Advance Wholesale Moderate Multi-Blend Fun aims provide relatively stable total returns (before fees and taxes) over the short to medium term, with some capital growth over the long term through a diversified mix of growth and defensive assets.
In July, global equity markets maintained current upward momentum with most regions delivering solid, positive returns. On the other hand, fixed income performance was mixed, although in this “risk on” phase of the cycle, riskier parts of the sector fared better.
A combination of further declines in headline inflation, resilient economic data, particularly from the US, and market expectations that the current interest rate hiking cycle is nearing an end, led to positive investor sentiment throughout the month.
The advanced Q2 2023 US GDP growth figure was reported late month, coming in at 2.4% and surprising market economist estimates of 1.8%. On the flipside, UK and Eurozone growth was close to flat. Benefitting from the base effects of emerging from its extensive 2022 Covid lockdown, China’s GDP growth rate was measured at an annualised 6.3%, though a little below 7.3% expectations. Forward-looking composite purchasing manager indices (PMI) kept falling across the globe in July, with Japan the only region holding steady. PMIs for the services sector continue to outpace manufacturing though are easing towards 50, an important level that is considered the line between expansion and contraction.
Inflation data continued to decline, somewhat aided by the impact of last year’s energy price surge rolling off. US headline Consumer Price Index (CPI) fell to 3.0% p.a and is at the lowest level since early 2021. Similarly, CPI data across the UK, Eurozone and Australia, continues to show easing inflationary conditions, albeit at higher levels than the US. CPI has flatlined at near zero in China. Japan was the only major country that recorded a marginal increase in its inflation rate during Q2 2023. Central banks continued to err on the side of caution, increasing rates by 25bps in the US and Eurozone and 50bps in the UK, where inflation remains the highest among major developed economies. Central banks continued to emphasise a data-driven approach to future rate adjustments. In the US, which is furthest ahead in the inflation cycle, markets are now pricing in a greater than 50% chance that the Fed’s policy rate has peaked and interest rate cuts maybe forthcoming in 2024.
Over July, Hedged Developed Markets Overseas Shares delivered a 2.8% return. US indices were broadly in line with international developed markets, however, Emerging Markets (unhedged) outperformed with a positive 4.9% return. Value modestly outperformed growth over the period, although when looking on a year-to-date basis, mega-cap tech stocks still dominate returns and has led to increased market concentration within that segment of global markets. In the US, with roughly half of S&P500 companies having reported their Q2 2023 earnings, FactSet currently projects a 7% quarter over quarter (QoQ) earnings decline, which would be the softest quarterly outcome since the height of Covid’s impact. That said, to date the majority of companies have reported better than expected earnings results.
Hedged Overseas Government Bonds returned -0.4% over the month, as bond yields across most regions increased in July. Yields on both key long bonds in the US (10-year and 30-year) rose by approximately 15bps over the month. Outside the US, Japan’s 10-year yield rose by around 19bps, which is noteworthy following the Bank of Japan’s announcement that it will further increase the upper tolerance range for the 10-year yield (now 1.0% vs 0.5% previously). The UK was the only major economy where the 10-year yield fell, albeit modestly.
Australian Shares returned 2.9%, marginally outperforming their overseas counterparts in July. Financials (4.9%) and Energy (8.4%) were the strongest sectors of the market, while Healthcare (-1.5%), and Materials (1.4%) detracted.
What is Advance Wholesale Moderate Multi-Blend Fund Advance Wholesale Moderate Multi-Blend Fund is an Managed Funds investment product that is benchmarked against Multi-Asset Balanced Investor Index and sits inside the Multi-Asset - 41-60% Multi-Manager Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Advance Wholesale Moderate Multi-Blend Fund has Assets Under Management of 1.09 BN with a management fee of 0.64%, a performance fee of 0.00% and a buy/sell spread fee of 0.32%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Advance Wholesale Moderate Multi-Blend Fund has returned 1.27% in the last month. The previous three years have returned 3.4% annualised and 6.06% each year since inception, which is when the Advance Wholesale Moderate Multi-Blend Fund first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Advance Wholesale Moderate Multi-Blend Fund first started, the Sharpe ratio is NA with an annualised volatility of 6.06%. The maximum drawdown of the investment product in the last 12 months is -1.63% and -21.21% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Advance Wholesale Moderate Multi-Blend Fund has a 12-month excess return when compared to the Multi-Asset - 41-60% Multi-Manager Index of -0.49% and -0.13% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Advance Wholesale Moderate Multi-Blend Fund has produced Alpha over the Multi-Asset - 41-60% Multi-Manager Index of NA% in the last 12 months and NA% since inception.
What are similar investment products? For a full list of investment products in the Multi-Asset - 41-60% Multi-Manager Index category, you can click here for the Peer Investment Report.
