Australia, 19 April, 2021 – Mercer’s Australian Shares Investment Manager Performance Survey released today reveals that investment managers with exposure to the Value style and Financial sector outperformed over the first quarter of 2021. Equity markets performed well over the quarter with the S&P/ASX 300 achieving total returns of 4.2% and the S&P/ASX 50 5.3%.
As the economy recovers banks have led the rally with Westpac, ANZ and NAB the three largest contributors to index performance. The Financials sector was the stand out contributor delivering 12.1% over the quarter followed next by Communication Services and Consumer Discretionary. The pace of the economic recovery and the risk from rising inflation influenced investor sentiment.
Ronan McCabe, Head of Portfolio Management for Mercer in the Pacific said, “The latest Mercer survey reveals further evidence of the long anticipated recovery in value stocks. After a protracted period of underperformance spanning over a decade, Australia is witnessing the strong performance of value factors seen elsewhere in the world.”
Mr McCabe noted that value is not the only style Australian equity investors should be aware of.
“Value, along with other return-enhancing factors such as quality, momentum, size and low volatility, is one of five key ‘factors’ that can be used when diversifying to ensure portfolios have exposure to a range of systematic return drivers,” said Mr McCabe.
“Our surveys have shown us over the years that value as a style has faced many challenges over the past decade, and these difficult market conditions in Australia may continue for some time.
“While we don’t know whether the current outperformance of value will be sustained, we do believe this approach has the potential to offer diversification of excess returns and enhance expected outcomes. Without exposure to value, investors may risk missing out on the benefits of that diversification,” he said.
Over the one-year time horizon:
Australian Shares – All Funds
Five above-median funds in the past 12 months to end March 2021 (alphabetical order)
Fund |
Style |
Contributors to benchmark outperformance |
Allan Gray Australian Equity |
Value |
· Energy |
Ausbil Australian Active Equity |
No style bias |
· Financials · Materials |
ECP AM All Cap |
Quality/Growth |
· Information Technology · Consumer Discretionary |
Martin Currie Australia Value Equity |
Value |
· Energy · Financials |
Perennial Concentrated Australian Shares |
Value |
· Financials · Materials |
Five below-median funds in the past 12 months to end March 2021 (alphabetical order)
Fund |
Style |
Contributors to benchmark underperformance |
AB Managed Volatility Equities |
Low Volatility |
· Consumer Staples · Communication Services |
Lazard Australian Equity |
Value |
· Consumer Staples · Industrials |
Martin Currie Australia Real Income |
Value |
· Real Estate |
Plato Australian Shares Low Volatility Income |
Low Volatility |
· Consumer Staples · Communication Services |
Solaris Australian Equities |
No style bias |
· Consumer Staples · Industrials |
Key Findings
About Mercer
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 approximately 25,000 employees are based in 43 countries and the firm operates in 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 over $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 @MercerAu and LinkedIn.