January, 2023
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of January. Risk sentiment improved over the month as the market saw US headline CPI continue to trend down to 6.5% YoY in December. Core US CPI came in line with expectation at 0.3% MoM and 5.7% YoY. Investors speculated that the Fed would decelerate the pace of rate hikes and lift the target cash rate by 25bps in the February 1 FOMC meeting.
Domestically, headline inflation in December increased to 7.8% YoY, above consensus of 7.6%. The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, returned 6.3% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned 6.2%. Unhedged International Equities returned 3.0%, underperforming their hedged equivalent, as the AUD strengthened against its major global peers. Unhedged Emerging Market Equities returned 3.8% over the month, Chinese equities continued to rally, the offshore stocks outperformed as China’s reopening boosted up investors’ sentiment. Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned 8.1% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned 8.0% over the month. Government bond yields shifted lower across most of the curve. The Australian 10-year government bond yield moved 50bps lower to 3.55% and the US 10-year Treasury yield moved 37bps lower to 3.51% over the month. The domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned 2.8% and the International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned 2.1%. Funds allocated to growth assets outperformed those with a higher allocation to defensive assets over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/BT-Wholesale-Funds-BT-Wholesale-Multi-manager-Balanced-Fund-BTA0221AU-factsheet-5.pdfDecember, 2022
The BT Wholesale Multi-manager Balanced Fund produced a negative return over the month of December. Following four consecutive hikes of 75bps this year, the US Federal Reserve decelerated the rate hike in December and lifted Federal Funds Target Rate by 50 basis points to a range between 4.25% and 4.50%. Despite another downside surprise on US November CPI, Fed officials reiterated the hawkish stance and indicated a higher terminal rate of above 5.00% over the next year.
The European Central Bank delivered a 50 basis points hike and increased its deposit rate to 2.00% in line with market expectations. The Reserve Bank of Australia raised the cash rate target by 25 basis points to 3.10%. Risk sentiment was weak heading into the year end, with market concerns around recession risk heightened, signalled by contractionary Service PMI readings in the US. The domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned -3.3% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned -5.2%. Unhedged international equities slightly underperformed hedged exposure due to a weaker USD, returning -5.5%.
Emerging Market Equities, as measured by the MSCI Emerging Markets EM AUD Net Total Return Index, returned -2.6%. Chinese offshore equities outperformed as the Chinese government shifts its focus away from Covid containment back towards economic growth. Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned -4.0% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned -3.8% over the month. Global yield curves shifted higher.
The US 10-year treasury yield moved 27bps higher to 3.88%, and the Australian 10-year government bond yield moved 52bps higher to 4.05% over the month. Domestic fixed interest, as measured by the Bloomberg Ausbond Composite 0+ Yr Index, returned -2.1%. International fixed interest markets, as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged index, returned -1.3%. Over the month both growth and defensive oriented portfolios had negative results.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/BT-Wholesale-Funds-BT-Wholesale-Multi-manager-Balanced-Fund-BTA0221AU-factsheet-4.pdfNovember, 2022
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of October. Risk sentiment improved over the month despite another higher-than-expected increase in US Core CPI of 6.6% YoY, and a Headline CPI increase of 8.2% YoY in September. Investors speculated a dovish pivot from the Fed post the November and December FOMC, where rate increases are expected to be kept at the current pace.
Domestically, the Reserve Bank of Australia has slowed the pace of rate hikes and raised the cash rate target by 25 basis points, meanwhile headline inflation was reported at 7.3% YoY in the September quarter, expecting to peak in the December quarter of 2022. The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, returned 6.0% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned 7.2%. Unhedged International Equities returned 7.8%, outperforming hedged exposure as the AUD slightly weakened against its major global peers. Emerging Market Equities returned -2.6% over the month, China has significantly underperformed, with investors disappointed by its unwavering insistence on COVID-zero measures post its 20th National Congress. Listed properties partially recovered from the previous drawdown. Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned 9.9% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned 3.1% over the month.
Bond market volatility elevated to historical level over the month as the global bond market saw liquidity pressures, followed by immediate government interventions. The Australian 10-year government bond yield moved 13bps lower to 3.76% while the US 10-year Treasury yield moved 22bps higher to 4.05% over the month. The domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned 0.9% and the International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned -0.4%. Funds allocated to growth assets outperformed those with a higher allocation to defensive assets over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/BT-Wholesale-Funds-BT-Wholesale-Multi-manager-Balanced-Fund-BTA0221AU-factsheet-3.pdfSeptember, 2022
The BT Wholesale Multi-manager Balanced Fund produced a negative return over the month of September.
