Cautious mixed asset funds still holding up
Cautious mixed asset funds are still holding up better than their aggressive counterparts, as not all have benefitted from the rebound of equities.
According to FE Analytics, within the Australian core strategies universe, the mixed asset cautious sector lost an average of 1.32%, while the aggressive sector lost an average of 8.07%, since the start of the year to 30 June, 2020.
In the cautious sector, there were nine funds that had positive returns, but only two had a return over 1%.
The Bendigo Defensive Index returned 1.1%, while Macquarie Multi-Asset Opportunities was the best performer in the sector, returning 6.61%.
In its latest report, the Macquarie fund said it was positioned defensively, but investment opportunities that are generated by the significant re-pricing in global risk assets should not be discounted.
“As a result, the fund maintained a modestly higher allocation in growth asset allocation compared to previous months,” it said.
“In the fund’s high-quality core credit holdings, a defensive exposure was maintained throughout June; during the month, we maintained a low exposure to Australian and international equities.”
Macquarie said credit spreads had contracted sharply and investors had followed the money.
“The deflationary shock from lockdowns, along with central banks’ commitment to keeping rates low for an extended period and discussions about engaging in yield curve control, are combining to keep bond yields low despite the euphoria in risk assets,” it said.
Without a vaccine readily available, it was expected the current economic environment would remain during H2.
“We assume that the hurdle for countries to re-impose lockdowns is expected to be high, but it seems likely that the new social distancing environment will persist,” it said.
“This environment will pose ongoing challenges for certain sectors and companies, particularly in services, where survival is not a certainty.
“Here, both the top down analysis and the bottom up sector and company analysis will play important roles in the security selection process.”
Performance of mixed asset sectors since the start of the year to 30 June 2020
AUTHOR
Chris Dastoor
Recommended for you
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
