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FUNDS
M A N AG E M E NT
SE RVICE
QUARTERLY
INVESTMENT
REPORT
30 September 2015
Quarterly Investment Report, 30 September 2015
Produced by
P U B LI C TR U S TE E
GPO Box 1338 Adelaide South Australia 5001
T 08 8226 9200 | F 08 8226 9350
Country freecall 1800 673 119
www.publictrustee.sa.gov.au
Quarterly Investment Report, 30 September 2015
This Quarterly Investment Report presents the results of the Public Trustee’s Funds
Management Service performance and commentary for the quarter ended 30 September
2015.
Public Trustee is a statutory entity founded in 1881. At the end of the September 2015
quarter, it had approximately $902m in funds under management. Public Trustee’s Funds
Management Service has a distinguished record of high quality, proven and consistent
investment performance. We are proud of our long-standing reputation for trust and
reliability, and the vital role we play for our customers and their financial affairs.
Investment markets were volatile during the September quarter. Concerns around China’s
growth led to a correction in global share markets. Pleasingly, all of Public Trustee’s
investment strategies comfortably exceeded benchmark returns for the September quarter
2015 and continue to do so over 1, 3 and 5 year periods.
SIS Performance versus Benchmark to 30 September 2015
Cash
benchmark
variance
Last 3
months
0.55%
0.29%
0.26%
Last 12
months
2.52%
1.46%
1.06%
Capital Stable
benchmark
variance
-0.05%
-0.46%
0.41%
Balanced
benchmark
variance
Performance
3 years
5 years
3.08%
1.73%
1.35%
3.90%
2.51%
1.39%
3.92%
3.44%
0.48%
5.81%
5.02%
0.79%
5.94%
5.26%
0.68%
-0.63%
-1.65%
1.02%
5.16%
4.35%
0.81%
8.66%
7.79%
0.87%
7.91%
7.17%
0.74%
Growth
benchmark
variance
-1.38%
-3.03%
1.65%
5.61%
4.01%
1.60%
10.76%
9.64%
1.12%
9.07%
7.95%
1.12%
Equities
benchmark
variance
-2.86%
-5.39%
2.53%
5.91%
2.99%
2.92%
13.84%
12.50%
1.34%
10.28%
8.74%
1.54%
*After fees
In the context of strong 3 and 5 year returns for share markets some volatility is not
unexpected. As always we are focused on the long term and in delivering sound returns to
our customers.
If you would like to add to your portfolio, you may do so at any time. Please contact Elaine
Pringle (08) 8226 1746 for more information.
Debra Contala
Public Trustee
6 November 2015
Quarterly Investment Report, 30 September 2015
Market Overview
Global
Sharp falls in the Chinese share market and concerns about their economy led to a sell-off
in global shares during the quarter. In Europe, signs that a recovery might be on its way
remain patchy despite stimulus from the European Central Bank.
The bright spot in the global economy is the US, with recent data showing continued
positive signs. Consumer spending and the housing market have held up relatively well
despite the softening of the global economy and uncertainties in China.
Australia
The Reserve Bank of Australia (RBA) kept official interest rates on hold at 2.00%. The
Australian Dollar fell against all major currencies during the September quarter, finishing at
$0.70US.
On the 15 September, Malcolm Turnbull was sworn in as the new Prime Minister of
Australia.
Share Markets
Australian shares (ASX 300) fell by 6.5% over the quarter, due largely to a poor month in
August. Global share markets were also volatile, however on an unhedged basis they were
up 0.4% due to the fall in the Australian dollar.
Key Developments
Key developments over the quarter were:
Outperformance from benchmark for all of Public Trustee’s investment strategies;
Depreciation of the Australian dollar against all major currencies, and;
Concerns around China’s economy.
Since 1990, funds invested through Public Trustee Common Funds have grown from
$160 million to $902 million today.
Quarterly Investment Report, 30 September 2015
Cash Investment Strategy
The Reserve Bank kept official interest rates on hold during the quarter at 2.00%. The
fund’s return of 0.55% for the quarter was above the benchmark return by 0.26%. The
strategies 3 and 5 year returns remain at 3.08% and 3.90%, which are 1.35% and 1.39%
respectively ahead of benchmark.
Crediting Rate:
The investment return for this fund is calculated daily, based on the net earnings of the
fund.
The average crediting rate for the quarter was 2.20%, and the daily rate at 30 September
2015 was 2.10%.
Fund size: $345 million.
Objective:
Funds assigned to the cash investment strategy are invested in the Public Trustee's Cash
Common Fund. The objective of the Cash Common Fund is the preservation of capital. The
strategy is intended for investors who are seeking secure returns at prevailing short term
interest rates.