Higher-than-expected US inflation has spurred a risk asset sell-off as the market recalibrated to higher interest rate expectations of 4% and above in the US by the end of this year with less likelihood of rate cuts in 2023. The Federal Reserve delivered its third consecutive 75 basis points rate hike and moved its target rate to a range of 3.00%-3.25%, the highest level since 2008. Energy concerns continued to plague Europe, German CPI was reported at 10.9% year on year and pressures remained for European central banks to turn more hawkish. Financial markets turmoil was further fuelled by the UK government’s fiscal plan and its ramification on UK gilts market.
The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, returned -6.3% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned -8.9%. Unhedged international equities returned -3.2%, outperforming hedged exposure as a result of a stronger USD. Emerging Market Equities, as measured by the MSCI Emerging Markets EM AUD Net Total Return Index, returned -5.9%.
Listed properties sold off as higher interest rates weighed on valuations. Domestic listed property as measured by the S&P/ASX 300 A-REIT Index returned -13.6% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned -11.8% over the month.
Fear of contagion elevated bond market volatility. UK 10yr gilt yields moved 129bps up to 4.09%, joined by a 57bps increase in German 10yr yield and 62bps increase in Italian 10yr bond yield. The US 10-year Treasury yield also moved 64bps higher to 3.83% over the month and the Australian 10-year government bond yield moved 29bps higher to 3.89%. Credit spreads also widened. As a result, the international fixed interest market, as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned -3.5%; and the domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned -1.4%.
Over the month both growth and defensive oriented portfolios had negative results.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/BT-Wholesale-Funds-BT-Wholesale-Multi-manager-Balanced-Fund-BTA0221AU-factsheet-2.pdfAugust, 2022
The BT Wholesale Multi-manager Balanced Fund produced a negative return over the month of August. Both the US Federal Reserve and the European Central Bank (ECB) continued their hawkish rhetoric and remained committed to aggressive interest rate hikes. Europe continued to suffer from high energy prices due to the suspension of Russian crude oil and gas supply. The German Producer Prices (PPI) reported its highest-onrecord increase in August and the energy supply problem was further exacerbated by the record-breaking droughts from prolonged heatwaves across Europe. Geopolitical risk in the Asia-Pacific region elevated as China carried out military exercises surrounding Taiwan following the US House of Representative Nancy Pelosi’s visit to Taiwan. Led by the strong Energy and Materials sector returns, the domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned 1.2% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned -3.6%. The USD further strengthened as the safe haven currency, unhedged international equities outperformed hedged exposures, returning -2.5%. Unhedged Emerging Market equities, as represented by the MSCI Emerging Markets Net Total Return AUD Index, returned 2.2% over the month. Listed property valuations continued to face a headwind from rising interest rates. Domestic listed property, as measured by the S&P/ASX 300 A-REIT Index, returned -3.6% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned -5.7% over the month. Global yield curves shifted higher because of higher cash rates. The Australian 10-year government bond yield moved 54bps higher to 3.60%, the domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned -2.5%. The US 10-year Treasury yield moved 54bps higher to 3.20% over the month, International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned -2.7%. Funds with allocations to both growth and defensive assets had negative results over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/BT-Wholesale-Funds-BT-Wholesale-Multi-manager-Balanced-Fund-BTA0221AU-factsheet-1.pdfJuly, 2022
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of July. Risk sentiment improved despite another uptick in the US headline CPI to 9.1% YoY in July, and a second consecutive 75bps interest rate hike from the US Federal Reserve. Investors speculated a peak in headline inflation and a less hawkish policy setting going forward, following a period of mixed economic signals and the US entering a technical recession over the first half of 2022. Domestically, the Reserve Bank of Australia continued to raise interest rates by 50bps to help contain higher inflation, currently reported as 6.1% YoY in the second quarter of 2022.
