Download SIS Performance versus Benchmark to 31 March 2016

FUNDS
M A N AG E M E NT
SE RVICE
QUARTERLY
INVESTMENT
REPORT
31 March 2016
Quarterly Investment Report, 31 March 2016
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 (landline only)
www.publictrustee.sa.gov.au
Quarterly Investment Report, 31 March 2016
This Quarterly Investment Report presents the results of the Public Trustee’s Funds
Management Service performance and commentary for the quarter ended 31 March
2016.
Public Trustee is a statutory entity founded in 1881. At the end of the March 2016
quarter, it had approximately $913m 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 quiet volatile for the March quarter. January and February
were generally poor months for shares whilst defensive assets like global bonds
performed well. In March we saw a reversal, with shares rising and global bonds
retreating. Overall Public Trustee’s investments continue to perform well and use of
active fund managers with a bias towards high quality and defensive style investments
has been beneficial. Pleasingly, all investment strategies are outperforming their
standard industry benchmarks over 1,3 and 5 years.
SIS Performance versus Benchmark to 31 March 2016
Cash
benchmark
variance
Last 3
months
0.54%
0.33%
0.21%
Last 12
months
2.24%
1.22%
1.02%
Capital Stable
benchmark
variance
0.29%
0.60%
-0.31%
Balanced
benchmark
variance
Performance*
3 years
5 years
2.79%
1.57%
1.22%
3.56%
2.23%
1.33%
0.86%
-0.40%
1.26%
4.89%
4.28%
0.61%
5.46%
4.98%
0.48%
-0.10%
-0.03%
-0.07%
-0.23%
-2.30%
2.07%
7.05%
6.27%
0.78%
7.24%
6.70%
0.54%
Growth
benchmark
variance
-0.92%
-1.06%
0.14%
-1.47%
-4.07%
2.60%
8.38%
7.24%
1.14%
8.14%
7.15%
0.99%
Equities
benchmark
variance
-3.17%
-3.37%
0.20%
-4.67%
-7.53%
2.86%
9.77%
8.44%
1.33%
8.72%
7.33%
1.39%
*After fees
During the March quarter Public Trustee continued to allocate more investment funds
into unlisted property and infrastructure. These changes will assist to reduce the
volatility of the funds and aims to enhance the income returns for 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
11 May 2016
Quarterly Investment Report, 31 March 2016
Market Overview
Global
Concerns continued regarding global growth during the quarter, particularly in China.
The Federal Reserve (Fed) put any further increase in US interest rates on hold, after
fears of a slowdown in China and collapsing oil prices which hit record lows. Security
was also a concern for European markets in the wake of the Brussels terrorist attacks
in March. In addition, the European Central Bank (ECB) announced additional stimulus
measures, including rate cuts.
Australia
The Reserve Bank of Australia (RBA) kept official interest rates on hold at 2.00%. The
Australian Dollar appreciated against all major currencies during the March quarter,
finishing at $0.765US.
Share Markets
Performance was subdued in the first quarter of 2016. The Australian Share market had
a volatile first half of the quarter, before recovering during the last half of the quarter.
Australian shares (S&P/ASX 300) closed slightly lower for the quarter down 2.6%.
Key Developments
Key developments over the quarter were:




Share markets have been volatile;
Appreciation of the Australian Dollar;
Sharp falls in commodity prices; and
US interest rates on hold.
Since 1990, funds invested through Public Trustee Common Funds have grown from
$160 million to $913 million today.
Quarterly Investment Report, 31 March 2016
Cash Investment Strategy
The Reserve Bank kept official interest rates on hold during the quarter at 2.00%. The
fund’s return of 0.54% for the quarter was above the benchmark return by 0.21%. The
strategies 3 and 5 year returns remain at 2.79% and 3.56%, which are 1.22% and
1.33% 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 2.16%, and the daily rate at 31 March
2016 was 2.20%.
Fund size: $350 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
0.29% underperforming the benchmark
return by 0.31%. The strategy’s 3 year and
5 year returns of 4.89% and 5.46% are
0.61% and 0.48% respectively ahead of
benchmark.
.
Fund size: $74 million.
Cash 19%
Australian
Shares 11%
Overseas
Shares 7%
Overseas
Fixed Int
12%
Short Term
Fixed Int
28%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to achieve a higher return than cash by strategically
allocating 26.5% of the funds in growth assets and the balance in fixed interest and cash. It
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
8%
Long Term
Fixed Int
15%
Quarterly Investment Report, 31 March 2016
Balanced Investment Strategy
Overseas
Fixed Int
11%
Short
Term
Fixed Int
9%
The strategy’s return for the quarter was
-0.10% underperforming the benchmark
return by 0.07%. The strategy’s 3 year and
5 year returns of 7.05% and 7.24% are
0.78% and 0.54% respectively ahead of
benchmark.
Long Term
Fixed Int
24%
Fund size: $205 million.
Performance
Cash 5%
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-0.10%
-0.23%
7.05%
7.24%
Benchmark**
-0.03%
-2.30%
6.27%
6.70%
Difference
-0.07%
2.07%
0.78%
0.54%
Australian
Shares 21%
Overseas
Shares 14%
Property
16%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to gain a higher return by strategically allocating 52.5% of
the funds in growth assets and the balance in fixed interest and cash. It is suitable for
medium term investors who seek higher returns and are prepared to accept some volatility
in the value of the funds invested.
Overseas
Short Term Fixed Int 6% Cash 5%
Fixed Int 5%
Growth Investment Strategy
The strategy’s return for the quarter was
-0.92%. This outperformed the benchmark
by 0.14%. The strategy’s 3 year and 5 year
returns remain at 8.38% and 8.14%, which
are 1.14% and 0.99% ahead of benchmark.
Long Term
Fixed Int
14%
Property
16%
Fund size: $210 million.
Performance
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-0.92%
-1.47%
8.38%
8.14%
Benchmark**
-1.06%
-4.07%
7.24%
7.15%
0.14%
2.60%
1.14%
0.99%
Difference
Australian
Shares 32%
*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
71.5% strategic allocation to growth assets and the balance in fixed interest and cash. It is
suitable for long term investors who are prepared to accept high volatility in the value of the
funds invested.
Overseas
Shares 22%
Quarterly Investment Report, 31 March 2016
Equities Investment Strategy
Overseas
Shares
42%
The strategy’s return for the quarter was
-3.17%, which outperformed the benchmark
by 0.20%. The strategy’s 3 year and 5 year
returns remain at 9.77% and 8.72%, which
are 1.33% and 1.39% respectively ahead of
benchmark.
Fund size: $75 million.
Performance
Quarter %
1 year %
3 year %*
5 year%**
Return (after fees)
-3.17%
-4.67%
9.77%
8.72%
Benchmark**
-3.37%
-7.53%
8.44%
7.33%
1.33%
1.39%
Difference
0.20%
2.86%
*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.
Australian
Shares
58%
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