Australia, 16 October, 2020 – Mercer’s Australian Shares Investment Manager Performance Survey released today reveals that investment managers with exposure to IT and growth continued to perform strongly versus their peers. COVID-19 has accelerated the trend towards e-commerce and online activity, fuelling the rally in the likes of Afterpay (payment platform) and Goodman Group (e-commerce logistics).
Ronan McCabe, Head of Portfolio Management for Mercer in the Pacific said, “In what has been a turbulent nine months, IT has continued to outperform the broad market. Long-term secular trends that had been expected to play out over the next number of years have been accelerated since COVID-19, such as e-commerce, remote working and data warehouses performed well, as opposed to physical retail.”
Healthcare and IT allocations have continued to be the key contributors to positive performance in the last year, with Energy and Financials as the major headwinds. Investment managers that had exposures to high growth and quality companies did better than value-based managers.
“Stocks focused in Healthcare and IT have been the winners through COVID-19 as we’ve seen Quality/Growth continue to outperform Value. Typically in a sell off and recession we can expect to see Value perform better, but this time it hasn’t been the case. However, now is not the time to write off Value and investors should seek to retain Value exposure in their portfolios through the cycle,” said McCabe.
Looking ahead, the US elections in early November may prove to be a volatile period both before and after. ”Looking at the last seven US presidential elections, the median Australian Shares investment manager generally outperformed the broad index in both the three months leading up to the election and the three months after the election. However, as the 2016 election showed, the equity market can react unpredictably to political outcomes. Volatility could increase as the election approaches and the market discounts potential policy changes,” McCabe added.
Australian Shares – All Funds
5 upper quartile funds in the past 12 months to end September 2020 (alphabetical order)
Fund |
Style |
Contributors to benchmark outperformance |
Bennelong Concentrated Equities |
Quality/Growth |
· Consumer Discretionary · Health Care |
Bennelong Core Equities |
Quality/Growth |
· Consumer Discretionary · Health Care |
ECP Asset Management All Cap |
Quality/Growth |
· Information Technology · Consumer Discretionary |
Hyperion Australian Growth |
Quality/Growth |
· Health Care · Information Technology |
Platypus Australian Equities |
Quality/Growth |
· Health Care · Information Technology |
5 lower quartile funds in the past 12 months to end September 2020 (alphabetical order)
Fund |
Style |
Contributors to benchmark underperformance |
Allan Gray Australian Equity |
Value |
· Energy |
Dimensional Australian Value |
Value |
· Financials · Energy |
Lazard Select Australian Equity |
Value |
· Energy |
Martin Currie Australia Real Income |
Value |
· Real Estate |
Nikko AM Australian Share Wholesale Fund |
Value |
· Financials · Energy |
Key Findings
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Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com.au. Follow Mercer on Twitter or LinkedIn.