall will be very short-lived and at most around two per cent in price. My expectation is that by the end of the year the All Ordinaries Index will be around or above the August high of 6481.30 points, which equates to a 12 per cent rise from current levels.
“So now is not the time to panic, but rather get excited and get ready to buy.”
The chart below shows the performance of the funds as against the All Ordinaries Index for the year to last month’s end.
AUTHOR
Anastasia Santoreneos
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
