SUMMARY
The Fund generated a +3.9% return in November. By way of comparison, the Australian stock market climbed +5.2%, whilst the (annual) return of the RBA cash rate plus 6% equated to approximately +0.8%. Calendar year to date, the fund has achieved a return of +5.9%, which compares favourably to the Australian stock market at +5.2%, although following the recent market correction, is tracking below the cash plus 6% benchmark of +9.0% for the 11 months.
Global equity markets rallied in November, with Australian dollar returns magnified further following a strengthening of the A$ during the month. The ASX rose 5% in November and over 9% in USD terms. Lower inflation expectations and increasing confidence that central banks may have peaked led to a risk-on environment following three consecutive previous monthly declines. The market’s recovery was led by the Health Care and Real Estate sectors, whilst Energy (lower oil prices) and utilities underperformed. US and Australian Bond yields saw a reversal in their previous upward trajectory, falling by approximately 50bps through November. Domestically, the RBA increased the cash rate by a further 25bp at the start of the month to 4.35%. Retail sales data moderated slightly, whilst headline inflation for October decelerated more meaningfully from 5.6% in September to 4.9% in October, fuelling the market’s optimism that the rate cycle may have peaked.