CLIENT INVESTMENT UPDATE Wholesale Products. 30 September 2014. General advice warning and disclaimer.
30 September 2014
Investment Futures Framework
Activity this quarter
More analysis of returns
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All asset classes delivered positive returns over 1, 3 and 5 years. Australian shares lagged global in the quarter.
A positive year for most global share markets but returns are relatively modest compared to a quarter ago.
Iron ore accounts for around a quarter of Australia’s exports. Prices have fallen to a five year low, driving the Australian share market lower.
Australian company dividend payout ratios are already at or near record levels for key market sectors. There is little scope for dividends to grow faster than earnings.
Source: Macquarie Research, from Maple-Brown Abbott
US manufacturing gathers momentum while China’s growth slows. Developments in China remain a key source of risk for Australia and the AUD.
HSBC - Markit Purchasing Managers Index of Manufacturing Activity
Source: HSBC,Markit, MLC
Three speed global economy (China soft landing)
(Mild) inflationary resolution
Developed market austerity, recession, stagnation
Extended quantitative easing
Sovereign yield re-rating
China hard landing
Two speed recovery
Extended risk aversion
One speed slow growth world
For a description of each scenario, please refer to ‘MLC’s scenario insights & portfolio positioning’, September 2014.
Source: MLC as at 30 September 2014
No changes to Moderate and Assertive. The following adjustments to Conservative increased defensive positioning before the Australian share market decline in September.
Adjustments to increase defensive positioning before the Australian share market decline in September.
This highlighted point is the real return over 7 years to 30 Sep 2014
Key contributors to most portfolios over the quarter
Note: Peer universe is the MLC Morningstar Wholesale Universe
Source: Morningstar Direct
* This index has recently changed it’s name from UBS to Bloomberg.