Has the Austrac scandal affected funds with high Westpac allocations?
Australian equity funds that had a high allocation towards Westpac have performed relatively well over the past three years and most have managed to recover their returns in the wake of the money-laundering scandal, giving an indication of the resilience of the bank.
Westpac came out of the Royal Commission relatively unscathed compared to the other major banks but the last two weeks had all eyes turned to Westpac in the wake of its AUSTRAC issues.
Over the last month to 29 November, 2019, Westpac’s share price dropped 13.78%, according to Market Index charts, and had plummeted 22.22% over the last five years.
Money Management decided to find out how funds that had high allocations towards Westpac (over 10%) had performed over the last three years and over the last month. This excluded index-trackers.
According to FE Analytics, over the three years to 31 October, 2019, all the funds performed well – between 39.9% and 28.47% – except one fund that made a return of 3.83%.
Funds with high Westpac allocations performance over three years to 31 October 2019
The highest performing fund, Antares High Growth Shares Personal returned 39.9% over the three years and had a 10.3% allocation towards Westpac. The fund also had the best recovery after Austrac crisis came into light with a return of 2.22% over the month to 28 November, 2019.
Antares did not respond to Money Management’s request for a comment on their Westpac allocation.
Mutual 50 Leaders Australian Shares fund followed the Antares fund with a return of 36.93% and has returned 1.33% over the last month. The fund has an 11.5% allocation towards Westpac.
Mutual told Money Management that the firm was aware of Austrac issues and after the details emerged, the fund reviewed its Westpac holdings and trimmed the position by around 5%, taking its allocation down to about 5%.
Funds with high Westpac allocations performance over month to 28 November 2019
Unsurprisingly, the fund with the largest allocation towards the bank was the VanEck Australian Banks ETF at 19.37%. The fund returned significantly lower at 28.47% and has been unable to recover since the mid-November as the fund has lost 4.72% over the month to 28 November, 2019.
However, it was the BetaShares – Australian Dividend Harvester that has struggled to recover after consistent falls in its return since May 2017. The fund over the three years returned 3.8%. It also has been unable to recover since the Austrac scandal with a loss of 0.24% over the month to 28 November, 2019. The fund had a 10.8% allocation to Westpac.
It is interesting to note, though, that while the Big Four banks took a beating during the Royal Commission their share prices rose significantly during that time, with NAB’s share price increasing the most at 25.69% according to ASX data. AMP’s share price during this time fell 25%.
However, over the five years to 29 November, 2019 all the bank’s share prices, except Commonwealth Bank, had their share price plummet with the largest loss experience by Westpac at 22.2%.
AMP’s share price had plunged 64.88% during this time, according to Market Index data.
Share price changes of Big Four banks and AMP
|
Bank |
Share price change during Royal Commission |
Share price change over the five years to |
|
Westpac |
18.37% |
-22.2% |
|
Commonwealth Bank |
11.66% |
2.81% |
|
ANZ |
16.6% |
-21.29% |
|
NAB |
25.69% |
-17.72% |
|
AMP |
-25% |
-64.88% |
Source: ASX and Market Index
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