Capital Stable Investment Strategy
The strategy’s return for the quarter was
-0.05%, outperforming the benchmark return
by 0.41%. The strategy’s 3 year and 5 year
returns of 5.81% and 5.94% are 0.79% and
0.68% respectively ahead of benchmark.
Overseas
Fxd Int
10.2%
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-0.05%
3.92%
5.81%
5.94%
Benchmark**
-0.46%
3.44%
5.02%
5.26%
0.41%
0.48%
0.79%
0.68%
Difference
Australian Overseas
Shares
Shares
11.0%
9.2%
Short Term
Fxd Int
29.6%
Fund size: $73 million.
Performance
Cash
19.8%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to achieve a higher return than cash by strategically
allocating 25% of the funds in growth assets and the balance in fixed interest and cash. This
strategy is suitable for investors who are seeking higher returns than cash over time and are
prepared to accept a slight increase in risk in terms of downward movements in the value of
their capital from time to time.
Property
5.1%
Long Term
Fxd Int
15.1%
Quarterly Investment Report, 30 September 2015
Balanced Investment Strategy
The strategy’s return for the quarter was
-0.63%, outperforming the benchmark return
by 1.02%. The strategy’s 3 year and 5 year
returns of 8.66% and 7.91% are 0.87% and
0.74% respectively ahead of benchmark.
Short Term
Fxd Int
9.8%
Fund size: $204 million.
Long Term
Fxd Int
25.0%
Performance
Overseas Cash
Fxd Int 4.9%
10.2%
Overseas
Shares
18.2%
Property
10.1%
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-0.63%
5.16%
8.66%
7.91%
Benchmark**
-1.65%
4.35%
7.79%
7.17%
1.02%
0.81%
0.87%
0.74%
Difference
Australian
Shares
21.8%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to gain a higher return by strategically allocating 50% of the
funds in growth assets and the balance in fixed interest and cash. This strategy is suitable
for medium term investors who seek higher returns and are prepared to accept some
volatility in the value of the funds invested.
Growth Investment Strategy
The strategy’s return for the quarter was
-1.38%. This outperformed the benchmark by
1.65%. The strategy’s 3 year and 5 year
returns remain at 10.76% and 9.07%, which
are both 1.12% ahead of benchmark.
Overseas Cash
Fxd Int 4.8%
5.1%
Term
Fxd Int
15.0%
Property
10.0%
Fund size: $204 million.
Performance
Short Term
Fxd Int
Long 4.9%
Overseas
Shares
28.4%
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-1.38%
5.61%
10.76%
9.07%
Benchmark**
-3.03%
4.01%
9.64%
7.95%
1.65%
1.60%
1.12%
1.12%
Difference
Australian
Shares
31.8%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to attain high long term returns in excess of inflation. It has a
70% strategic allocation to growth assets and the balance in fixed interest and cash. This
strategy is suitable for long term investors who are prepared to accept high volatility in the
value of the funds invested.
Quarterly Investment Report, 30 September 2015
Equities Investment Strategy
Australian
Shares
49.4%
The strategy’s return for the quarter was
-2.86%, which outperformed the benchmark
by 2.53%. The strategy’s 3 year and 5 year
returns remain at 13.84% and 10.28%, which
are 1.34% and 1.54% respectively ahead of
benchmark.
Overseas
Shares
50.6%
Fund size: $77 million.
Performance
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-2.86%
5.91%
13.84%
10.28%
Benchmark**
-5.39%
2.99%
12.50%
8.74%
2.53%
2.92%
1.34%
1.54%
Difference
*Annualised ** Index return on Strategic Asset Allocation
Objective:
The equities strategy offers 100% exposure to the world’s share markets. Over the long
term, it offers the prospects of high returns but with the likelihood that capital values will
fluctuate broadly in line with the fortunes of the share markets. Typically, this strategy may
be used as a return booster in conjunction with one of the other investment strategies.
The objective of this strategy is to gain exposure to both domestic and overseas share
markets. This strategy has a 55/45 strategic allocation to the two markets respectively.
NB: All the above investment strategies are exercised through investment in one, or a
combination of, the Public Trustee Common Funds.
The investment returns presented in this quarterly report relate to past performances and must not be
taken to imply that this predicts future returns of the funds. The information and opinions contained in this
report have been compiled or are arrived at by Public Trustee from sources believe to be reliable, but no
representation or warranty, expressed or implied, is made as to their accuracy, completeness or
correctness.
The information in this report is of a general nature. Public Trustee strongly recommends that you contact
the Office to discuss your particular circumstances. Public Trustee does not accept any liability whatsoever
for any direct or consequential loss arising from any usage of information herein contained.
PUBLIC TRUSTEE
GPO Box 1338 Adelaide South Australia 5001
T 08 8226 9200 | F 08 8226 9350
Country freecall 1800 673 119 | www. publictrustee.sa.gov.au