August, 2023
Markets declined in August, as expectations that interest rates may remain higher-for-longer and China growth concerns weighed on investor sentiment. Global equities, as measured by the MSCI World Index (hedged), broadly declined 1.8% in Australian dollar terms over the month, but pared back some losses towards the end of August. The unhedged index finished the month up 1.6% as positive currency moves offset the decline in international share prices. Developed Market equities outperformed their Emerging Market counterparts. Fixed Income markets, as represented by the Bloomberg Barclays Global Aggregate Index (hedged), continued to experience volatility and closed the month down 0.3%.
United States
In the US, the S&P 500 Index fell by 1.6% over the month (in local currency terms), with Utilities and Consumer Staples sectors among the worst performers. At the Jackson Hole economic symposium, US Federal Reserve (Fed) Chairman, Jay Powell, reiterated the need to hold monetary policy tight and noted he sees a “long way to go” on getting inflation down to target. Earlier in August, Fitch Ratings’ downgrade of the US credit rating to AA+ led to renewed focus on the country’s fiscal challenges. Meanwhile, reporting season for Q2 saw corporate earnings fall year-on-year for the third consecutive quarter, although the size of the decline was better than analyst expectations. On the data front, core inflation increased 4.7% yearon-year in July, while unemployment ticked down to 3.5% alongside robust job growth.
Europe
European equities, as represented through the Euro Stoxx 50 Index, decreased by 3.8% in August (in local currency terms), with several sectors that are most sensitive to the economic backdrop, notably Consumer Discretionary, recording steep declines. Following hawkish comments from several European Central Bank (ECB) Executive Board members, ECB President, Christine Lagarde, further reinforced that interest rates will stay high “as long as necessary” at the Jackson Hole economic symposium. Meeting minutes from the July ECB decision also showed a willingness by policymakers to further hike rates at the September meeting. However, investors are increasingly wary of the economic impact of multiple rate rises, with the Euro Area PMI falling below expectations to 47.0 – the lowest reading since late 2020 – while core inflation only edged down to 5.3% year-on-year.
In the UK, the FTSE 100 Index declined 2.5% in August (in local currency terms). Early in the month, the Bank of England (BoE) hiked rates 25 basis points to bring the base rate to 5.25%. The central bank continues to grapple with the starkest trade-off between inflation and growth in a generation, having sharply hiked rates by over 500 basis points in cumulative tightening thus far. Despite consensus forecasts of a modest decline, UK core inflation remained unchanged at 6.9% for July with British wages growing strongly.
Asia
Asian equity markets sold-off over the period. China’s CSI 300 Index underperformed and fell by 6.0% in August (in local currency terms), amid concerns around the property sector and sluggish underlying activity. Several large Chinese property developers faced turbulence over the month, with Evergrande filing for US bankruptcy protection while Country Garden warned it could soon default on its debts. In a fresh sign that authorities are ramping up monetary easing efforts to boost a sputtering economic recovery, China’s central bank unexpectedly cut key policy rates for the second time in three months. Chinese exports and imports shrank further in July, while youth unemployment also remains an issue.
Japanese equities, as represented by the Nikkei 225 Index, declined by 1.6% in August (in local currency terms), but remain a strong performer on a year-to-date basis, with markets up 26.5%. Japan’s GDP handily beat expectations to grow by 6.0% annualised over Q2, with net exports providing the largest quarterly contribution to GDP in three years. On the inflation front, the country’s core-core inflation index (which excludes prices of fresh food and energy) accelerated from the previous month and rose 4.3% year-on-year. Meanwhile, the Japanese yen has declined sharply since the Bank of Japan’s (BoJ) policy adjustment in July and sits near levels which spurred official intervention in currency markets late last year.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/blackrock-tactical-growth-fund-fund-update-en-au-4.pdfJuly, 2023
The BlackRock Tactical Growth Fund recorded a positive return for July of 2.07% (after fees), compared to its diversified benchmark which rose by 2.15% over the month. In terms of absolute performance, growth assets realised gains across the period, namely Global Equities, Australian Equities and Emerging Market Equities. Global Property and Global Infrastructure also contributed over the month.