What level of diversification will Advance Wholesale Moderate Multi-Blend Fund provide? Advance Wholesale Moderate Multi-Blend Fund has a correlation coefficient of 0.98 and a beta of 0.92 when compared to the Multi-Asset - 41-60% Multi-Manager Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Advance Wholesale Moderate Multi-Blend Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Advance Wholesale Moderate Multi-Blend Fund with the Multi-Asset Balanced Investor Index? For a full quantitative report on Advance Wholesale Moderate Multi-Blend Fund compared to the Multi-Asset Balanced Investor Index, you can click here.
Can I sort and compare the Advance Wholesale Moderate Multi-Blend Fund to do my own analysis? To sort and compare the Advance Wholesale Moderate Multi-Blend Fund financial metrics, please refer to the table above.
Has the Advance Wholesale Moderate Multi-Blend Fund been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Advance Wholesale Moderate Multi-Blend Fund? If you or your self managed super fund would like to invest in the Advance Wholesale Moderate Multi-Blend Fund please contact 275 Kent Street Sydney, NSW 2000 Australia via phone 61-2-9259-3555 or via email -.
How do I get in contact with the Advance Wholesale Moderate Multi-Blend Fund? If you would like to get in contact with the Advance Wholesale Moderate Multi-Blend Fund manager, please call 61-2-9259-3555.
Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Advance Wholesale Moderate Multi-Blend Fund. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - June 30, 2023 In June, global equities, commodities and REITs posted strong returns, while bonds were generally flat with credit outperforming government bonds.
Markets continue to price in a soft landing as news flow remains focused on falling headline inflation, a potential end to the global interest rate hiking cycle and broad economic resilience, despite challenges for some sectors, such as regional banks.
Inflation continues to edge down in most major economies raising hopes that the hiking cycle is near an end in most regions. Although the Federal Reserve kept rates on hold for the first time in over a year, forward guidance was more hawkish than expected, which weakened the positive momentum that markets carried during the first half of the month. The ECB and RBA hiked rates by 25bps each, while the Bank of England was compelled to hike by 50bps, given stubbornly elevated levels of inflation in the UK. China continued to ease as its expected economic recovery has been underwhelming. Labour markets remain resilient, with unemployment only marginally rising in some regions, however, remaining close to multi-decade lows.
Volatility in rate markets fell in June, following the resolution of the debt ceiling talks, and the pause in monetary tightening in the US. Bond yields rose slightly in June, while credit spreads slightly decreased during the month.
Over June, Hedged Developed Markets Overseas Shares returned 5.6%, US stocks outperformed emerging markets and other international developed markets. Value and growth stocks delivered similar results in June, although year to date growth has significantly outperformed value. Japan contributed significantly to the outperformance of developed markets, gaining 7.5% in June, as the Bank of Japan continues to stimulate the economy. Emerging Markets Shares (UH) gained 0.9%, held back by weakness in China. Latin America was the standout in emerging markets as the recovery in commodities provides a tailwind for its equities.
Hedged Overseas Government Bonds returned -2.3% over the month, as bond yields generally increased during June. In the US, the 10-year bond yield rose by 16bps. In developed markets outside the US, 10-year yields fell by 3bps in Japan, while yields rose 20bps in the UK, and 13bps in the Eurozone.
US inflation expectations, as measured by the 10-year inflation breakeven rate, was unchanged and ended June at 2.2%.
Australian Shares returned 1.7%, underperforming their overseas counterparts in June. Materials (4.6%) and Financials (3.1%) were the strongest sectors, meanwhile Healthcare (-6.4%), and Communication Services (-1.0%) were the largest detractors.
Performance Commentary - May 31, 2023 In May, risk asset returns in developed markets were mostly negative, bonds and real assets also generally declined. Emerging market equities returns were marginally positive.
News flow during May focused predominantly on the debt ceiling deadline looming in early June. Overall, the market impact has been fairly limited, although ratings agencies have placed US credit on watch for potential downgrades. The challenges facing regional banks in the US continued to be a major topic in early-May with regulators brokering a deal for JP Morgan to purchase First Republic Bank. However, the sell-off in shares of other vulnerable banks continued along with sizable deposit outflows.
Economic data in general remained resilient. US unemployment rose slightly in May but remains at historically low levels, although, other indicators such as wage growth show that the labour market is gradually cooling. Forwardlooking purchasing manager indices remain in expansion territory across most major regions, with strength in services outweighing weakness in manufacturing. In spite of economic resilience, headline inflation continued to decline in most major economies with it falling to just under 5% in the US. Inflation in Japan rose to 3.5%, which is high by historical standards, but still lower than in other developed countries. In the UK and Eurozone, inflation remains more resilient, but also on a downward trajectory. Inflation in China remains low amid a slow and developing expected economic recovery.
