NUN0002AU Pre-Select Balanced Fund aims to provide medium to long term returns that are generally higher than those achievable by investing in conservative funds. Maintain a balanced spread of investments between growth and defensive assets. The likelihood of the portfolio incurring a negative return in any particular year is moderate to high.
The Fund returned 2.0% for the quarter (before fees) and 9.2% for the year.
Key contributors to performance for the quarter ended 30 June 2023 are:
• In another volatile quarter, that saw large monthly swings in both share and bond markets, the Australian shares strategy had a positive return of +1.0% and the global shares unhedged strategy a very strong return of +7.4%.
• Corporate bonds have also benefitted from improving risk appetite with narrower credit spreads. Investors are finding the current corporate yields as now providing attractive income potential compared to recent years. The extended credit strategy returned +1.4%.
What is Pre-Select Balanced Fund Pre-Select Balanced 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 Pre-Select Balanced Fund has Assets Under Management of 127.53 M with a management fee of 0.65%, a performance fee of 0 and a buy/sell spread fee of 0.21%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Pre-Select Balanced Fund has returned 0.92% in the last month. The previous three years have returned 3.64% annualised and 6.01% each year since inception, which is when the Pre-Select Balanced 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 Pre-Select Balanced Fund first started, the Sharpe ratio is NA with an annualised volatility of 6.01%. The maximum drawdown of the investment product in the last 12 months is -3.67% and -22.63% 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 Pre-Select Balanced Fund has a 12-month excess return when compared to the Multi-Asset - 41-60% Multi-Manager Index of 0.25% and 0.34% 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. Pre-Select Balanced 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 Pre-Select Balanced Fund provide? Pre-Select Balanced Fund has a correlation coefficient of 0.97 and a beta of 0.99 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 Pre-Select Balanced Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pre-Select Balanced Fund with the Multi-Asset Balanced Investor Index? For a full quantitative report on Pre-Select Balanced Fund compared to the Multi-Asset Balanced Investor Index, you can click here.
Can I sort and compare the Pre-Select Balanced Fund to do my own analysis? To sort and compare the Pre-Select Balanced Fund financial metrics, please refer to the table above.
Has the Pre-Select Balanced 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.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Pre-Select Balanced Fund. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - March 31, 2023 The Fund returned 4.1% for the quarter (before fees) and 1.2% for the year.
Key contributors to performance for the quarter ended 31 March 2023 are:
• In another volatile quarter, that saw large swings in both share and bond markets, Australian shares had a strong return of +4.4% and global shares unhedged an exceptionally strong return of +9.3%.
• Fixed income returns continued to improve over the quarter. The inflation-linked bonds strategy had a strong return +4.2% and the short-maturity strategy returned +1.7%. Inflation-linked bonds continue to take favour in the scenario where inflation is higher than expected and is further supported by the reset in real rates. Note: Returns for the asset classes above are before fees and tax.
Performance Commentary - December 31, 2022 The Fund returned 4.2% for the quarter (before fees) and -5.2% for the year.
Key contributors to performance for the quarter ended 31 December are:
In a volatile quarter, that saw large swings in both share and bond markets, Australian and global shares hedged had exceptionally strong returns of +8.4% and +9.2%.
The listed infrastructure exposure had a very strong return of +5.6%. The Inflation-linked bonds strategy has reduced the exposure to inflationary risks while protecting against expectations of lower economic growth.
Performance Commentary - September 30, 2022 The Fund returned -1.3% for the quarter (before fees) and -7.6% for the year. Key contributors to performance for the quarter ended 30 September 2022 are:
• The exposure to inflation-linked bonds has reduced exposure to inflationary risks while protecting against expectations of lower economic growth.
• The overweight to global shares unhedged was beneficial due to the persistent strength in the US dollar.
• The fund also invests in the MLC Inflation Plus portfolios, providing important real return exposure and sources of low correlation return streams.
In a volatile quarter for share markets and fixed income, within Inflation Plus, the Low Correlation Strategy and the insurance-related investments strategy both produced strong positive returns of 2.3% and 2.0% respectively.
Note: Returns for the asset classes above are before fees and tax.
