Market Overview – Piers Bolger
As the global economy continues its recovery on the back of the COVID-19 inoculation program, the opportunities for growth assets remains in place and our asset allocation across our portfolios reflect this.
In Australia, the fall in volatility and economic recovery has been underpinned by a positive corporate outlook, demonstrated by a strong recovery in earnings, resulting in a lift to forecast dividends across the ASX200.
With governments and central banks continuing their fiscal and monetary support, this accommodative policy means our asset allocation is more constructive on equities through the current cycle than Q12020. While we view more downside risk in bond markets given current yield curve positioning, reducing our allocation across portfolios compared to where we were this time last year.
Core Australian Equities – Dom Mlcek
Reporting season gives us the opportunity to see how companies are tracking. Beats and misses are part and parcel this period and we remain focused on looking past short-term sentiment to fundamentals and calls with management to provide outlook in our long-term investments.
We were pleased to see the strongest reporting season for earnings per share upgrades in 20 years. Reporting periods are seen to signal the start of strong period in ASX.
Rates have driven short-term movement in the equity market, but we remain committed to a disciplined approach to find quality companies that can grow earnings throughout the cycle, this again drives the diversity of the core portfolio across different sectors.
This approach has meant that short-term underperformance is a result of not owning positions in Buy Now Pay Later companies and some Bank positions. These companies have benefited from rate movement and sentiment. We are not going to chase short-term momentum and we believe our approach will continue to provide consistent long-term excess returns.
SMID Australian Equities – Chris Adams
We remain overweight technology, quality and higher growth as we still believe this is where longer term returns have been the most compelling and are still the most attractive despite the correction in recent months.
Our preference on the cyclicals has been to maintain a solid positioning in Resource companies. We are trying to increase our exposure to better quality domestic cyclicals which generally are in short supply.
As with our approach in the Core portfolio we will remain balanced and target those sectors where longer term returns are the most compelling rather than get caught up in short-term momentum.
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