September, 2023
After a rally early in the quarter, the Fund switched further exposure from bonds and equities to alternatives. Changes were focused on global shares, with additional reductions in real assets and emerging market equities. We also made further reductions in Australian bonds and moved to an offsetting short position in the US. At quarter’s end, the Fund was marginally lower than average in weighting to Australian shares, and lower again across international share markets, with a sector bias toward value and energy. We remain very light in property, at less than 2%, and have reduced exposure to infrastructure early in the quarter to below 4%. In regard to fixed income, markets have been decimated this year, mostly arising from interest rate increases, rather than credit stress (so far). Prospective bond returns are looking increasingly attractive and as the peak in rate hikes approaches, we believe a buying opportunity is emerging
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-15.pdfAugust, 2023
The Fund produced a small negative return in August amid significant market volatility and a renewed march higher in global interest rates. Global equity markets fell over 3.5%, whilst global bonds fell close to 2%. Australia fared relatively better, with a rise in the local equity market of over 1%, however government bonds also fell almost 3%. The sell offs were induced by a marked increase in hawkishness from the world’s central banks, notably on the back of speeches at the Jackson Hole central bank symposium, where Fed Chair Jerome Powell gave a hawkish speech conveying a clear resolve to fight inflation with further rate hikes. Economic data releases in the US were mostly soft and reflect increasing risk of recession.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Capture.jpgSeptember, 2022
In continued difficult market conditions, the Fund was negative for the quarter. While any negative return is unwelcome, in the current market context, the results for the quarter and the last year, do demonstrate resilience. In international equities, the Fund’s three core managers have outperformed the market collectively by around 7% over one year, while its two Australian equity strategies have outperformed by approximately 2.5% collectively, over the same timeframe. Both however slightly underperformed over the last quarter. In fixed income, Australian bond exposure offset by a short US bond exposure benefited performance, as the unusually wide gap between the two markets closed aggressively. In alternatives, the Fund’s new Liquid Alternatives strategy pleasingly returned approximately 5% for the quarter.
After a rally early in the quarter, the Fund switched further exposure from bonds and equities to alternatives. Changes were focused on global shares, with additional reductions in real assets and emerging market equities. We also made further reductions in Australian bonds and moved to an offsetting short position in the US. At quarter’s end, the Fund was marginally lower than average in weighting to Australian shares, and lower again across international share markets, with a sector bias toward value and energy.
We remain very light in property, at less than 2%, and have reduced exposure to infrastructure early in the quarter to below 4%. In regard to fixed income, markets have been decimated this year, mostly arising from interest rate increases, rather than credit stress (so far). Prospective bond returns are looking increasingly attractive and as the peak in rate hikes approaches, we believe a buying opportunity is emerging.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-14.pdfAugust, 2022
The Fund produced a small negative return in August amid significant market volatility and a renewed march higher in global interest rates. Global equity markets fell over 3.5%, whilst global bonds fell close to 2%. Australia fared relatively better, with a rise in the local equity market of over 1%, however government bonds also fell almost 3%. The sell offs were induced by a marked increase in hawkishness from the world’s central banks, notably on the back of speeches at the Jackson Hole central bank symposium, where Fed Chair Jerome Powell gave a hawkish speech conveying a clear resolve to fight inflation with further rate hikes. Economic data releases in the US were mostly soft and reflect increasing risk of recession.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-13.pdfJune, 2022
The Fund fell in the June quarter amid broadly falling markets, though performed relatively well considering the size of these market falls. Major global bond and equity markets haven experienced their worst first half in over 50 years as central banks have rapidly tightened policy to combat inflation, and in doing stoked fears of triggering a recession. Global equities have fallen over 18% year-to-date, global bond indices have fallen circa 10% and listed real estate over 20%. In contrast, energy and infrastructure-related assets have held up relatively well, although commodities also retraced very sharply in June as recession fears increased. Hedges and cash in the Fund aided the return, with positive contributions seen from stock selection, infrastructure, and alternatives.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-12.pdfMay, 2022
The Fund fell slightly in May as broader global markets continued to deteriorate. Global equities have, in some cases, corrected beyond 20% from recent peaks, while some bond markets are down by similar amounts. Bond market corrections of this size have not been seen for over 40 years. The Fund’s relatively low recent losses have been a result of asset allocation leaning toward cash, real assets and alternatives; stock selection from our core managers; and tail hedges, which will likely continue to aid the Fund’s performance if markets fall further. Our hedges in credit and equities have been performing strongly, with some profits being taken from credit in May.
