Which were the riskiest sectors in 2019?
The Australian equity geared sector was the riskiest equity sector with a volatility of 15.38 over the year to 31 December, 2019, according to FE Analytics.
FE Analytics data from the Australian Core Strategies universe found that the top performing fund in this sector was BetaShares Geared Australian Equity at 57.8%.
North American equities was the next most risky sector with a volatility of 12.01, followed by European equities at 10.3, emerging markets at 9.4, and hedged global equities at 9.2.
Volatility for the geared and North American equity sector paid off as the two had the highest average return during 2019 at 36.4% and 31.5% respectively. The hedged global equity sector was also in the top performing quartile at 24.9%.
While the global equity sector was also a top quartile performer at 25%, its volatility was substantially lower and in the second quartile at 8.7.
Four of the top five performing North American equity funds were exchange traded funds (ETF), and the best performing fund was BetaShares Geared US Equity (69%). This was followed by BetaShares NASDAQ 100 ETF (38.77%), VanEck Vectors Morningstar Wide Moat ETF (34.89%), Pendal American Share (32.75%), and UBS IQ MSCI USA Ethical ETF (31.38%).
Pendal said in its latest factsheet that its fund outperformed the S&P500 during the third quarter of the last calendar year due to stock selection in consumer discretionary and communication services.
“Overweights in Target, Dollar General, Altice, and Fiserv and not owning Netflix were stock positions that contributed to performance,” it said.
It noted that the portfolio’s holdings of US animal health products manufacturer Elanco Animal Health and oil company BP held back returns.
The BetaShares Geared US Equity fund had its largest sector weighting towards information technology at 23.2% and, unsurprisingly, its top five holdings were Apple, Microsoft, Amazon, Facebook, and conglomerate Berkshire Hathaway.
On the other end of the scale, the infrastructure equity sector was the least risky sector with a volatility of 5.7. This was followed by Australian equity income at 7.85, Australian small/mid cap equities at 7.99, and global small/mid equities at 8.1.
Returns were varied with the least risky sectors with the Australian small/mid cap equities performing the best in the second quartile at 24.45%.
The poorest performer among the least risky sectors was the Australian equity income at 18.45 which fell into the fourth quartile. The worst performing fund in this sector was MLC National Australia Investment Trust Monthly Income at 10.3%.
Riskiest v least risky equity sector performance in 2019
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