F U N D S
MAN A G E M E N T S E RV I C E
QUARTERLY INVESTMENT REPORT
30 September 2017
Produced by
P U B L I C TR U S TE E
GPO Box 1338 Adelaide South Australia 5001
T 08 8226 9200 | F 08 8226 9350
Country freecall 1800 673 119 (landline only)
www.publictrustee.sa.gov.au
This Quarterly Investment Report presents the results of the Public Trustee’s Funds Management Service performance and commentary for the quarter ended 30 September 2017.
Public Trustee is a statutory entity founded in 1881. At the end of the September 2017 quarter, it had approximately $1 billion in funds under management. Public Trustee’s Funds Management Service has a distinguished record of high quality, proven and consistent investment performance. We are proud of our long-standing reputation for trust and reliability, and the vital role we play for our customers and their financial affairs.
Investment returns for the September quarter were very good for Public Trustee customers. For the last 12 months Public Trustee investment strategies have delivered returns ranging from 1.76% for cash to 12.22% for equities, net of fees. Over the short and longer term (3-5 years) Public Trustee’s investments are all exceeding industry benchmarks.
SIS Performance versus Benchmark to 30 September 2017
Performance* / Last 3 months / Last 12 months / 3 years / 5 yearsCash / 0.43% / 1.76% / 2.15% / 2.63%
benchmark / 0.18% / 0.75% / 1.14% / 1.43%
variance / 0.25% / 1.01% / 1.01% / 1.20%
Capital Stable / 0.81% / 3.81% / 4.21% / 5.23%
benchmark / 0.54% / 2.66% / 3.68% / 4.53%
variance / 0.27% / 1.15% / 0.53% / 0.70%
Balanced / 1.19% / 5.90% / 6.13% / 7.84%
benchmark / 0.85% / 4.56% / 5.45% / 7.08%
variance / 0.34% / 1.34% / 0.68% / 0.76%
Growth / 1.44% / 7.92% / 7.36% / 9.75%
benchmark / 1.17% / 6.86% / 6.44% / 8.84%
variance / 0.27% / 1.06% / 0.92% / 0.91%
Equities / 1.76% / 12.22% / 9.18% / 12.64%
benchmark / 1.72% / 11.70% / 7.99% / 11.73%
variance / 0.04% / 0.52% / 1.19% / 0.91%
*After Fees
If you would like to add to your portfolio, you may do so at any time. Please contact Cosi Capozzo (08) 8226 9177 for more information.
Debra Contala
Public Trustee
October 2017
· Market Overview
Global
Global shares set record highs over the September quarter, buoyed by generally positive global economic data. The US, Europe, Japan and Chinese economies each reported growth. In the US, companies posted better than expected earnings for the second quarter. In Europe, Angela Merkel won a fourth term as chancellor of Germany, while in Japan Prime Minister Shinzo Abe called a snap election. In China, the economy expanded at a faster than expected pace of 6.9% for the 12 months to June.
Australia
During the quarter, the Reserve Bank of Australia maintained interest rates at 1.50%,
noting that the improvement in global economic conditions had continued.
The Australian Dollar appreciated against the US dollar, finishing the quarter at $0.78US.
Share Markets
The Australian share market had a mildly positive quarter, with the S&P/ASX 300 Accumulation Index closing up 0.8%.
Global shares were stronger, with the MSCI World Index finishing up 2.5% on an unhedged basis.
Key Developments
Key developments over the quarter were:
· Global share markets rose for a sixth straight quarter
· Evidence of synchronized global economic growth
· Geopolitical tension due to North Korea missile testing
Since 1990, funds invested through Public Trustee Common Funds
have grown from $160 million to $1 billion today.
· Cash Investment Strategy
The Reserve Bank kept interest rates on hold during the quarter at 1.50%. The fund’s return of 0.43% for the quarter was above the benchmark return by 0.25%. The strategies 3 and 5 year returns remain at 2.15% and 2.63%, which are 1.01% and 1.20% respectively ahead of benchmark.
Crediting Rate:
The investment return for this fund is calculated daily, based on the net earnings of the fund.
The average crediting rate for the quarter was 1.70%, and the daily rate at 30 September 2017 was 1.70%.
Fund size: $385 million.
