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
Selfwealth has provided an update on the status of its scheme implementation deed with Bell Financial Group as well as whether rival bidder Svava remains in the picture.
Magellan Financial Group has reported its first half FY25 results while appointing a new chief financial officer and promoting Sophia Rahmani to chief executive.
Schroders Australia has launched two active ETFs and plans to further expand its listed range over the year ahead.
Platform Netwealth has reported its financial results for the first half of FY25, reporting an 80 per cent increase in net flows, with its CEO viewing a “huge opportunity” from private assets.
