Balanced
Balanced Fund Update
June Quarter 2007
The performance shown in the Fund Update is the gross performance of the fund. To view the net performance of the fund or of the different unit classes of the fund download the Fund Performance Report or select Fund Performance.
Gross performance returns and benchmark performance shown do not include expenses, fees or tax. Net performance returns are prepared on an exit-to-exit fee basis which includes all ongoing fees and expenses.
- In Australia, economic growth has unambiguously strengthened in the first half of 2007, but wages growth and inflation remains well contained which has kept the Reserve Bank on the sidelines so far. Combined with a very supportive supply/demand backdrop, this has been a very positive environment for Australian equities which performed strongly again over the quarter.
- The AUD also rallied again over the quarter (to an 18-year high against the USD) with long-term commodity price expectations continuing to be revised higher. The strength of the AUD continues to be a drag on unhedged equity returns.
Performance contributors
- Over the quarter, the strategies which added most value were tactical asset allocation, global allocation, portable alpha and quantitative Australian equities.
- There were no significant detractors from performance.
Portfolio strategy & outlook
- We remain optimistic on the outlook for equities supported by a combination of favourable liquidity conditions (reflecting the high level of merger and acquisition activity), strong global economic growth and benign inflation.
- The risks attached to this bull market are building as leverage is increasing, but it still seems to be premature to worry about that now.
- Bond markets have sold off significantly in the past quarter, but the sell-off has not yet been significant enough to make bonds an attractive investment proposition.
- The outlook for the AUD remains constructive supported by relatively high interest rates, robust Australian economic growth and persistently high commodity prices.
Performance review
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Gross returns
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Benchmark returns#
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Out-performance*
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3 Month
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3.97%
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2.94%
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1.03%
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6 Month
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7.94%
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6.03%
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1.91%
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1 Year
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15.97%
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16.25%
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-0.28%
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2 Year (pa)
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17.78%
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16.01%
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1.76%
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3 Year (pa)
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16.68%
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15.27%
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1.41%
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5 Year (pa)
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12.20%
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11.90%
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0.30%
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Past performance is not a reliable indicator of future performance.
#The Fund is a diversified fund so the benchmark consists of a weighted average of the returns provided by market indices for the relevant asset classes.
*Shows the difference between Gross return and Benchmark return.
Gross performance figures quoted are calculated with no allowance for management fees, operating expenses or tax on income. Long-term performance shows the potential volatility of returns over time.
Investment objective
The investment objective of the Fund is to provide investors with the highest possible returns consistent with a "balanced" investment strategy encompassing:
- an orientation towards growth assets;
- a bias toward Australian assets; and
- active asset allocation, security selection and risk management.
Fund strategy
The investment strategy of the Fund is to provide investors with a
diversified exposure to the best investment teams and strategies that BlackRock has globally within the context of an Australian based "balanced" investment portfolio.
The Fund's strategy is built around two steps:
1. Establishing the most appropriate strategic benchmark subject to the growth/income splits and market risk exposures of the range of Australian balanced funds; and
2. Enhancing the returns of the Fund relative to the strategic benchmark to the maximum extent possible by utilising investment teams, strategies and techniques from BlackRock's resources around the globe subject to a risk budgeting framework
Designed for investors who…
- Seek a fund which aims to provide a combination of capital growth and income.
- Accept the risk that moderate volatility may be experienced.
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