Australia, 19 January, 2021 – Mercer’s Australian Shares Investment Manager Performance Survey released today reveals that investment managers with exposure to Value as a style, and sectors such as Energy and Financials outperformed over the final quarter of 2020. Over the full year, the growth style-dominant IT sector outperformed, returning more than 50 per cent for the year.
The strong performance of IT was largely on the back of secular trends that were accelerated by COVID-19, such as the trend towards online activity. Afterpay (payment platform) was the largest contributor to overall index performance.
Consumer Discretionary was another strong sector over the year, a result of online activity rather than physical retail. The other strong performing sector was Materials, largely driven by the recovery in China with Fortescue, Rio Tinto, BHP and Pilbara all performing well over the recent quarter.
Ronan McCabe, Head of Portfolio Management for Mercer in the Pacific said, “The final quarter of 2020 was very strong for equity markets with the ASX 300 returning 13.8 per cent and the ASX 50 13.2 per cent. Over the quarter the top three sectors were Energy, Financials and IT, respectively. Rebound in oil prices and easing of restrictions on bank dividends, in addition to improving economic outlook, were drivers of performance.”
McCabe added, “In a reversal of the prior two quarters, Value outperformed Quality/Growth. Value-esque stocks such as Woodside Petroleum, Rio Tinto, BHP, CBA, ANZ and NAB were the largest contributors to strong performance. While Value has had a tough time over the past few years, our perspective is that investors should seek to retain some Value exposure in their portfolios through the cycle. The recent quarter’s performance illustrates this nicely.”
On active management, McCabe noted that, “In what was a roller-coaster year for markets, Active held up very well. The median manager was slightly above benchmark over the year, while top quartile managers outperformed the benchmark by 2.5 per cent over the quarter and 3.9 per cent over the year. Over three years and five years, the top quartile managers beat the benchmarks by 1.2 per cent and 1.3 per cent respectively. This evidences the role of active management in investors’ portfolios. While selecting best in breed managers is difficult, it does come with its rewards.”
Australian Shares – All Funds
5 upper quartile funds in the past 12 months to end December 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 December 2020 (alphabetical order)
Fund |
Style |
Contributors to benchmark underperformance |
Allan Gray Australian Equity |
Value |
· Energy |
Investors Mutual Equity Income |
Value |
· Communications Services · 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
-ENDS-
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