The market sell-off that has dominated 2022 showed no signs of abating in June and caused Australian share funds to post some of the heaviest losses, research by Money Management shows.
Investor sentiment had been battered this year by surging inflation, rising interest rates, recession fears, the war in Ukraine and China’s renewed COVID lockdowns.
The ASX 200 – which had been outperforming its international peers for most 2022 – came off worst with a fall of 9.2%. This compared to losses of 4.8% by the S&P 500 and 4.9% by the MSCI ACWI.
All of the industries in the Australian market fell last month, with the exception of consumer staples stocks thanks to a small gain of 0.2%. Materials companies fell the hardest with a decline of 12.4%, followed by financials (down 11.9%) and tech stocks (down 11%).
This broad-based decline can be seen when looking at the average returns made by the 36 fund sectors in the Australian Core Strategies universe in June: all of four worst-performing sectors invested in Australian assets. These were ACS Equity Australia Geared, ACS Equity Australia Small and Mid-Cap, ACS Property Australia Listed and ACS Equity Australia.
However, it was clear that June had been a hard month for any asset to make money in. Even commodity funds, which had been strong for most of 2022 on the back of surging commodity prices, posted losses as investors eyed the risk of slowing growth and weakening demand for raw materials.
Just three sectors in the ACS universe could boast of a positive average return: ACS Cash Other, ACS Equity Asia Pacific Single Country and ACS Fixed Int Mortgages.
Looking at specific fund performance, those funds which were able to short the market and profit when stocks were going down fared the best.
CFS Australian Small Companies Long Short, BetaShares Australian Equities Strong Bear Hedge, BetaShares U.S. Equities Strong Bear ETF Currency Hedged and ETFS Ultra Short Nasdaq 100 Hedge occupied the top four spots of best-performing funds and are examples of these funds.
Funds that invested in China were also well-represented on the list, after the country went against June’s trend and rallied hard. This explained why the ACS Equity – Asia Pacific Single Country sector was one of the few to be in the black.
At the very bottom of the table was BetaShares Crypto Innovators ETF, reflecting the crash in cryptocurrencies that has come as investors fled risk assets.
