Which Australian equity investors are best rewarded by Santa?
With December being traditionally one of the strongest months for equity investors, Money Management has taken a closer look at for which Australian equity funds the Santa rally effect worked best in the past by analysing the performance of the Australian equity funds in December of 2016, 2017 and 2018.
According to the FE Analytics, there was only one fund across the Australian equities universe that delivered a consistent performance in the last month of the year over the last three years.
Ellerston Australian Share, with returns of 0.08%, 3.55% and 19.49% in December 2018, 2017 and 2016, respectively, was the only fund that sat in the first quartile of its peer group consistently when analysing the returns for the last month of the year for the past three years.
According to Fidelity International, which looked at the past 27 years of monthly returns of the S&P/ASX200, December was identified as the second-best performing month in the year, with an average return of 2.0% over the month.
In addition, 20 of the last 26 December months have seen the Australian equity market rise, with December 1993 generating a +8.2% return.
However, Fidelity found last year’s December was the first month since 2012 when S&P/ASX200 monthly returns were negative (-0.4%) by comparison, the sector returned 1.6% and 4.1% in the last month of the year in 2017 and 2016, respectively.
Interestingly, the worst month for Australian equity returns has been May, with an average -0.8% loss, giving credence to the old investor’s rhyme ‘Sell in May and go away’, Fidelity found.
“There are a number of plausible reasons as to why this seasonal effect exists (also known as the “Santa Claus rally”), including increased holiday shopping, higher optimism, and reduced participation from professional investors leaving more bullish retail investors to drive the market higher. Or, it might just be random,” Anthony Doyle, global cross asset investment specialist at Fidelity International, said.
Following this, FE Analytics found another seven funds with returns that positioned them in the first quartile for the result for December 2017 and 2016 and in the second quartile when looking at their return in last year’s December, making them one of the Aussie equities funds which benefitted the most from the Santa Claus rally over the past three years.
These funds were: Schroder Australian Equity, BT Wholesale Partner Australian Shares Growth 1, Schroder Wholesale Australian Equity, ANZ Wholesale Select Leaders Trust, Schroder Equity Opportunities and Macquarie Australian Shares.
Another two funds, which were AXA Wholesale Australian Equity Value and CFS Realindex Australian Share, were also among the most consistent funds which received a helping hand from Santa. Both funds delivered the results which positioned them in the first quartile of December 2016 and 2018 and in the second quartile in December, 2017.
Performance of funds that sat in the first and second quartile in the December month in 2016, 2017 and 2018. Returns over the month to December 2016
Performance of funds that sat in the first and second quartile in the December month in 2016, 2017 and 2018. Returns over the month to December 2017
Performance of funds that sat in the first and second quartile in the December month in 2016, 2017 and 2018. Returns over the month to December 2018
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