The Fund’s more defensive asset classes added to performance in July, including Australian Inflation Linked Bonds, Global High Yield Corporate Bonds, Australian Investment Grade Corporate Bonds and Australian Fixed Income. US Inflation Linked Bonds modestly detracted over the month, while the defensive allocation to Gold further contributed across the period. On the active front, the Fund underperformed its diversified benchmark in July by -0.08% (after fees). Global Equities was the largest detractor as stock selection in China, Taiwan and Korea weighed on active performance, while positioning across information technology and financials also detracted.
Furthermore, the Emerging Market Equities strategy detracted due to stock selection across the period. The Fund’s Market-Neutral Style Premia strategy also underperformed its benchmark, but remains a strong contributor over the past year. Australian Equities was the largest contributor in July, driven by the Australian systematic strategy which benefited from machine learned Timing insights and positioning across materials and financials. The Fund invests in a Global Macro strategy that takes overweight and underweight positions across asset classes and regions. This sub-strategy further contributed alongside tactical portfolio tilts which were additive over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/blackrock-tactical-growth-fund-fund-update-en-au-3.pdfJune, 2023
Risk assets performed strongly over the second quarter of 2023. While sentiment was buoyed by a resolution to US debt ceiling negotiations and focus on generative artificial intelligence (AI), investors saw meaningful regional and sector dispersion across markets. Global equities, as measured by the MSCI World Index, increased by 7.5% over Q2 in Australian dollar terms, with Developed Markets outperforming their Emerging Market counterparts. Fixed Income markets, as represented by the Bloomberg Barclays Global Aggregate Index (hedged) declined 0.3% over the quarter, as sticky inflation and renewed expectations of higher-for-longer rates proved headwinds for government bonds.
The BlackRock Tactical Growth Fund recorded a positive return of 1.76% in Q2 (after fees), compared to its diversified benchmark which rose by 1.94% over the quarter. In terms of absolute performance, growth assets realised gains over the period, namely Global Equities, Australian Equities and Emerging Market Equities. Global Property also contributed in Q2, while Global Infrastructure was roughly flat. Defensive assets were negative over the quarter, including Australian Fixed Income, Australian Inflation Linked Bonds and US Inflation Linked Bonds. Australian Investment Grade Corporate Bonds also realised losses, although Global High Yield Corporate Bonds added to performance. The defensive allocation to Gold detracted over the period. On the active front, the Fund underperformed its diversified benchmark in Q2 by -0.17% (after fees). Emerging Market equities was one of the largest contributors over the quarter, as the allocation to a fundamental strategy benefitted from stock selection in Brazil and Taiwan. Global Property also outperformed its underlying benchmark, primarily driven by positioning within the EMEA region. The Fund invests in a Global Macro strategy that takes overweight and underweight positions across asset classes and regions. This sub-strategy contributed over the quarter, although was offset by tactical portfolio tilts which was the largest detractor in Q2 but remains additive over the past year. Global fixed income further detracted, particularly due to our global systematic strategy which takes long/short positions across a broad array of fixed income markets.
File:April, 2023
The BlackRock Tactical Growth Fund recorded performance of 1.50% in April (after fees), behind its diversified benchmark which gained 1.62%. The fund underperformed by 0.12% (after fees) in the month of April. Looking at total returns over the month, most asset classes experienced relatively strong performance. Growth assets such as Australian Equities and International Equities drove the fund’s total return, whilst the Emerging Market Equities declined as sentiment toward Chinese assets waned. International Property and Global Infrastructure also realised gains in April. The Fund’s more typical defensive asset classes, primarily Australian Fixed Income and International Fixed Income also contributed marginally to overall performance, despite the high intra-month volatility across the fixed income markets. Gold (in Australian dollar terms) also rose in April.