The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, returned 6.0% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned 8.0%. Unhedged international equities returned 6.4%, underperforming a hedged exposure as the AUD appreciated against its major global peers. Emerging Market Equities underperformed, returning -1.7%. Listed property rallied after a large drawdown over the previous quarter. Domestic listed property, as measured by the S&P/ASX 300 A-REIT Index, returned 11.8% and global listed property, as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned 7.7% over the month. The growing concerns of a looming recession pushed longer-term bond yields lower. The Australian 10-year government bond yield moved 38bps lower to 3.06% while the US 10-year Treasury yield moved 10bps higher to 2.65% over the month. The domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned 3.4% and the International Fixed Interest, as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned 2.5%. Funds allocated to growth assets outperformed those with a higher allocation to defensive assets over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/BT-Wholesale-Funds-BT-Wholesale-Multi-manager-Balanced-Fund-BTA0221AU-factsheet.pdfJune, 2022
BT Wholesale Multi-manager Conservative Fund produced a negative return over the month of June. In response to the higher-than-expected increase in the Consumer Price Index for June, the US Federal Reserve delivered a 75 basis-point rate hike, the biggest increase since 1994, lifting the target range for the federal funds rate to between 1.5% and 1.75%. The Reserve Bank of Australia has also lifted the cash rate by 50 basis points to 0.85% in June.
Risk sentiment remained negative because of monetary tightening and a weaker growth outlook. The domestic equity market, as represented by the S&P/ASX 300 Accumulation Index, returned -9.0% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, returned -8.1%. Unhedged international equities returned -4.6%, as the Australian Dollar depreciated against the stronger US Dollar. Unhedged Emerging Market equities, as represented by
the MSCI Emerging Markets Net Total Return AUD Index, returned -2.6% over the month.
Listed property valuations were under pressure due to rising interest rates. Domestic listed property, as measured by the S&P/ASX 300 A-REIT Index, returned -10.4% and global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned -7.8% over the month.
Global yield curves shifted higher as a result of higher cash rate targets. The Australian 10-year government bond yield moved 31bps higher to 3.66%, the domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned -1.5%. The US 10-year Treasury yield moved 17bps higher to 3.02% over the month, the International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned -1.6%.
Funds with allocations to both growth and defensive assets had negative results over the month.
November, 2021
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of August. Risk assets had positive gains over the month, as investment markets anticipated continuing accommodative policies from central banks and a slower pace of QE tapering. This was despite volatility associated with Delta variant outbreaks, supply chain issues, Afghanistan, and the slowing of growth in China.
The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, gained 2.6% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, gained 2.7%. Unhedged international equity exposure outperformed hedged exposure as the USD strengthened, returning 3.1%. Emerging market equities returned 3.2%, as measured by the MSCI Emerging Markets Net Total Return Index. Chinese stock performance remained weak due to ongoing domestic regulatory issues and US-China tension. The Indian equity market, on the other hand, has been the top performer among major equity markets over the month. Domestic listed property performed strongly with the S&P/ASX 300 A-REIT Index returning 6.4%, thanks to the increasing vaccination rate. Global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned 1.5% over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/fund-performance-report-november-2021.pdfAugust, 2021
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of August. Risk assets had positive gains over the month, as investment markets anticipated continuing accommodative policies from central banks and a slower pace of QE tapering. This was despite volatility associated with Delta variant outbreaks, supply chain issues, Afghanistan, and the slowing of growth in China. The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, gained 2.6% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, gained 2.7%. Unhedged international equity exposure outperformed hedged exposure as the USD strengthened, returning 3.1%. Emerging market equities returned 3.2%, as measured by the MSCI Emerging Markets Net Total Return Index. Chinese stock performance remained weak due to ongoing domestic regulatory issues and US-China tension. The Indian equity market, on the other hand, has been the top performer among major equity markets over the month. Domestic listed property performed strongly with the S&P/ASX 300 A-REIT Index returning 6.4%, thanks to the increasing vaccination rate. Global listed property as measured by the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index, returned 1.5% over the month.
The narrative of transitory inflation still holds and the bond market priced long term inflation expectation consistently below the 2.5% mark. The Australian 10-year government bond yield moved 3bps lower to 1.16% over the month whereas the US 10-year Treasury yield moved 9bps higher to 1.31% as of month end. Investment Grade Credit spreads remained flat. As a result, the domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned 0.1% and the International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned -0.2%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/179261768.pdfJuly, 2021
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of July. Equities market traded more cautiously during the month with concern around enduring inflation, slowing global recovery due to the Delta variant and earlier than expected monetary policy tightening. Most developed market equity indices ended the turbulent month in positive territory, supported by central banks’ dovish stance on monetary policy and data from the UK showing the effectiveness of vaccination against hospitalisation.
