Atlas Wealth Advisory Market Update - September 2020

Share markets proving to be resilient during Covid-19 with some positive gains in global markets.

Risk asset strength continued

  • Global shares rose 6.2% and 3.5% in hedged and unhedged terms, respectively. Global equities continue to be led by the US market with Tech stocks the leaders as the tech-heavy Nasdaq Index rose by 9.6% in USD terms.
  • Emerging markets fell -0.9% during August in Australian Dollar (AUD) terms. One driver was the 2% rise of the Australian Dollar against the Hong Kong Dollar over the period with other emerging market currencies also weakening.
  • Australian shares underperformed global shares rising 2.8% in August. The month was defined by FY20 results reporting with Technology stocks rising over 15% as investors hunted for scarce growth while disappointment with the Telstra result saw the Communications Service sector fall over 5% during the month.
  • The Australian dollar (AUD) also continued to rally from its climb from late March lows with an 1.1% rise against major currencies and a 3.3% gain against the US dollar notably.
  • Fixed income returns were negative with Australian and international bond benchmarks falling -0.4% and -0.8% during August. Stronger growth expectations and a change in policy at the Federal Reserve saw bonds sell off and yields rise, driving negative returns.

As the economy gained momentum

Globally

Locally

Major asset class performance (%)

Asset classes

1 month %

1 year %

5 years (p.a)%

Australian shares

2.8

-5.1

7.5

Global shares (hedged)

6.2

12.1

10.3

Global shares (unhedged)

3.5

6.7

9.6

Global small companies (unhedged)

2.2

-2.4

6.7

Global emerging markets (unhedged)

-0.9

4.3

7.7

Global listed property (hedged)

2.0

-17.4

2.6

Cash

0.0

0.7

1.7

Australian fixed income

-0.4

1.6

4.4

International fixed income

-0.8

2.4

4.6

Source: Bloomberg & IOOF, 31 August 2020

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Currency markets

At close 31/08

% change 1 month

% change 12 months

USD/AUD

0.74

3.3

9.5

Euro/AUD

0.62

1.9

0.8

Yen/AUD

78.1

3.3

9.1

Trade weighted index

62.6

1.1

6.3

Source: Bloomberg & IOOF, 31 August 2020. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

Disclaimer: This information is current as at 31 August 2020 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522

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