Objective:
Funds assigned to the cash investment strategy are invested in the Public Trustee's Cash Common Fund. The objective of the Cash Common Fund is the preservation of capital. The strategy is intended for investors who are seeking secure returns at prevailing short term interest rates.
· Capital Stable Investment Strategy
The strategy’s return for the quarter was 0.81% outperforming the benchmark return by 0.27%. The strategy’s 3 year and 5 year returns of 4.21% and 5.23% are 0.53% and 0.70% respectively ahead of benchmark.
Fund size: $119 million.
Performance / Quarter % / 1 year % / 3 year %* / 5 year%**Return (after fees) / 0.81% / 3.81% / 4.21% / 5.23%
Benchmark** / 0.54% / 2.66% / 3.68% / 4.53%
Difference / 0.27% / 1.15% / 0.53% / 0.70%
*Annualised ** Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to achieve a higher return than cash by strategically allocating 28% of the funds in growth assets and the balance in fixed interest and cash. It is suitable for investors who are seeking higher returns than cash over time and are prepared to accept a slight increase in risk in terms of downward movements in the value of their capital from time to time.
· Balanced Investment Strategy
The strategy’s return for the quarter was 1.19% outperforming the benchmark return by 0.34%. The strategy’s 3 year and 5 year returns of 6.13% and 7.84% are 0.68% and 0.76% respectively ahead of benchmark.
Fund size: $229 million.
Performance / Quarter % / 1 year % / 3 year %* / 5 year%**Return (after fees) / 1.19% / 5.90% / 6.13% / 7.84%
Benchmark** / 0.85% / 4.56% / 5.45% / 7.08%
Difference / 0.34% / 1.34% / 0.68% / 0.76%
*Annualised ** Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to gain a higher return by strategically allocating 55% of the funds in growth assets and the balance in fixed interest and cash. It is suitable for medium term investors who seek higher returns and are prepared to accept some volatility in the value of the funds invested.
· Growth Investment Strategy
The strategy’s return for the quarter was 1.44%. This outperformed the benchmark by 0.27%. The strategy’s 3 year and 5 year returns remain at 7.36% and 9.75%, which are 0.92% and 0.91% ahead of benchmark.
Fund size: $213 million.
Performance / Quarter % / 1 year % / 3 year %* / 5 year%**Return (after fees) / 1.44% / 7.92% / 7.36% / 9.75%
Benchmark** / 1.17% / 6.86% / 6.44% / 8.84%
Difference / 0.27% / 1.06% / 0.92% / 0.91%
*Annualised ** Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to attain high long term returns in excess of inflation. It has a 73% strategic allocation to growth assets and the balance in fixed interest and cash. It is suitable for long term investors who are prepared to accept high volatility in the value of the funds invested.
· Equities Investment Strategy
The strategy’s return for the quarter was 1.76%, which outperformed the benchmark by 0.04%. The strategy’s 3 year and 5 year returns remain at 9.18% and 12.64%, which are 1.19% and 0.91% respectively ahead of benchmark.
Fund size: $80 million.
Performance / Quarter % / 1 year % / 3 year %* / 5 year%**Return (after fees) / 1.76% / 12.22% / 9.18% / 12.64%
Benchmark** / 1.72% / 11.70% / 7.99% / 11.73%
Difference / 0.04% / 0.52% / 1.19% / 0.91%
*Annualised ** Index return on Strategic Asset Allocation
Objective:
The equities strategy offers 100% exposure to the world’s share markets. Over the long term, it offers the prospects of high returns but with the likelihood that capital values will fluctuate broadly in line with the fortunes of the share markets. Typically, this strategy may be used as a return booster in conjunction with one of the other investment strategies.
The objective of this strategy is to gain exposure to both domestic and overseas share markets. It has a 55/45 strategic allocation to the two markets respectively.
NB: All the above investment strategies are exercised through investment in one, or a combination of, the Public Trustee Common Funds.
The investment returns presented in this quarterly report relate to past performances and must not be taken to imply that this predicts future returns of the funds. The information and opinions contained in this report have been compiled or are arrived at by Public Trustee from sources believe to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness.
The information in this report is of a general nature. Public Trustee strongly recommends that you contact the Office to discuss your particular circumstances. Public Trustee does not accept any liability whatsoever for any direct or consequential loss arising from any usage of information herein contained.