Performance Commentary - June 30, 2022 Australian shares were not immune to the sharp sell-off in global share markets over the course of the second quarter of 2022 and delivered a weak return of -11.9% in the three months to June 2022. Many central banks engaged in monetary tightening, raising interest rates to combat high inflation. This in turn heightened investor fears of a global economic recession. The concerns over a slowing global economy and a reduction in demand saw oil prices pull back as the quarter progressed. Iron ore prices also fell sharply as China’s zero-COVID policy continued to weigh negatively on economic activity and therefore demand for iron ore.
There continued to be a rotation out of growth and higher multiple companies into value stocks, particularly in defensive areas of the market. The Australian share market’s heavy fall over the June quarter saw all sectors finish lower except for the Utilities and Energy sectors which both eked out small gains. Particularly hard hit were the Information Technology, Materials and Consumer Discretionary sectors as investors repositioned their portfolios more defensively for the expected softer economic times ahead.
Performance Commentary - March 31, 2022 The Fund returned -2.3% for the quarter (before fees) and 2.1% for the year.
Key contributors to performance for the quarter ended 31 March 2022 are:
• The Australian shares strategy produced a solid return of 2.0% for the March quarter. The gains over the quarter were led by the Resources sector which rallied strongly as the prices of many commodities soared following the introduction of sanctions on Russian commodity exports following the invasion of Ukraine. The major banks also performed well on expectations of interest rate rises and the positive flow on effect this could have on their net interest margins.
• The infrastructure strategy in Inflation Plus has produced a strong return of 3.6% this quarter. Airports have been stronger with healthy earnings following the lifting of international travel restrictions. Railroads have also performed strongly on the view that higher commodity prices would be supportive of North American freight rail operators.
Performance Commentary - June 30, 2021 June quarter. The US Federal Reserve also maintained guidance that interest rates would remain low but did signal consideration for tapering their bond purchase program later this year. European shares made a strong 3.6% return (in local currency terms) with the steady vaccination rollout and gradual relaxation of lockdown restrictions. The European Central Bank’s guidance of continued low interest rates and bond purchases was also supportive for European shares.
Emerging market shares (unhedged) delivered a very strong 6.6% gain for the quarter. This surge was led by large gains for India (8.7%, in local currency terms) with encouraging signs of lower virus infection cases. Global bonds (hedged) delivered a positive 0.9% return for the quarter. Government bond yields have stabilised over recent months as central banks maintained their guidance of low interest rates despite higher inflation. Global high yield bonds (hedged) also made a positive gain of 1.3% for the quarter. Credit spreads have narrowed given improving risk appetites due to the gains in global share markets and more promising economic indicators
Performance Commentary - September 30, 2020 The Fund increased in value by 1.2% for the quarter (before fees and tax). Strong returns have offset some of the March quarter’s falls so the fund is down only 0.3% for the year to 30 September 2020.
Key contributors to performance for the quarter ended 30 September 2020 are:
• The global shares strategy (hedged to the Australian dollar) delivered a strong return in the September quarter of 4.8%. While Wall Street surged to record highs in early September given vaccine hopes, various factors weighed on global shares later in September. Firstly, and primarily, the virus remains a troubling global threat with new infection cases rising again. Secondly, political risk is becoming more prominent, in particular the US Presidential election. Global share markets continue to be narrowly led, with those companies delivering on earnings growth being handsomely rewarded, while those stocks with any economic sensitivity are being punished. Strength in the Australian dollar also added to this global shares strategy return because it’s hedged to the Australian dollar.
• The global shares strategy (not hedged to the Australian dollar) also contributed with a 2.5% return. The return was lower than hedged global shares because the Australian dollar appreciated in value, as it tends to do when global share markets rise.
• The fixed income strategy delivered a positive return of 1.0%. Global government and corporate bonds have delivered solid returns over the past quarter. Assertive central bank bond buying and hopes for a virus vaccine has seen investors become more comfortable with credit risk. The revival in global share markets has also contributed to improving risk appetites.With the extraordinarily low levels of government bond yields across the developed world (most notably Germany and Japan which are below 0% for long maturities), we have tilted the strategy modestly towards credit assets where yields are higher and the interest rate risk (duration) is lower.
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