Big 4 exposure didn’t hold back best Aus geared equity funds
The best performing funds in the ACS Equity – Australia Geared sector saw success despite under-performance from the Big Four banks.
According to data from FE Analytics, the ACS Equity – Australia Geared sector returned 40.46% from the year to 30 November, 2019.
In their top five holdings, the top three funds held Commonwealth Bank of Australia (CBA) and Westpac, three of the top four held National Australia Bank (NAB), but only one held ANZ.
The best five performing funds were Colonial First State Wholesale Geared Share (63.4%), Ausbil Australian Geared Equity (56.43%), BetaShares Geared Australian Equity Hedge (56.35), CFS Acadian Wholesale Geared Australian Equity (53.87%), OnePath Wholesale Geared Australian Shares Index Trust B (50.46%).
Melbourne-based medical biotech company CSL was one of the top performing stocks that boosted the performance of those funds.
Colonial First State Wholesale Geared Share top holdings were CSL (9.37%), CBA (8.19%), BHP (7.55%), Westpac (6.83%) and Macquarie Group (5.09%) as at 31 August, 2019.
Ausbil’s top holdings were CSL (15.17%), NAB (13.27%), BHP (12.93%), CBA (12.36%) and QBE (9.79%), as at 31 October, 2019.
Betashares’ top holdings were CBA (7.8%), CSL (6.5%), BHP (6%), Westpac (5.5%) and NAB (4.6%), as at 31 October, 2019.
CFS Acadian’s top holdings were Woolworths (3.59%), Aurizon (3.46%), NAB (3.33%), Telstra (3.07%) and ANZ (2.95%), as at 31 August, 2019.
In its quarterly review, Ausbil noted in September the Australian equity market rebounded from a weak August.
“The aggressive rotation from momentum and growth stocks to cyclical and value stocks was evident in September, with the communication services (-2.9%), REITs (-2.3%) and health care (-2.2%) sectors underperforming,” it said.
“And the banks (+5.0%), energy (+4.5%), consumer discretionary (+3.3%) and materials (+3.0%) sectors outperforming.”
“The RBA decided to keep interest rates unchanged in September, though proceeded to reduce rates by 25bps [basis points] to a record low of 0.75% in early October, with the RBA ‘prepared to ease monetary policy further if needed’.”
However, its October review said the pullback in the rotation towards value stocks experienced that month was largely due to earnings expectations from the banks.
“Weak consensus earnings forecasts, increased capital scrutiny, ongoing remediation costs and a low interest rate environment continue to be major challenges for banks,” it said.
“Resource companies also underperformed with iron ore prices tapering off, with supply normalising since the Vale mining disaster.
“Despite weaker Bank and Resources sector performance, repositioning of portfolios will be evident if the rotation into value continues to run its course.”
Best performing Australian equity geared funds over the year to 29 November 2019
AUTHOR
Chris Dastoor
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