The key detraction to active performance came from International Equities, particularly our position in Asian markets- stock selection/s in South Korea and Taiwan detracted. The fund’s exposure to Australian Equities also declined over the month. However, the allocation to International Property outperformed its underlying benchmark and contributed meaningfully to the fund’s active return, while Global Infrastructure was flat in the period. After a strong Q1, active contributions from Global Macro strategies and market-neutral style premia strategy were also relatively muted in April.
File:March, 2023
The BlackRock Tactical Growth Fund recorded performance of 5.66% in Q1 (after fees), ahead of its diversified benchmark which increased 5.21%. The fund outperformed by 0.45% (after fees) in the first quarter.
Looking at total returns over the quarter, growth assets such as Australian Equities, International Equities and Emerging Market Equities contributed. Global Infrastructure and Global Property also modestly contributed in Q1. The Fund’s more typical defensive asset classes, primarily Australian Fixed Income and International Fixed Income also added to overall performance. The defensive allocation to Gold further contributed to the Fund’s performance.
The Fund outperformed its diversified benchmark in Q1 (after fees). The key contribution to active performance came from a market-neutral style premia strategy. This sub-strategy seeks to capture positive returns from a range of style factors (i.e., Momentum, Quality, Minimum Volatility, Value and Carry) across global asset classes, while maintaining low correlation to broad market indices. Across style factors, Value, Carry, Minimum Volatility and particularly strong returns in Quality given the U.S. regional banking crisis, drove outperformance. Momentum was the lone detractor over the quarter.
International Equities, Australian Equities and Global Infrastructure were also positive active contributors over the quarter. The allocation to Global Macro strategies, which enables the fund to take in macro-driven, high conviction tactical views detracted from the fund’s active returns, after a strong 2022. However, some timely tactical portfolio tilts in Australian bonds contributed positively and helped cushion active performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/blackrock-tactical-growth-fund-fund-update-en-au-2.pdfFebruary, 2023
The BlackRock Tactical Growth Fund recorded performance of -0.75% in February (after fees), ahead of its diversified benchmark which declined 1.26%. The fund outperformed by 0.51% (after fees) in the month of February. Looking at total returns over the month, most asset classes experienced several headwinds and detracted from the fund’s performance. Growth assets such as Australian Equities and International Equities curbed the fund’s total return and the Emerging Market Equities also declined over the month after a strong performance in previous months. The portfolios significant exposure to movements in the Australian dollar helped ameliorate overall returns- in the case of our global equity exposure, unhedged returns were actually positive in February thanks to a weaker AUD. The Fund’s more typical defensive asset classes, primarily Australian Fixed Income and International Fixed Income also detracted from the overall performance as sharp rise in rates meant for falling bond prices. The allocation to Gold also declined over the period.
The Fund outperformed its diversified benchmark in February (after fees). The key contribution to active performance came from Global Macro strategies, which enables the fund to take in macro-driven, high conviction tactical views. This sub-strategy has been a significant contributor over the past year and was meaningful again this month after giving back some gains last month. The strategy has a meaningful underweight position in German, US and Japanese bonds, combined with overweight to US Value Equities. Active contributions from International Equites and a Style Premia strategy were also additive over the month. Global Property and Global Fixed Income also outperformed their underlying benchmark, while Global Infrastructure was relatively flat across the period.
File:November, 2022
The BlackRock Tactical Growth Fund recorded performance of 3.96% in November (after fees), behind its diversified benchmark which gained 4.26%. The fund underperformed by 0.30% (after fees) in the month of November. Looking at total returns over the month, most asset classes experienced relatively strong performance. Growth assets such as Australian Equities and International Equities drove the fund’s total return, Emerging Market Equities rebounded as result of incremental relaxation of China’s zeroCOVID policy.