Rate markets continue to grapple with the question of how long monetary policy will remain tight. The bond market is pricing in an initial rate cut toward the end of this year or early next year, but US Fed officials have generally cast doubt on that timeline. Credit spreads moved slightly higher during the month. Issuance is coming back after a slowdown earlier in the year when the first signs of distress emerged among US regional banks.
Over May, Hedged Developed Markets Overseas Shares returned -0.2%, equity volatility increased moderately over the month, with one spike early in the month due to renewed banking concerns and another spike later in the month amid debt ceiling negotiations. Earnings season for Q1 2023 is coming to an end, with a second consecutive quarterly decline. Equities markets have seen through weaker earnings so far as attested by strong year to date returns for Overseas Shares.
Over the month, it was notable that growth outperformed value by a large margin, in spite of rising yields. A couple of contributors included optimism over developments in A.I. favouring growth stocks, while more cyclical sectors that dominate value indices lagged. Emerging Markets Shares (UH) gained 0.4%, as poor performance in China offset positive performance in other major emerging economies.
Hedged Overseas Government Bonds returned -0.6% over the month as bond yields generally increased during May. In the US, the 10-year bond yield rose by 22bps, while the 30-year yield was up by 18bps. In developed markets outside the US, 10-year yields rose by 8bps for Japan and 46bps for the UK, while falling 3bps for the Eurozone. US inflation expectations, as measured by the 10-year inflation breakeven rate, fell 3bps to 2.2%.
Australian Shares returned -2.5%, underperforming their overseas counterparts in May. IT (10.4%) and Utilities (1.1%) were the strongest sectors, meanwhile Consumer Discretionary (-6.2%), and Consumer Staples (-4.5%) were the largest detractors.
Performance Commentary - April 30, 2023 In April, risk asset returns in developed markets were mostly positive, while defensive assets also provided modest gains. Emerging market equities were lower than their developed market counterparts due to the weakness in Chinese stocks.
News flow during April was fairly quiet until the last week of the month when banking concerns resurfaced, as First Republic Bank came under pressure and was ultimately acquired by J.P. Morgan. Equity market volatility ended the month at its lowest level since late-2021, despite a brief spike during the last week of the month. Major economies remained resilient, driven largely by service activity. US GDP for Q1 2023 rose at a 1.1% annualised rate, which was below expectations.
Consumer confidence remained on the rise and labour markets remained tight, in spite of high profile layoffs in the US. Headline inflation continued to decline in major economies, reaching 5.0% in the US, its lowest level since mid-2021. In the UK, inflation fell by less than expected and remained above 10.0%, the highest rate in major developed economies. The People’s Bank of China and Reserve Bank of Australia left key lending rates unchanged.
Over April, Hedged Developed Markets Overseas Shares returned 1.6%. Even though the US earnings season delivered a fair number of positive EPS surprises relative to expectations, the earnings decline over the first quarter is set to be the largest since the second quarter of 2020. Returns were positive for most sectors with Consumer Staples delivering the largest gains for the month.
Value outperformed growth among large- and mid-cap stocks, while growth outperformed among small-caps. Emerging Market Shares (UH) underperformed unhedged Overseas Shares in April. Weakness in China outweighed the better performance from India and Brazil. Hedged Overseas Government Bonds returned 0.2% over the month as bond yields generally saw modest changes for most countries during the month. In the US, the 10-year bond yield fell by 4bps, while the 30-year yield was flat.
In developed markets outside the US, 10-year yields rose by 6bps for Japan and 23bps for the UK. US inflation expectations, as measured by the 10-year inflation breakeven rate, fell from 2.3% to 2.2%. Australian Government Bonds were flat over the month. Lending conditions remain somewhat stressed due to banking concerns but bond markets have remained fairly calm.
Credit spreads generally declined during the month, with investment-grade spreads falling 2bps and high yield spreads declining 3bps. Australian Shares returned 1.8%, underperforming their overseas counterparts in April. Real Estate (5.2%) and IT (4.5%) were the strongest sectors, meanwhile Materials (-2.6%) and Utilities (1.4%) were the largest detractors.
Performance Commentary - February 28, 2023 The Advance Moderate Multi-Blend Fund produced a negative return over the month of February. Global central banks committed to stay restrictive on monetary policy settings as service-related inflation remained elevated and labour market conditions remained tight. The US Federal Reserve increased US interest rates a further 25 basis points, lifting the Federal Funds Target Rate to a range between 4.50% and 4.75% in February. Both the European Central Bank and the Bank of England raised interest rates by 50 basis points to 2.50% and 4.0% respectively. The Reserve Bank of Australia delivered another 25 basis points hike moving the overnight interest rate target to 3.35%. The domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned -2.5% over the month. International equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned -1.6%.
The Unhedged international equities outperformed hedged as the AUD depreciated against other major global currencies, returning 2.1% over the month. Emerging Market Equities, as measured by the MSCI Emerging Markets EM AUD Net Total Return Index, returned -2.3%. Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned -0.4% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned -3.6% over the month.