We believe the current environment is very attractive We believe the current environment is very attractive for actively managed funds. After recent falls, lower valuations will likely be setting up stronger longer-term returns. The uncertainty is how much damage is encountered in bringing inflation under control in the meantime. Economic growth expectations are slowing sharply, as central banks prioritise inflation-control over employment. While markets have started pricing a recession, earnings remain solid (for now) and US consumers are still spending. If inflation softens over the next six months there is room for a soft landing in the US and a likely great buying opportunity. If inflation remains higher for longer, we believe the probability of a recession will rise above 50%. We expect market volatility to remain higher and market direction to remain sideways at best over the next six months. Conditions favour defensives and energy sectors in equities. Despite confidence in commodities, especially oil and some metals, we have now taken some profits in these areas as they are quite susceptible to rising volatility.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_h-1.pdfApril, 2022
Performance and positioning The Fund fell slightly in April, though held up well within the context of sizeable falls in mainstream markets. The US market led the way, falling over 8% over the month, while emerging markets fell by over 5%. Government bonds also fell, losing 1.5% in Australia and almost 3% globally. The Fund meanwhile benefited from areas of the portfolio that are the most differentiated from more mainstream diversified funds. Positive contributors included profits from our tail hedges in US equities and US high yield bonds. Alternative strategies also lifted returns, while stock selection again added significant value.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-11.pdfMarch, 2022
The Fund fell slightly in the March quarter; however, performance was resilient in a market where International Equities and Bonds both lost significant value. The fund benefited from investments in areas such as Latin America and also Australia. Markets continued to be heavily impacted by rising inflation and rapidly shifting central bank policy, especially from the US. The US Federal Reserve (Fed) raised rates by 0.25% late in the quarter, with a further 8 hikes priced over 2022. It also signalled a much faster unwind of bond holdings (‘quantitative tightening’ or ‘QT’) than originally expected.
Looking ahead, we expect economic growth to remain positive but to slow, as the impact of higher prices, costs, and interest rates ripple through economies. Alongside the high level of geopolitical shocks and lack of the safety valves (e.g. monetary policy), we expect the elevated volatility to continue. The potential for a ‘policy mistake’ has risen, but our base case remains that inflation is likely to retreat somewhat over the next 12 months and that growth can maintain some of its momentum. There are elevated risks around this view however. At present there remain many areas of attraction in markets, especially those around commodity markets and the decarbonisation process. We expect these, plus the additional volatility, to continue to present opportunities
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-10.pdfFebruary, 2022
The Fund fell slightly, though continued to show resilience in February relative to broader markets, which were markedly impacted by the Russian invasion of Ukraine. The conflict led to severe volatility in commodities and a surge in energy prices, which further exacerbated already present supply chain and inflation issues. Fund performance in February was helped by our conservative positioning, with a current tilt towards cash and away from bonds and credit, as well as favouring areas such as Latin America and listed infrastructure. Strong stock selection within our active strategies also added considerable value. Mid to longer-term performance of the Fund remains solid.