The Fund’s more typical defensive asset classes, primarily Australian Fixed Income, International Fixed Income and Global High Yield also contributed positively to overall performance. The returns from allocation to International Infrastructure and Gold were additive. The Fund underperformed its diversified benchmark in November (after fees). The key detraction to active performance came from Global Fixed Income selection and Global Listed Real Estate. The allocation to Global Macro, contributed modestly to active returns.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/blackrock-tactical-growth-fund-fund-update-en-au-1.pdfOctober, 2022
The BlackRock Tactical Growth Fund recorded performance of 4.20% in October (after fees), ahead of its diversified benchmark which gained 4.07%. The fund outperformed by 0.13% (after fees) in the month of October. Looking at total returns over the month, most asset classes experienced relatively strong performance. The clear exceptions were Emerging Market Equities and Gold- the former being underwhelmed by the measures coming out of the 20th Chinese Communist Party as previously mentioned, while Gold gave back most of the strong returns from September. The Fund outperformed its diversified benchmark in October (after fees). The key contribution to active performance came from Global Macro, which enables the fund to take in macro-driven, high conviction tactical views.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/blackrock-tactical-growth-fund-fund-update-en-au.pdfSeptember, 2022
The BlackRock Tactical Growth Fund recorded performance of -1.41% in Q3 (after fees), ahead of its diversified benchmark which declined 2.15%. The fund outperformed by 0.74% (after fees) in the third quarter.
Looking at total returns over the quarter, growth assets such as International Equities, Emerging Market Equities and International Properties detracted whilst Australian Equities proved more resilient and contributed over the period. The Fund’s more typical defensive asset classes, primarily International Fixed Income, Australian Fixed Income and Global High Yield also contributed negatively to overall performance. The allocation to International Infrastructure and Gold also detracted. Having much of our international growth assets as unhedged to currency movements helped meaningfully in the quarter- the Australian Dollar was one of the weaker developed market currencies amidst a backdrop of a broad-based strong United States Dollar.
The Fund outperformed its diversified benchmark meaningfully in Q3 (after fees). The key contribution to active performance came from Global Macro, which enables the fund to take in macro-driven, high conviction tactical views. The allocation to market-neutral style premia strategy and International Equities also drove active returns. Additionally, allocations into liquid alternatives and Global High Yield within global fixed income were also additive to performance. Active contributions from Australian Bonds, Australian Equities and Global REITS & Infrastructure were relatively muted over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/192029509.pdfJuly, 2022
The BlackRock Tactical Growth Fund gained 4.37% in July (after fees), behind its diversified benchmark which gained 4.61%. Looking at total returns over the month, growth assets including Australian Equities and International Equities were the greatest contributors over the period. The Fund’s more defensive asset classes, primarily Australian Fixed income, Global High Yield and International Fixed income also contributed positively to overall performance. Emerging Market Equities and Gold were the only asset classes that experienced negative performance in July and somewhat detracted from overall portfolio returns.
The Fund underperformed its diversified benchmark in July (after fees). Our Global Macro strategy which has material short positions in European and US interest rates lost ground in July, having been a strong performer so far this year. Additionally, Security selection in Australian Equities and International Equities detracted slightly from active returns in July. Active contributions from Australian Bonds and Global REITS and Infrastructure were relatively muted over the period. Our high-conviction long position in shorter-dated Australian bonds provided some offset to the underperformance elsewhere in the portfolio as rate hike expectations for the RBA were pared back.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/190153846-1.pdfJuly, 2022
The BlackRock Tactical Growth Fund gained 4.37% in July (after fees), behind its diversified benchmark which gained 4.61%. Looking at total returns over the month, growth assets including Australian Equities and International Equities were the greatest contributors over the period. The Fund’s more defensive asset classes, primarily Australian Fixed income, Global High Yield and International Fixed income also contributed positively to overall performance. Emerging Market Equities and Gold were the only asset classes that experienced negative performance in July and somewhat detracted from overall portfolio returns.
