• Marcus Bogdan

Portfolio Update - July 2019

Central bank risk aversion was on full display in July with both Australia and the US cutting interest rates by 25 basis points. Mounting concerns over the weakness in the global economy and escalating trade tensions between the US and China provided the tinder for the US Federal Reserve to reduce its interest rate for the first time since the global financial crisis.

Global equity markets remarkable rally since December 2018 has been predominately fuelled by Central Bank intervention and fiscal stimulus as investors have chosen to ignore company earnings headwinds. Yet, with a growing number of Australian companies pre-announcing earnings downgrades, the ASX 200 price earnings valuation of circa 16.2 times looks increasingly vulnerable. As such, we have raised portfolio cash levels to around 20%.

Blended Australian Equity Portfolio 

The Blended Australian Equity Portfolio finished the month of July up 2.07% compared to the ASX Accumulation Index up 2.94%. Positive attribution for the Blended Australian Equity Portfolio was driven by Caltex (CTX), Resmed (RMD), and Cleanaway Waste Management (CWY). Whereas, Adelaide Brighton (ABC), Nearmap (NEA) and Healius (HLS) weighed negatively on attribution.

Australian Equities Income Portfolio

The Australian Income Portfolio finished the month of July up 1.88% compared to the ASX Accumulation Index up 2.94%. Positive attribution for the Australian Income Portfolio was driven by Caltex (CTX), ASX Limited (ASX), and Woolworths (WOW). Whereas, Adelaide Brighton (ABC), Healius (HLS) and Woodside (WPL) weighed negatively on attribution.

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