Looking ahead, we feel economic growth is likely to be lower, as the impact of higher prices, costs, and interest rates ripple through economies. Alongside the high level of geopolitical shocks and lack of the normal safety valves (e.g. monetary policy), we expect the elevated volatility to continue. The good news remains however that the themes of reopening, solid savings levels, and strong corporate fundamentals mean recessions are less likely, particularly in Australia or the US. Europe looks more vulnerable at present, while China’s commitment and ability to stimulate its economy, and especially its property sector, remain unclear, with their COVID containment policies an additional and unfolding threat to growth and supply chains. A negotiated peace in Ukraine would obviously help ‘stagflation’ concerns and would also provide a welcome boost to markets that have priced in larger risk premiums.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-9.pdfJanuary, 2022
The Fund lost some value in January as markets fell amid fears of globally rising interest rates and continued inflation. The performance however was quite strong on a relative basis. Losses in Australian and global equities, listed property, and bonds were mitigated by the Fund’s hedges (downside protection), emerging markets positions; and especially stock selection within equities, where core strategies in Australia and globally added value in excess of benchmark indices. The portfolio remains positioned conservatively, with cash exposure temporarily being raised higher since early January.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-8.pdfDecember, 2021
The portfolio is positioned conservatively as we enter 2022. Average equity exposures are approximately 40% of the portfolio, with a lean towards active stock selection in non-US developed equity markets and real assets. Meanwhile, alternative strategies total approximately 22%, while bond and credit exposures remain relatively low. We have a focus on further developing the range of absolute return strategies and we expect to introduce some of these in 2022. In a market that has been dominated by low interest rates, ever higher valuations in the US, and historically-low return expectations from mainstream markets, expanding the scope of alternatives from both existing and new partners is both a priority and a key point of difference of our goals-based funds.
In our view, 2022 offers a host of risks and opportunities. For example, we believe commodities markets present opportunities, given the current themes of underinvestment, decarbonization and COVID-related disruptions. Regarding risks, we feel these are focused around tightening monetary policy, geopolitics, climate and China. Perhaps the greatest positive theme, however, is the potential for COVID-19 to finally be forced into relative submission through the combined forces of medical progress, immunity and milder mutations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-1-2.pdfNovember, 2021
Looking forward, our base case is that economic growth will remain positive into 2022 supported by a strong household savings position, inventory rebuilding and ongoing medical progress with respect to COVID-19. That said, we expect greater economic and market volatility throughout 2022 compared to 2021, and this should create more opportunities to benefit from dislocations. Longerterm return expectations remain very low across most asset classes. Our in-house medium-term (5 to 10-year) projections for balanced funds are near their lowest-ever levels overall, driven primarily by very low bond yields. We believe however that this can be addressed through greater allocations to active and alternative strategies, thus we continue to expand our range of available alternative and absolute return options.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-7.pdfOctober, 2021
The Fund produced a positive return in October. Returns were supported by the Fund’s exposure to real assets, equities, and notably real estate investment trusts. The Fund continues to favour alternative strategies and developed market equities and remains more cautious in regard to emerging markets. Protection is held in US and Australian equities, and notably the US high yield market.
In the near term, the increase in inflationary concerns and change in policy has increased the risk of a correction. Broad-based price rises, particularly in the US, are placing more pressure on the central banks to respond, initially through faster tapering but potentially through faster rate hikes. Despite the uneven economic recovery and lower expected market returns going forward, the medium-term economic outlook remains reasonably positive given growth is expected to be supported by strong savings, rebuilding of inventories, and the continued progress in containing COVID-19.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-6.pdfSeptember, 2021
The Fund produced a negative return in September. Returns were supported by the Fund’s exposure to alternative assets as global equity and bond markets fell during the month. The Fund continues to favour alternative strategies. The Fund reduced overall equity exposure during the quarter while retaining some exposure to emerging markets. Protection remains primarily on the US high yield market. The exposure to bonds was maintained at low levels while its cash allocation rose.
