Global Allocation
Global Allocation Fund (Aust) Update
December Quarter 2007
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Download the Global Allocation Fund (Aust) Update
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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 visit 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.
Portfolio activity
- During the quarter, the Fund’s overall equity allocation increased from 54% to 57%. Exposure to U.S. equities increased mainly due to an increase in the Consumer Staples, Industrials and Healthcare sectors, along with a modest increase in Japanese equities which were partially offset by a reduction in European equities, most notably in Germany.
- On a sector basis, the Fund increased its equity weightings across most sectors; these include Information Technology, Consumer Staples, Health Care, Industrials, Telecom Services, Energy and Consumer Discretionary, while reducing its weighting in Financials and Materials.
- The Fund’s allocation to fixed income remained relatively unchanged at 28%.
- A decrease in U.S. fixed income exposure was largely offset by an increase in European fixed income.
- Reflecting the above changes, the Fund’s cash equivalent holdings decreased from 18% to 15% of net assets.
- The Fund’s underweight position in fixed income securities continues to reflect the assessment that available yields are insufficiently attractive relative to the risks of higher inflation and higher interest rates outside the US, particularly in Asia and Europe.
- Relative to its benchmark, the Fund’s currency exposures are underweight the US dollar, the British pound and the Euro, while simultaneously being overweight the Japanese Yen, the Swiss Franc, the Brazilian Real and several Asian currencies. The Fund’s benchmark currency weights are hedged back into AUD.
Performance review
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Gross
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Benchmark*
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Out-performance^
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1 Month
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0.66%
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-0.22%
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0.88%
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3 Month
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2.52%
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0.15%
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2.37%
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6 Month
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6.37%
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2.72%
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3.65%
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1 Year
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15.52%
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9.12%
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6.41%
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2 Year (pa)
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15.59%
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10.80%
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4.79%
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Past performance is not necessarily a guide to future performance.
*Benchmark consists of a weighted average of returns for a composite of 36% S&P 500 Composite (total return), 24% Financial Times/S&P Actuaries World Index ex-US Citigroup Non-USD World (total return), 24% Merrill Lynch Government Index GA05 (5 year Treasury Bond) and 16% Government Debt Index.
^ Outperformance represents the difference between Gross return and Benchmark return. Long term performance returns show the potential volatility of returns over time.
Positive influences on performance were:
- An overweight to India
- A significant underweight to the U.S.
- Stock selection in Brazilian and U.S. equities.
- An underweight and stock selection in the Financials sector
- An overweight and stock selection in the Energy sector
- Within the fixed income portfolio, an overweight allocation to U.S. Treasuries and U.S. Treasury Inflation Protected Securities (TIPS) and an underweight to European and Asian sovereign debt.
Negative influences on portfolio performance were:
- Detracting moderately from the Fund’s relative performance was its overweight in Japan as Japanese equity markets declined.
Composition of the Fund as at 31/12/2007
Australia Equities
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0.92%
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Australia Fixed Income
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0.44%
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Asia (ex-Japan) Equities
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2.70%
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Asia (ex-Japan) Fixed Income
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0.62%
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Emerging Market Equities
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9.74%
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Emerging Market Fixed Income
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3.46%
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Europe (ex-UK) Equities
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8.63%
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Europe (ex-UK) Fixed Income
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4.74%
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Japan Equities
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6.26%
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Japan Fixed Income
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-0.80%
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North America Equities
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21.91%
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North America Fixed Income
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21.50%
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UK Equities
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2.38%
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UK Fixed Income
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2.21%
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Commodity
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2.48%
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Cash Equivalents
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12.80%
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Investment objective
The Fund seeks to maximise total investment returns while managing risk by actively investing in global equities, debt and short-term securities.
Fund strategy
The Fund is managed by the Global Allocation Team (“G.A. Team”) which is based in Princeton, New Jersey, USA. The investment strategy is to invest in global equities, fixed income and cash, with the combination varied both with respect to types of securities and markets, in response to changing market conditions and economic trends.
In selecting equity investments, the Fund mainly seeks to invest in securities which are believed to be undervalued. The Fund may buy fixed income securities of varying maturities.
The Fund can, and does, look for investments in all the markets of the world, however, it will typically invest a majority of its assets in the securities of companies and governments located in North and South America, Europe and Asia. The G.A. Team aims to identify the long-term trends and changes that could benefit particular markets and/or industries relative to other markets and industries.
Currency is actively managed in the Fund around a fully-hedged Australian dollar benchmark.
Designed for investors who…
- Seek a single fund that offers broad global exposure and the largest universe of securities from which to choose.
- Seek a fund that maximises total investment return while having the flexibility to manage risk and move into safer instruments.
- Have a long term investment horizon.
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