Which geographic sectors weathered 2020 the best?
Asia Pacific sectors were the best sectors to invest in last year, as well as Australia’s small/mid cap sector, according to data.
According to FE Analytics, out of all the geographic orientated sectors within the Australian Core Strategies universe, the Asia Pacific ex Japan sector had the best return with an average return of 18.27% over the 12 months to 30 November, 2020.
The next best two were the Australia small/mid cap sector, which had an average return of 12.8%, and Asia Pacific single country (10.33%).
Australia geared was the worst-performing sector with an average loss of 11.54%, followed by Europe (-5.8%) and Australia equity income (-0.56%).
Performance of the best and worst geographic sectors over the 12 months to 30 November 2020
Saville Capital Emerging Companies was the best-performing in the Asia Pacific ex Japan sector, which returned 54.41%.
This was followed by Ellerston Australian MicroCap (29.7%), Platinum’s Asia fund (29.1%) and Asia quoted Managed Hedge ETF (28.26%), and Nikko AM TAAM New Asia (27.48%).
Saville’s largest holdings were in the online retail and consumer staples sectors, with the fund investing 95% of its capital in 19 stocks.
Although the fund invested in Australian Securities Exchange (ASX) stocks, it also invested in the New Zealand Exchange (NZX), excluding it from any of the Australian equity related sectors.
The fund invested in stocks that sat outside the ASX100 and NZ20, and returned 140% in a six month period last year.
In its November update, Saville Capital principal, Jonathan Collett, said many of the market changes from 2020 will carry over into the future, even with potential sector rotations.
“The news of highly effective COVID vaccines spawned a ‘re-opening’ trade in November where many structurally challenged/cyclical businesses attracted euphoric market support based on a prevailing view that the vaccine will see consumer and business behaviour (as well as activity levels) largely revert back to ‘normal’ in 2021,” Collett said.
“As an extension of that view, many stocks that have excelled during 2020 were sold off, either to fund the ‘rotation’ or due to the perception that in a more open global economy, their strong operational and share price performance logically shouldn’t continue.”
However, Collett said this was an “overly simplistic interpretation” of the last nine months and the near future.
“While some activity will quickly revert to normal, such as leisure travel, we think that business travel will be permanently lower, working from home (even if just in part) will be permanently higher and online consumption trends will continue their growth trajectory from an elevated base,” Collett said.
“Our view remains that where habits have been forced to change in 2020, and that change has been a positive experience for consumers, businesses and society, those behaviours will now persist in the aftermath of COVID.”
Best-performing Asia Pacific ex Japan funds over the previous year to 30 November 2020
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