The Fund underperformed its diversified benchmark in July (after fees). Our Global Macro strategy which has material short positions in European and US interest rates lost ground in July, having been a strong performer so far this year. Additionally, Security selection in Australian Equities and International Equities detracted slightly from active returns in July. Active contributions from Australian Bonds and Global REITS and Infrastructure were relatively muted over the period. Our high-conviction long position in shorter-dated Australian bonds provided some offset to the underperformance elsewhere in the portfolio as rate hike expectations for the RBA were pared back.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/190153846.pdfJune, 2022
The BlackRock Tactical Growth Fund declined 8.06% in Q2 (after fees), ahead its diversified benchmark which detracted 8.32%. Looking at total returns over the quarter, growth assets including Australian Equities and International Equities were the greatest detractors over the period. The Fund’s more defensive asset classes, primarily Australian Fixed income, Global High Yield and International Fixed income also contributed negatively to overall performance. Global Listed Infrastructure and Gold were the only asset classes that generated positive performance in Q2 and helped somewhat support overall portfolio returns.
The Fund outperformed its diversified benchmark in Q2 (after fees). Allocations to a global macro strategy and market-neutral style premia strategy drove the returns in the active return space and provided material protection. Security selection in International Property and International Equities detracted from active returns in Q2. Active contributions from Global Fixed Income, Australian Fixed Income and Australian Equities were relatively muted.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/189094581.pdfMarch, 2022
In Australia, the S&P/ASX 300 Accumulation Index recorded positive performance of 2.1% over the quarter. Energy, Consumer Staples, Utilities and Materials performed best, whilst growth sectors continued to detract. The Reserve Bank of Australia (RBA) continued to hold the cash rate at 10 basis points, however, noticeably shifted its tone by noting that inflation had picked up and was likely to rise further. The unemployment rate fell to a 13 year low of 4.0% with an uptake in full-time positions, however wage growth, a focus for the RBA, continues to remain weak in real terms. The lifting of Omicron related restrictions resulted in a rise in the Markit Manufacturing PMI, driven by purchasing activity, easing supply chain disruptions and higher employment levels. Gains in house prices continued to decelerate with the latest 0.3% month-over-month rise being the lowest since late 2020.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/186584951.pdfFebruary, 2022
In Australia, the S&P/ASX300 Accumulation Index gained 2.1% in February, outperforming most other developed markets. Earning expectations were stronger than expected given recent volatility, with Energy and Utilities driving the positive returns over the month. The rotation out of ‘growth’ stocks was evident once more over the period, with the IT sector detracting 6.9%.
The easing of Omicron related restrictions resulted in a rise in the Markit Composite PMI to an eight-month high of 55.9 in February, driven by private sector output, demand and higher employment levels. Whilst the January unemployment rate was unchanged at 4.2%, the participation rate rose to 66.2%, a near all-time high. The Reserve Bank of Australia (RBA) announced to maintain its cash rate at 10 basis points and continue to expand their balance sheet, albeit with a more hawkish sentiment as supply-demand imbalances continue to put upward pressure on prices. Gains in house prices continued to decelerate with the latest 0.3% monthover-month rise being the lowest since late 2020.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/185761852.pdfJanuary, 2022
In Australia, the S&P/ASX300 Accumulation Index declined by -6.5% in January, underperforming most other developed markets. Energy and Utilities fell the most over the month.
The Consumer Price Index (CPI) rose to 3.5% in December, driven by increased prices for new dwellings and automotive fuel. On the other hand, the Producer Price Index (PPI) rose to 3.7%, indicating some of the production costs are being consumed by businesses. The Reserve Bank of Australia (RBA) announced to maintain its cash rate at 10 basis points and continue to expand their balance sheet, though would re-assess their position in February. The RBA commented on the economy’s recovery from the previous Delta outbreak leading to a strong labour market and comparative low levels of inflation to other developed nations, though will remain prepared to act once inflation is sustainably within the 2-3% target range.