Global yield curves shifted higher following the additional increase in interest rates. The US 10-year treasury yield moved 41bps higher to 3.92%, and the Australian 10-year government bond yield moved 30bps higher to 3.85% over the month. Domestic fixed interest, as measured by the Bloomberg Ausbond Composite 0+ Yr Index, returned -1.3%. International fixed interest markets, as measured by the Bloomberg Barclays GlobalAggregate Total Return AUD Hedged index, returned -1.8%. Over the month both growth and defensive oriented portfolios returned negative results.
Performance Commentary - January 31, 2023 The Advance Moderate Multi-Blend Fund produced a positive return over the month of January. Risk sentiment improved over the month as the market saw US headline CPI continue to trend down to 6.5% YoY in December. Core US CPI came in line with expectation at 0.3% MoM and 5.7% YoY. Investors speculated that the Fed would decelerate the pace of rate hikes and lift the target cash rate by 25bps in the February 1 FOMC meeting.
Domestically, headline inflation in December increased to 7.8% YoY, above consensus of 7.6%. The domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned 6.3% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned 6.2%. Unhedged International Equities returned 3.0%, underperforming their hedged equivalent, as the AUD strengthened against its major global peers. Unhedged Emerging Market Equities returned 3.8% over the month, Chinese equities continued to rally, the offshore stocks outperformed as China’s reopening boosted up investors’ sentiment.
Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned 8.1% and global listed property as measured by the FTSE EPRA/ NAREIT Developed AUD Hedged Net Total Return Index, returned 8.0% over the month. Government bond yields shifted lower across most of the curve. The Australian 10-year government bond yield moved 50bps lower to 3.55% and the US 10-year Treasury yield moved 37bps lower to 3.51% over the month.
The domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned 2.8% and the International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned 2.1%. Funds allocated to growth assets outperformed those with a higher allocation to defensive assets over the month.
Performance Commentary - December 31, 2022 The Advance Moderate Multi-Blend Fund produced a negative return over the month of December. Following four consecutive hikes of 75bps this year, the US Federal Reserve decelerated the rate hike in December and lifted Federal Funds Target Rate by 50 basis points to a range between 4.25% and 4.50%. Despite another downside surprise on US November CPI, Fed officials reiterated the hawkish stance and indicated a higher terminal rate of above 5.00% over the next year. The European Central Bank delivered a 50 basis points hike and increased its deposit rate to 2.00% in line with market expectations. The Reserve Bank of Australia raised the cash rate target by 25 basis points to 3.10%. Risk sentiment was weak heading into the year end, with market concerns around recession risk heightened, signalled by contractionary Service PMI readings in the US.
The domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned -3.3% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned -5.2%. Unhedged international equities slightly underperformed hedged exposure due to a weaker USD, returning -5.5%. Emerging Market Equities, as measured by the MSCI Emerging Markets EM AUD Net Total Return Index, returned -2.6%. Chinese offshore equities outperformed as the Chinese government shifts its focus away from Covid containment back towards economic growth.
Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned -4.0% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned -3.8% over the month. Global yield curves shifted higher. The US 10-year treasury yield moved 27bps higher to 3.88%, and the Australian 10-year government bond yield moved 52bps higher to 4.05% over the month. Domestic fixed interest, as measured by the Bloomberg Ausbond Composite 0+ Yr Index, returned -2.1%. International fixed interest markets, as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged index, returned -1.3%. Over the month both growth and defensive oriented portfolios had negative results.
Performance Commentary - November 30, 2022 The Advance Moderate Multi-Blend Fund produced a positive return over the month of November.
A lower-than-expected October US inflation print triggered a rally in stock markets as interest rate expectations shifted lower. This was despite the US Federal Reserve hiking its cash rate target by another 75bps to 3.75-4.00% and its hawkish messaging suggesting a higher terminal rate of above 5%. The US mid-term election concluded with Republicans taking control of the House of Representatives and the Democrats retaining control of the Senate. Domestically, the Reserve Bank of Australia delivered another 25bps rate hike, the first November rate rise since 2010. The Australian Bureau of Statistics released a new monthly CPI indicator, showing a headline inflation of 6.9% year-on-year to October, below market expectations.
The domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned 6.5% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned 5.4%. Unhedged international equities returned 2.0%, underperforming hedged exposure as the AUD appreciated against its major global peers. Chinese offshore equities had a sharp rebound with the Hang Seng index rallying 26.6% over the month.
Market sentiment improved with Chinese authorities recalibrating covid restriction rules and laying out measures to address the liquidity crunch in the property sector. As a result, emerging market equities outperformed, returning 9.6% in AUD terms.
Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned 5.8% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned 5.0% over the month.
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