Aussie equities see positive reversal in Q1: Zenith
According to Zenith Investment Partners, the performance of Aussie equities was stronger than expected due to declining inflation alongside China’s reopening.
In a quarterly managed account update, Zenith’s head of investment consulting, Steven Tang, and senior investment consultant, Shailesh Jain, expressed confidence in Q1’s performance.
For fixed income markets, Tang said Q1 had been better than people had expected.
“The outlook looked a lot more positive than last quarter. Global growth looked a lot better, inflation came down, China’s reopening and energy costs came down, which was all very positive for markets. You did see some wobbles, but they were taken as a positive by markets,” Tang noted.
With growth stocks outperforming value stocks, equities experienced a market reversal from the last quarter.
“We saw energy and healthcare stocks come under pressure, which had done reasonably well in the last two quarters. On the flip side, we saw tech stocks being strong contributors,” said Jain.
However, Australian shares underperformed against global shares due to a larger weighting to banks.
During the highly volatile period, Jain remained pleased with Zenith’s portfolio outcome. International shares were the strongest contributor to the performance of the firm’s balanced portfolio.
“Active managers did most of the heavy lifting in terms of outperformance, but also having a small cap bias was very beneficial, which drove most of the outperformance,” Jain added.
Moreover, fixed income was another positive contributor to Zenith’s portfolios, with Australian bonds outperforming global ones and corporate bonds performing well.
Tang identified that strong bond markets assisted the growth of the Western Asset Australian Bond fund and the PIMCO Global Bond fund, which saw returns of 5.15 per cent and 2.19 per cent, respectively.
Additionally, the Ardea Real Outcome fund saw strong returns of 4.19 per cent, despite market volatility.
Looking forward, Tang said: “As we see cash rates peaking as well as the upside of inflation dissipating, there is an opportunity to add interest rate sensitivities further into our portfolios”.
AUTHOR
Jasmine Siljic
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