Most sectors experienced disappointing performances in the March 2018 quarter, with 88.2 per cent delivering returns lower than those of the March 2017 quarter, according to data from FE Analytics.
Analysis by Money Management found that less than half of all sectors in the Australian Core Strategies universe gave investors returns in the positives for the third quarter of the 2017/18 financial year, with most performances slumping below zero.
The highest performing sector for the quartile was Cash – Other, delivering returns of 4.10 per cent. It also experienced the highest growth comparative to its position at 31 March, last year, jumping 8.49 per cent from -4.39.
Cash invested in Australian dollars also performed well comparative to other sectors, returning 0.33 per cent last quarter. While this was a decrease of 0.04 per cent compared to the March 2017 quartile, it was still a far smaller drop than most sectors experienced between those time periods.
Funds that invested in cash for safety then, may have been pleasantly surprised. Despite generally strong performances for funds over the last few years, the last three months suggest that money in cash is not misplaced.
Of sectors invested in equities, Global Small and Mid-Caps were the most improved sector between quartiles. It grew 0.15 per cent to deliver returns of 1.2 per cent. Its domestic counterpart did not enjoy the same success though, diving 1.84 per cent to go from 0.93 to -0.91 between the two quarters.
Equities in general did not enjoy the same success in the March quarter of 2017 than they did in that of 2018. They accounted for six of the seven sectors to experience the biggest drops between the two periods, with the Australia Equity – Income and Infrastructure sectors taking the bottom two spots with decreases of 7.46 and 9.23 per cent respectively.
The Emerging Markets Equity sector was the second highest performing across the board for the last quartile, delivering 2.41 per cent. When you consider that it gave investors returns of 5.92 per cent in the March 2017 quartile though, this is less impressive.
While few sectors recorded positive returns for the most recent quarter, fixed interest bonds did better than most generally. The Fixed Interest Inflation Linked, Global, Australian, Australia/Global and Global Strategic Bond sectors all avoided going into the red. They returned 0.85, 0.54, 0.6, 0.49 and 0.16 respectively.
Although these are lower returns than their March 2017 quarter equivalents, they are nonetheless higher than most other sectors in the Australian universe that have higher volatility. Amid speculation that the bond bull market may finally be ending, this could prove useful to remember.
The worst performing sectors for the March 2018 quarter were Australian Listed Property and Global Property. The latter returned -3.89 per cent, while the former had by far the worst performance at -6.26 per cent. This was a 7.05 per cent drop from where the sector finished the March 2017 quarter.