Volatility continues to dominate market dynamics as hawkish policy signals by central banks, high inflation figures and geopolitical tensions add to investor concerns. Positive December half-year earnings results provided much needed support to equity markets with some reversal of earlier month declines in late January. The highest US inflation in 40 years put more pressure on the Federal Reserve to accelerate their normalisation process to pre-pandemic rate levels, with markets pricing in 5 rate hikes within 2022. This sentiment was echoed by their global counterparts as the European Central Bank (ECB) suggested an early end to their asset purchase program whilst the Bank of England (BoE) raised rates by 25bps once more. Inflation continues to be driven by supply bottlenecks, energy mismatches and resources reallocation, however, uncertainty remains over consecutive rate hikes coming at a cost to economic growth given the broader reopening of the global economy. Although underlying inflation rose to 2.6% in Australia, RBA governor Phillip Lowe maintained his stance that market reactions to inflationary pressures are blown out of proportion. The RBA continues to emphasise that wage growth would need to accelerate at a much more sustainable pace before rate hikes are warranted, however, has formally ended its quantitative easing program. We continue to maintain the view that eventual policy responses to inflation will be more muted than current market predictions. However, volatility will likely continue to feature in markets in the period ahead.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/184589980.pdfDecember, 2021
Markets have become more jittery amid the emergence of the new Omicron virus strain and the liquidity removal by several central banks around the globe. We monitor the situation closely but believe that Omicron is likely to delay – not derail – the powerful activity restart even as its impact is likely to differ by country. As a result, we remain fairly optimistic and try to look through the current noise and volatility in markets. The key themes that have been driving markets recently – and we believe will continue to drive markets into 2022 – are news on the Omicron variant and a more hawkish tilt from central banks around the globe. Current data on Omicron supports the hypothesis that it will be less severe than Delta, vaccination rates are higher, and there is less political support for a return to stringent lockdown conditions (especially in Australia).
This gives us confidence that the re-opening will continue and lends overall support to likely strong forthcoming macro data. Central banks have pivoted to a much more hawkish posture around the globe. For example, the European Central Bank (ECB) trimmed the PEPP programme meaningfully in December, removing liquidity from the system and signalling a more hawkish policy stance. The US Fed continued its hawkish pivot by doubling the pace of tapering and signalling three rate hikes in 2022. It also indicated that it is planning to shrink its balance sheet sooner than expected – quantitative tightening (QT). The Reserve Bank of Australia (RBA) at this stage continues to indicate that it will be patient before deciding to hike rates, but many investors expect the RBA to raise rates beginning around the middle of 2022. While global central banks have turned more hawkish in recent weeks, we believe their response to high inflation and strong economic growth is going to be more muted than in the past and real rates are likely to remain negative for a few more quarters, which is ultimately a positive for risk assets.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/183936157.pdfNovember, 2021
The BlackRock Tactical Growth Fund gained 0.85% in November (after fees). This brings the Fund’s year-to-date return to +11.72% (after fees), slightly behind its diversified benchmark. Asset classes recorded mixed performance in November. Most growth assets including Australian equities and international equities (hedged) detracted from total returns as markets experienced volatility towards the end of the month after the emergence of the Omicron variant. The Australian dollar depreciated meaningfully in November, which boosted returns from the unhedged international equity exposures in the portfolio. The Fund’s more defensive asset classes generally recorded positive performance. US inflationlinked bonds, Australian government bonds and gold gained alongside the Fund’s global infrastructure and REITs allocations.
Looking at active returns, the Fund slightly underperformed its diversified benchmark over the month (after fees). Security selection in global REITs and fixed income securities generated positive active returns, while stock selection in Australia equities detracted. However, the largest detractor from active returns in November was tactical asset allocation decisions. For example, a tactical underweight position to long-dated German government bonds detracted, as the German yield curve flattened over the period. The portfolio had an overweight position to Japanese, Spanish and Italian equities, which also weighed on active performance as these sharemarkets declined over the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/181744746.pdfOctober, 2021
The BlackRock Tactical Growth Fund recorded a roughly flat return in October (-0.1%, after fees). This brings the Fund’s year-to-date return to +10.8% (after fees), slightly ahead of its diversified benchmark. Asset classes recorded mixed performance in October. Most growth assets, including Australian equities, international equities and global REITs showed positive performance and added to total returns. On the flipside, emerging markets (EM) equities detracted. The Fund’s more defensive asset classes also recorded mixed performance. US inflation-linked bonds gained in October, whilst Australian and global government bonds and gold declined. Global high yield securities and EM debt finished the month roughly flat.
