Australian Cash & Fixed Interest — Review
Short-term rates are unchanged, with the 90-day bank bill yield just above zero. Bond yields have also been steady, and at 1.22%, the 10-year Commonwealth bond yield is close to where it was a month ago. The Australian dollar has weakened during September, and year to date is now down 4.7% in overall trade-weighted value.
Australian & International Property — Review
The A-REITs have done well, and have matched the strong performance of the overall sharemarket. The S&P/ASX 200 A-REITs index is up 13.3% in capital value and has returned 16.2% including dividends. The sector saw the IPO on Sept. 6 of a substantial new name, the Healthco Healthcare and Wellness REIT, with some AUD 550 million of healthcare assets. The launch went well, and at AUD 2.34 it is currently trading at a 17% premium to its listing price.
Global listed property has also performed well, and year to date the FTSE EPRA/NAREIT Global Index in U.S. dollars is up by 14.7% in capital value and has delivered a total return of 17.5% including dividends. The result has been heavily influenced by the very strong U.S. market, which has returned 27.8%, and to a lesser degree by the U.K. market, which has returned 23.6% (also in dollars). The Asia-Pacific region (3.9% return) and the eurozone (3.5%) have been subdued, while emerging markets went backwards with a loss of 8.3%.
Australasian Equities — Review
Australian shares have done well year to date, and the S&P/ASX 200 is up 12.9% in capital value and has returned 16.4% including dividends. Two prime beneficiaries of the faster than expected recovery from the 2020 COVID-19 outbreak have led the way, with the financials (ex the A-REITs) up 23.5% and consumer discretionary stocks, boosted by the release of the spending power pent-up during the pandemic, up 21.3%.
International Fixed Interest — Review
The environment of a strong bounce in economic activity out of the first round of COVID-19, bringing various inflationary pressures with it, has not been congenial for bonds. Yields remain higher than where they started the year, and running yields have been too low to offset the capital losses. Year to date in U.S. dollars the Bloomberg Barclays Global Aggregate Bond Index is down by 2.1%: government bonds have lost 3.4%, while higher yields have helped protect the overall return from corporate bonds, which are down by 0.5%.
International Equities — Review
September has not been kind to world shares, with prices peaking early in the month and sliding since then. The recent weakness has been modest relative to the substantial gains earlier this year, however, so year to date, the major share indexes are still well ahead: the MSCI World index of developed markets in U.S. dollars is up by 15.8%. Performance has remained regionally diverse: the U.S. (S&P500 up 18.3%) and the eurozone (FTSE Eurofirst300 up 13.3% in U.S. dollars) have led the way, while Japan (Nikkei up 4.2% in dollars) has lagged. Emerging markets are barely ahead (MSCI Emerging Markets in U.S. dollars up 0.4%) and the key BRIC markets (Brazil, Russia, India, China) are down 4.8%.
Source: Morningstar Australasia Pty Ltd
Performance periods unless otherwise stated generally refer to periods ended September 22, 2021.