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Growth and quality still the focus for top Aussie shares
The healthcare and consumer sectors were the best places to be for investors in Australian shares last financial year, Mercer’s latest investment survey shows, while banking stocks predictably suffered amid the fallout of the Royal Commission.
The strategies that performed strongest continued to be growth and quality-focused, with Yee Hou Seck, an Australian equities researcher at Mercer, saying that “the leading strategies had some commonality in stock exposure that drove portfolio returns, both in large caps and small caps”.
The survey showed that fiscal 2018 was another strong year for alpha among Australian shares, reinforcing the continued outperformance of active management strategies over the S&P ASX 300 Accumulation Index over longer-term periods.
Mercer warned that “the ability to generate alpha was very much dependent on the investment approach taken over the financial year” however. While the long-only, long-short and socially responsibly investment sub-universes outperformed the index by 1.8 to 2.2 per cent, the income-oriented and targeted volatility sub-universes lagged the index by 4.9 and 4.4 per cent respectively over the year.
The top 10 performing Australian shares strategies for the year to June 2018 were:
Looking overseas, growth stocks from across different sectors were present in the portfolios of the top performing growth strategies for global shares. Cyclical industries such as energy, materials, consumer discretionary and industrials outperformed more defensive industries such as utilities, consumer staples and telecoms.
Information technology also continued to perform strongly, with Mercer finding that the tech rally for the fiscal year was broader than just FAANGS. This was reflected in growth continuing to outperform value styles.
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The Australian Retirement Trust is adopting a “healthy level of conservatism” towards the US as the end of the 90-day tariff pause approaches, with “anything possible”.
Uncertainty around tariffs and subdued growth may lead to some short-term constraints in relation to the private credit market, the fund manager has said.
Just three active asset managers are expected to attract net inflows over the coming year, according to Morningstar, with those specialising in fixed income or private markets best positioned to benefit.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom 465 Calder Road Calder
99.46 3 y p.a(%)
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
78.55 3 y p.a(%)
4
BetaShares Crypto Innovators ETF
50.39 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
47.50 3 y p.a(%)
