A strong end to March disguises the extremely volatile performance of the broader markets during the month. While our growth-focused investments performed well, our defensive assets had better performance because they were less subject to the big swings experienced by those exposed to shares.
Equity markets performed reasonably well in March with the Australian market adding to a strong start to the year with a return of 0.7% for the month. Global markets fared better with the US equity market returning 1.9% in March.
This, however, only tells part of the story as the day-to-day performance of the market was marked by sizeable swings in equity markets with the local exchange falling 2.7% from its highs before rallying strongly into the end of the month. This end-of-month rally was driven by a combination of factors including stronger Chinese growth numbers and resolutions on Robert Mueller’s investigation into President Trump. Further buoying markets was the news that US-China trade negotiations look to be bearing fruit and could conclude positively in the not-too-distant future.
Despite the continued strong performance from equity markets, investors continue to tread carefully and appear to be hedging their bets by buying defensive assets as well. Australian government bonds continued their recent strong performance with a return of 2% for the month which brings the annual return to a lofty 7.7%. Similarly, the more defensive equity sectors performed strongly with locally-based property trusts returning 6% for the month and a staggering 25.9% for the year.
This leaves a mixed picture for the year ahead with mixed signals from markets indicating that investors are unsure whether to fully embrace risk or prepare for tougher times ahead. At Australian Catholic Super we are continuing to assess all current risks in light of our long term strategy and have adjusted our portfolios accordingly.