Investment Year in Review

Leading into Christmas, I must admit that 2019 has a very different feel about it than 2018.

This time last year, Australian and global share markets had fallen close to 30% in the September to December quarter and the mood was grim. The headlines were dominated by talks of a trade war between the United States and China, there was considerable uncertainty and expectations that Central Banks were considering increasing rates.

It wasn’t long after New Years’ celebrations had ended though that markets started to move, and over the last eleven and a bit months the numbers have been positive in almost every asset class – shares, property, government bonds, corporate debt and commodities are all up. 

We have seen broad rallies in markets.  The Dow Jones (which represents a section of the US share market) has posted a return of almost 30% and the ASX 200 is nudging 22%.  

All of these results are impressive, as are the results being delivered across many platforms our clients are invested on.  If you were to log onto your account or accounts today, I would expect that for most of our clients the numbers would be quite positive. 

We aren’t getting complacent.  Over the course of the year, the members of the Investment Committee have collectively had more than 150 meetings with investment managers, 10 Investment Committee meetings, attended 5 portfolio construction conferences and corresponded with suppliers via email on hundreds of occasions. 

All of these actions are with the intent of delivering outcomes for you.  In addition, for those clients invested in the AAN models via the Praemium platform we have taken a number of actions on your behalf throughout the last 12 months:

  • December of 2018, we bought growth assets in the dip
  • March, June and September of 2019 we have been taking profits
  • March, we introduced a corporate debt investment into our Core portfolio to take advantage of the change in interest rates
  • March, we added an Independent Researcher to our Investment Committee
  • June, we decreased model fees, and in August we decreased administration fees
  • September, we introduced a new international ETF into the portfolio to reduce costs

The above actions have enhanced the broad rallies we have seen in markets and have allowed us to deliver a 12-month return of over 24% for the AAN Growth Model and 19% for the AAN Core Model before fees. 

We do not expect that volatility and uncertainty will disappear next year, nor will risk. For that reason, retirees should continue to maintain a cash buffer and accumulators should maintain their long term plan of regularly investing in growth assets.

Should you have any questions about your portfolio, I would encourage you to email your adviser and to make a time for a review.

It’s my job to work as my client’s financial ‘lifesaver’ to ensure that they swim between the flags and that they don’t get in over their heads.