The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, gained 1.1% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, gained 1.8%. The Australian Dollar depreciated against most major currency peers, affected by a retreat in commodity prices, extended COVID lockdowns across Australia and risk sentiment. Unhedged international equity exposure outperformed hedged exposure and returned 4.0%.
Emerging market equities returned -4.7%, as measured by the MSCI Emerging Markets Net Total Return Index, the cause: a contagious sell-off in Hong Kong and US-listed Chinese stocks triggered by China’s new regulatory crackdown on education companies, in addition to its ongoing scrutiny on IT companies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/177737495.pdfMay, 2021
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of May. Equity markets continued to rally over May despite the first signs of increasing inflation in the global economy. Shortcomings on key employment numbers helped fuel investors’ expectations of continued monetary support, pushing risk assets higher and keeping yields at similar levels to April. The domestic equity market, as represented by the S&P/ ASX 300 Accumulation Index, gained 2.3% over the month. International Equities, as measured by the MSCI World ex Australia Net Return AUD Hedged Index, gained 1.0%. Unhedged international equity exposure returned 1.2%, outperforming hedged exposure due to a slight depreciation in the Australian Dollar against the basket of developed market peers, despite minor appreciation versus the US Dollar. Emerging market equities outperformed developed markets in AUD terms, with the MSCI Emerging Markets Net Total Return Index returning 2.1%.
Listed property also performed strongly with the S&P/ASX 300 A-REIT Index returning 1.8% and the FTSE EPRA/ NAREIT Developed AUD Hedged Net Total Return Index returning 1.4% over the month.
Bond yields have plateaued since the beginning of the March quarter. The Australian 10-year government bond yield drifted 4bps lower to 1.71% over the month and the US 10-year Treasury yield also moved 4bps lower to 1.59%. Credit spreads slightly narrowed over the month. As a result, the domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index, returned 0.3% and the International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index, returned 0.2%.
Funds with higher allocations to growth assets yielded higher returns to those with a higher allocation to defensive assets, due to stronger returns for growth assets.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/173550625.pdfFebruary, 2021
The BT Wholesale Multi-manager Balanced Fund produced a positive return over the month of February. Reflation trades dominated the market on the prospect of Biden’s $1.9 trillion fiscal stimulus and vaccine rollout. The improved growth and higher inflation expectations drove global bond yields higher. Subsequent weak demand at the US 7-year Treasury auction saw the bond market sell off sharply.
The US 10-year Treasury benchmark yield hit its highest level since March last year (1.40%). Over the month the US 10-year Treasury yield moved 34bps higher, the Australian 10-year government bond yield jumped 78bps higher, while credit spreads marginally narrowed. As a result, International Fixed Interest as measured by the Bloomberg Barclays Global-Aggregate Total Return AUD Hedged Index returned -1.6% and the domestic fixed interest market, as represented by the Bloomberg Ausbond Composite 0+ Yr Index returned -3.6%. Equity markets had a strong start of the month driven by positive sentiment, before stalling due to the bond market sell-off. Long ‘duration’ growth stocks underperformed value stocks given the current reflationary market expectations. The MSCI World ex Australia Net Return AUD Hedged Index returned 2.7% and unhedged international equity exposure returned 1.6%, as the Australian Dollar appreciated against most developed market peers over the month.
The Australian equity market, as represented by the S&P/ ASX 300 Accumulation Index, gained 1.5% over the month. Emerging market equities underperformed developed markets in AUD terms, with the MSCI Emerging Markets Net Total Return Index returning -0.1%. Domestic listed property returned -2.5% whereas global listed property returned 2.7%, as measured by the S&P/ASX 300 A-REIT Index and the FTSE EPRA/NAREIT Developed AUD Hedged Net Total Return Index respectively. Funds with higher allocations to growth assets outperformed those with a lower allocation to growth assets.
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ticker: BTA0221AU
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BT Wholesale Multi-manager Balanced Fund investment objective is to provide moderate to high total returns (before fees and taxes) over the medium term from a combination of capital growth and income through a diversified mix of growth and defensive assets.