Australian equities are well and truly back in favour with the S&P/ASX300 Accumulation Index outperforming every other asset class for the year to December 2005, according to the Morningstar performance survey.
While funds with an Australian equities bias would have performed well for the year, those that favoured large caps were the real winners. Australian large cap managers outperformed their small cap counterparts for the second year in a row, with the S&P/ASX300 returning 22.45 per cent for the year compared with the S&P/ASX Small Ordinaries Accumulation Index’s 19.59 per cent. In local equities, managers with a growth bias outperformed value managers, a trend that did not resonate in international equities where both value and growth managers fluctuated in performance. International equities, generally, performed a lot better than in 2004, with the MSCI World ex-Australia Accumulation Net Dividends Reinvested Index (unhedged) return of 16.84 per cent well up on the 9.94 per cent of 2004. However, over the seven-year period the international index is still in negative territory at -.04 per cent. In property the trend was reversed, with the much newer global property asset class outperforming the old darling of Australian listed property. Only seven of the 14 global property funds measured by Morningstar have a year’s history, nonetheless the UBS Global Real Estate Investors Index $A returned 15.83 per cent, compared with the S&P/ASX300 Property Trusts Accumulation Index return of 12.7 per cent. Justin Walsh, head of research at Morningstar, said these returns by the new kid on the block could prompt more investors to look at the asset class in determining their overall asset allocation. “The global property index return certainly ensured that many investors will begin to consider the benefits of diversifying their property exposure,” he said. In the more conservative asset classes, Walsh said fixed interest asset classes again illustrated the maxim that international fixed interest should not be overlooked. The Lehman Brothers Global Aggregate Index Hedged returned 6.84 per cent and the UBS Composite, the local benchmark, returned 5.79 per cent for the year.
The $34 billion Brighter Super is set to shift around $10 billion of assets from passive to active management. Chief investment officer Mark Rider says the move is possible because of scale created by mergers, and the fund will be looking to its newly appointed active managers to generate performance through the cycle by taking idiosyncratic risks.
Darcy SongJanuary 21, 2025