Recent corporate earnings releases in the US and Europe have been strong, which helps to justify high equity valuations, with several major equity indices currently trading at all-time highs. The majority of companies that released quarterly earnings beat expectations (from a sales and earnings perspective). Yet, the few companies that missed earnings forecasts sold off sharply – indicating that a lot of the optimism had already been priced in. Markets have become somewhat more jittery amid focus on China’s regulatory clampdown and the potential tapering by several central banks around the globe including the Reserve Bank of Australia (RBA), US Federal Reserve (Fed) and Bank of England (BoE). We believe the path for further gains in risk assets has narrowed after an extended run higher, warranting a more selective approach.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/180898429.pdfSeptember, 2021
The BlackRock Tactical Growth Fund gained 1.55% (after fees) over the quarter ending 30 September 2021, while its composite benchmark gained 1.45%. This brings the Fund’s year-to-date return to +10.90% (after fees), 0.5% ahead of its benchmark. Growth assets, including Australian and international equities and REITs continued to advance in July and August and drove the Fund’s positive return over the quarter, despite a pullback towards the end of the quarter. Emerging markets (EM) equities was an exception and detracted over the quarter. The Fund’s more defensive asset classes (e.g. government bonds, inflation-linked bonds and gold) recorded mixed performance. Australian bonds, US inflation-linked bonds and gold contributed positively to overall performance, while EM debt detracted. Looking at active returns, the Fund slightly outperformed its diversified benchmark over the quarter. Most of the outperformance came in September when markets started trading in a risk-off fashion. A key driver of the Fund’s outperformance during that time was a tactical underweight position to global government bonds relative to the Fund’s composite benchmark. The rapid adjustment upward in bond yields observed in September caught markets by surprise and led to negative returns from fixed income indices, which in turn led to positive alpha at the Fund level. Furthermore, a tactical overweight position in Japanese equities generated positive active returns over the quarter
After seven months of positive performance from growth assets, risk appetite deteriorated in September due to increasing concerns such as China’s growth slowdown, the energy crisis, inflation and the potential tapering by global central banks (including the US Fed). Corporate earnings results have been strong in recent quarters and many economic indicators have recovered back to pre-Covid levels, but the positive economic momentum appears to be slowing
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/180196536.pdfAugust, 2021
The BlackRock Tactical Growth Fund gained 1.64% in August (after fees). This brings the Fund’s year-to-date return to +12.95% (after fees), in line with its composite benchmark. Growth assets, including Australian and international equities and REITs continued to advance and drove the Fund’s overall return in August. The Fund’s more defensive asset classes (e.g. government bonds, inflation-linked bonds and gold) were relatively flat over the period.
While several regions in Australia are still in lockdown, restrictions have been lifted in many other countries and the global economic recovery is broadening. Several economic indicators are back at pre-Covid levels and corporate earnings results have been strong in recent quarters. However, the positive economic momentum seems to be slowing somewhat. A combination of longer-than-expected supply chain disruptions and the spread of the Delta variant have placed downward pressure on nearterm growth momentum and upward pressure on inflation. Tighter labour markets, coupled with firmer price increases, have encouraged central banks around the world to make a gradual but definite move towards a less accommodative policy stance (e.g. slowing the pace of asset purchases). We feel that this constellation of macro drivers is likely to be a more challenging environment for both risk assets and fixed income. As such, we modestly reduced the size of our equity overweight and recently increased the size of our underweight fixed income positions. Regionally, European inflation is in the process of catching up to US price pressures – consequently we have used long-dated German government bonds as the primary source of our fixed income underweight.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/179144915.pdfJuly, 2021
The BlackRock Tactical Growth Fund gained 1.77% in July (after fees). This brings the Fund’s year-to-date return to +11.13% (after fees), which is +0.20% ahead of its strategic benchmark. Virtually all asset classes contributed positively to the Fund’s overall return this month. Growth assets, such as Australian and international equities, global REITs and infrastructure had a particularly strong month and drove the Fund’s overall return. The portfolio’s more defensive assets, such as gold, inflation-linked bonds and other fixed income securities also contributed meaningfully to overall performance. Emerging market equities was the only asset class that detracted in July
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/176088829.pdfJune, 2021
The BlackRock Tactical Growth Fund recorded a strong quarter and gained +6.34% (after fees). This brings the Fund’s year-to-date return to +9.21% (after fees), which is +0.38% ahead of its strategic benchmark. Virtually all asset classes contributed positively to the Fund’s overall return this quarter. Growth assets, such as Australian and international equities, global REITs and emerging markets equities had a particularly strong quarter and drove the Fund’s return. The portfolio’s more defensive assets, such as gold, inflation-linked bonds and other fixed income securities also contributed positively but to a lesser extent.
