The financial year ending 30 June 2019 was a tale of two halves.
Share markets had a poor first half of the financial year (to Dec 2018). There were a variety of reasons for investors to be nervous, including Trump’s trade war with China, US interest rates on the rise, the Brexit debacle in the Euro zone and China’s slowing growth.
We reminded clients at the end of the year to stay the course, ignore news headlines and not let short term stock market movements or market forecasters impact your investment decisions.
Six months on, many of those same investor concerns remain unresolved. The trade war continues, Chinese growth is at its lowest levels in 30 years and Brexit remains incomplete.
The only meaningful change in the market narrative has been the prospect of lower interest rates around the globe – which very few predicted at the start of the year. Meanwhile global share markets, bond markets and gold are all significantly higher.
Asset class returns
The 2018/19 financial year proved once again that staying the course in a diversified portfolio of low cost ETFs is your best course of action as a long term investor.
Gold reached an all time high in Australian dollars, delivering a return of 18.7% for the financial year. Investors have been favouring gold on the back of falling global bond yields, which we discussed in our article in The Australian newspaper. Gold has been the best performing asset in our portfolios since we increased the allocation from 10% to 12.3% in November 2017.
The other defensive asset in our portfolios, Australian bonds, cushioned share market falls and also increased on the back of lower interest rates, finishing the financial year up 9.4%.
Australian shares had a stellar finish to the financial year closing up 12.2%. Global large shares (+14.4%) outperformed their emerging market peers (+6.2%).
The Stockspot portfolios delivered exceptional returns of between 10.5% to 11.4% for the financial year (2018/19). By investing in low-cost index funds our clients accessed more of the market return and paid less in fees away to fund managers.
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Combining ETFs in the right proportions has meant our strategies have only taken half the risk of a portfolio holding just Australian shares.
We recently discussed why the Stockspot portfolios continue to have more defensive assets than you may expect. This strategy certainly hasn’t detracted from returns.
Find out how Stockspot makes it easy to grow your wealth and invest in your future.