The medium-term outlook appears positive given growth is expected to be supported by strong savings, supportive policy, reinvestment and rebuild of inventories, and the continued progress in containing COVID-19. In the near term, the increase in inflationary concerns and change in policy could lead to the risk of a correction. In addition, the tapering of bond buying, uncertainty around China and Evergrande, market supply chains, earnings and the US debt ceiling remains a concern.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-5.pdfAugust, 2021
The Fund produced a positive return in August. Return contributions were led by international equities, with support from alternative assets. Most bond exposures were flat while emerging market equities detracted slightly from returns. The Fund continues to favour international equities and alternative strategies, while being cautious of bonds and emerging markets. Protection is held primarily on the US high yield market. Active strategies in equities and alternatives continue to offer a positive net benefit to the portfolio/
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_h.pdfJuly, 2021
The Fund produced a positive return in July. The month saw broad-based contributions across the portfolio from equities, fixed income, and absolute return strategies. The Fund’s construction and risk profile remain focussed on investors approaching preretirement, with a prioritisation on the protection of capital. This includes a focus on downside protection, maximising diversification, and emphasising active security selection where it is expected to be rewarded.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-4.pdfJune, 2021
We made the decision to lower the Fund’s target return objective from CPI+5.5% to CPI+4.5% as at the end of June. This is in response to the continued decline in longerterm average return expectations, in turn driven by low interest rates and high historic valuations. The change does not impact how the Fund is managed or the risk profile. Despite the growth scare from the Delta variant, earnings momentum remains strong and growth in many cyclical areas look robust into next year. Anecdotal descriptions of the value on offer in certain stocks in the portfolio, especially energy and materials, are encouraging for the next 12 months. The US Federal Reserve increasingly discusses tapering, and longer rates have started to fall again.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-1-1.pdfMay, 2021
The Fund produced a positive return in May. The month saw strong contributions across the portfolio from equities, real assets and alternative strategies. The Fund’s positioning was largely unchanged over the month, with some strengthening in protection positions and profit taking in equities. The portfolio retains a larger than average exposure to equities, favouring cheaper cyclical areas, and is underweight its normal levels of bonds. Exposure to alternative and active strategies remains higher than average.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-2.pdfApril, 2021
The Fund produced a strong positive return in April. Contributions were broad based across equities, fixed income, and absolute return strategies. Stand out contributions again came from US banks, supported by global and Australian equity strategies. The hedge fund and co-investment strategies also had a very strong month, while bond holdings benefited from a pull-pack in interest rates following sharp rises in the first quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a-1.pdfJanuary, 2021
The Fund produced a positive return in January, while global equity and bond markets experienced small losses. The Fund’s exposure to cyclical equities benefited performance, particularly in US banks, China and emerging markets. The Fund remains well placed to take advantage of re-opening economic environments.
The Fund’s equity exposure remains slightly above its longer-term history. Some investments designed to benefit from vaccine progress and economic re-opening have now been closed given the speed at which this narrative has been priced by the market. For example, US bank holdings have produced very robust returns as loan losses have been far less than originally expected, and the sector has strongly outperformed the broader market since the investments were initiated. Protective overlays have been renewed in US equities as the market rally has showed signs of becoming stretched in the near term.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ffs-wnbf_a.pdfasset_class: Multi-Asset
asset_category: Real Return
peer_benchmark: Multi-Asset - Real Return Index
broad_market_index: Multi-Asset Growth Investor Index
manager_contact_details: Array
ticker: AMP1685AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
Latest Performance Report
Class A
fund_features:
AMP Capital Multi-Asset Fund aims to provide a total return (income and capital growth ) before costs and before tax, of 5.5% pa above inflation, the Reserve Bank of Australia inflation rate (Consumer Price Index) on a rolling 5 year basis. In Addition, The Fund also aims to deliver indicative volatility rate of 4-8% (bond-like) over rolling five years. The fund invests in alternative assets. Traditional risks such as credit and liquidity risk can be magnified for alternative assets.
structure: Managed Fund