Looking at active returns, the Fund performed roughly in line with its diversified benchmark over the quarter. Security selection within Australian equities worked well and generated positive active returns. For example, underweight positions in oil & gas and airlines versus overweights in commercial services companies and real estate added to performance. Security selection in global infrastructure assets and fixed income was also additive, along with positive contribution from tactical asset allocation decisions. On the flipside, stock selection in international equities (mainly in Asia) detracted and offset active returns over the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/174871241.pdfApril, 2021
The BlackRock Tactical Growth Fund gained 2.62% in April (after fees), broadly in line with its diversified benchmark. This brings the Fund’s yearto-date return to +5.38%, which is 0.39% ahead of its strategic benchmark (after fees). All asset classes contributed positively to Fund performance in April. Growth assets, such as Australian and international equities, and global REITs had a particularly strong month and drove the overall return in April. The portfolio’s more defensive asset classes, such as fixed income and gold, also contributed positively over the period.
Looking at active returns, the Fund performed broadly in line with its diversified benchmark in April and continued to outperform year-todate. The Fund’s underlying active return sources recorded offsetting performance in April. Tactical asset allocation decisions and security selection in global infrastructure added to active returns, while security selection in international equities (especially Asian equities) detracted. Security selection in Australian and global fixed income markets recorded relatively muted active performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/172013650.pdfFebruary, 2021
The BlackRock Tactical Growth Fund recorded a roughly flat return in January (-0.03%, after fees), while its diversified benchmark declined 0.09%. Growth assets such as Australian and international equities had a positive month and added to total returns. The portfolio’s more defensive asset classes such as fixed income and gold offset performance over the period. Looking at active returns, the Fund slightly outperformed its diversified benchmark by 0.06% over the month (after fees). The small outperformance was driven by active security selection in emerging markets equities and fixed income markets, along with positive active returns from global REITs. On the flipside, security selection in Australian equities and tactical asset allocation decisions detracted slightly.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/168493221.pdfasset_class:
asset_category:
peer_benchmark:
broad_market_index:
manager_contact_details: Array
ticker: PWA0822AU
release_schedule: Monthly
structure: Managed Fund
commentary_block: Array
factsheet_url:
https://www.blackrock.com/au/individual/products/254876/blackrock-tactical-growth-fund
or this direct link:
fund_features:
The investment objective of the Fund aims to outperform peer performance consistent with a “growth” orientated investment strategy encompassing: a broadly diversified exposure to Australian and international assets active asset allocation, security selection and risk management flexibility to deviate meaningfully from the strategic asset allocation to help manage total portfolio risk The Fund aims to outperform its benchmark indices over a 5-year rolling period before fees. The investment strategy of the Funds is to provide investors with a diversified exposure to the best investment teams and strategies that BlackRock has globally within the context of an Australian based globally diversified investment portfolio. The strategy is built around two steps: 1. Establishing the most appropriate strategic benchmark subject to the growth/income splits and market risk exposures consistent with a “growth” oriented fund; and 2. Enhancing the returns of the Fund relative to the strategic benchmark to the maximum extent possible by utilising investment teams, strategies and techniques from BlackRock’s resources around the globe subject to a risk budgeting framework.