Bonds down as equities stage come back

Australian equities were the stand-out performer when compared to other asset classes in the month of October, after theS&P200/ASXfinished up 3.2 per cent.

International equities also fared well over the month, with a return of 2.6 per cent, although returns were damaged by the continuing rise of the Australian dollar.

The property sector also finished in positive territory, with listed property trusts finishing up 2.4 per cent and direct property up 0.7 per cent.

Funds managerAusbil Dexiasays the only negative asset class was bond markets which folded before the prospect of a strengthening global economy to be down 0.9 per cent.

However, the manager says there is evidence of renewed confidence in bonds, with expectations for yields to rise further with rising Australian cash rates.

Ausbil Dexia chief economist John Honan says strength of the local sharemarket would lift the average superannuation manager’s return by 1.7 per cent for the month, meaning the average balanced fund’s return for the first four months of the financial year would be around 5 per cent.

The manager says the rally for October was a result of a strong domestic economy, an increase in corporate takeover and merger activity and solid third quarter US profit results.

Global equity markets were also positive over the month, with Honan saying these market improvements were positive for continued domestic growth, reflecting growing confidence in the global economic recovery.