In terms of the investment markets, Q2 was generally less volatile than the March quarter and most sectors were positive above their long-term average.
There were exceptions however with emerging markets in particular which were negative during the quarter and the wider Asian market, which was also soft. That said both regions have delivered solid performance over the last 12 months.
The following is an indication of market performance via the total returns (capital and income) from the key exchange traded funds (ETF’s) in each sector;
|ETF||Country/Markets||3 Month Change||12 Month Change|
|Fixed Interest ETF (IAF)||Australia||0.77%||2.89%|
|Fixed Interest ETF (VAF)||Australia||0.75%||2.91%|
|Commercial Property REITs (VAP)||Australia||4.45%||7.59%|
|Vanguard Australian Shares (VAS)||Australia||8.33%||13.12%|
|S&P 500 Hedged (IHVV)||US||3.37%||13.70%|
|Vanguard Emerging Markets (VGE)||Emerging||-6.30%||9.20%|
|IShares Asia (IAA)||Asia||0.94%||18.19%|
|IShares Global (IOO)||World||2.34%||9.40%|
The 12-month returns for all of these index funds are at or above target performance, which is pleasing, as are the 3 years and 5-year values.
This also emphasises again that investing has to be for the long term and that a short term loss is not a loss at all if there is no need to sell the underlying investments. For most portfolios there is no need to do this as cash reserves are more than significant to pay fees, pensions or whatever other fees are leaving the fund.
We have also seen political tensions increase again as seen in a developing trade way instigated in the US, which drives protectionism via tariff, and the tit for tat reaction does concern markets greatly.
On the positive side, the reduction in isolation of North Korea and the increased chances of stabilisation on the Korean peninsula and surrounding countries provides welcome good news for the investment markets in Q2.
Prospects for the next quarter are that volatility may increase again as result of trade tensions, however the fundamental GDP growth across developed markets provides an outlook where stock prices should stabilise.
Finally a reminder, that if you have any questions about your personal portfolios then call me anytime. We will of course discuss these as part of your ongoing service meetings.
And on a more personal note, I am pleased to say that I am now very happy to be part of a new licensee, FYG Planners Pty Ltd, who are based in Burnie, Tasmania.
Baldwin Financial Services is based in Prospect in the northern suburbs of Adelaide.
Contact us to find out how we may be able to help you.