PSSap Fund Performance for September 2006
Welcome to the monthly update on your Fund's investment portfolios.
ARIA's primary responsibility is the management and investment of the Fund in the equitable and best interests of all members. ARIA approaches this task by setting investment objectives for the Fund's investment options that maximise the real investment returns earned subject to tolerable levels of short-term volatility for each option.
Table 1: Asset allocations for pre-mixed investment options as at end September 2006 (% )
This table below shows the actual asset allocations of the four pre-mixed investment options at the end of September 2006. The other seven options are essentially single strategy options - see our product disclosure statement .
Asset Class |
Conservative |
Balanced 50/50 |
Trustee Choice |
Aggressive |
Cash |
23 |
5 |
5 |
2 |
Bonds/Fixed interest |
46 |
35 |
12 |
0 |
Market neutral strategies |
0 |
10 |
10 |
8 |
Total Defensive Assets |
69 |
50 |
27 |
10 |
Australian shares |
17 |
19 |
32 |
42 |
International shares |
11 |
14 |
23 |
32 |
Property |
3 |
12 |
13 |
11 |
Long/Short equities |
0 |
5 |
5 |
5 |
Total Growth Assets |
31 |
50 |
73 |
90 |
Total |
100 |
100 |
100 |
100 |
Table 2: Performance in 2006-07 as at end September 2006 (%)
The figures in the table are after taxes and fees. The first column shows performance for the 12 months ending June 2006. The second column shows the return for each option for a member who was invested for the whole of the September quarter of 2006.
Investment Option |
Financial Year 2005-06 |
3 Months to end September 2006 |
Conservative |
7.7 |
2.0 |
Balanced (50/50) |
10.2 |
2.3 |
Trustee Choice |
14.3 |
2.7 |
Aggressive |
16.1 |
3.0 |
Cash |
4.6 |
1.2 |
Bonds/Fixed interest |
2.0 |
1.7 |
Australian shares |
22.3 |
1.5 |
International shares (unhedged) |
17.8 |
3.4 |
International shares (hedged) |
15.4 |
4.1 |
Property |
11.7 |
6.1 |
Sustainable |
19.0 |
1.2 |
Commentary:
Global equity markets continued to advance in the month of September, culminating in strong returns for the September quarter. Markets in the September quarter were buoyed by a perceived peaking in US interest rates, a sharp decline in the oil price, continued strong corporate profits growth and heightened takeover activity. The Australian equity market also rose in the September quarter, but at a more moderate pace than its global counterparts. This was due to a decline in the price of resource shares, which were constrained by a fall in commodity prices.
Global fixed interest markets also benefited from the perceived peaking in US interest rates. US 10 year bond yields declined by 0.5% in the September quarter, thereby fuelling strong capital gains and impressive bond market returns. The US gains were repeated in other global bond markets, with the correlation between markets at very high levels.
Option returns have begun this financial year on a strong note, with the highest returns achieved by those options with the largest exposure to international equities. The exception to this was property, where returns were boosted by strong upward revaluations for a number of properties.
Andre Morony
CIO
26 October 2006
