FUNDS
M A N AG E M E NT
SE RVICE
QUARTERLY
INVESTMENT
REPORT
30 June 2015
Quarterly Investment Report, 30 June 2015
Produced by
P U B LI C TR U S TE E
GPO Box 1338 Adelaide South Australia 5001
T 08 8226 9200 | F 08 8226 9350
Country freecall 1800 673 119
www.publictrustee.sa.gov.au
Quarterly Investment Report, 30 June 2015
This Quarterly Investment Report presents the results of the Public Trustee’s Funds
Management Service performance and commentary for the quarter ended 30 June 2015.
Public Trustee is a statutory entity founded in 1881. At the end of the June 2015 quarter, it
had approximately $895m in funds under management. Public Trustee’s Funds
Management Service has a distinguished record of high quality, proven and consistent
investment performance. We are proud of our long-standing reputation for trust and
reliability, and the vital role we play for our customers and their financial affairs.
Investment markets were quite volatile during the June quarter, with a lot of attention being
focused on developments in Greece and their potential exit from the Eurozone.
Despite a positive start to the quarter, most markets ended in negative territory.
All of Public Trustee’s investment strategies exceeded benchmark for the June quarter
2015. More importantly they have also exceeded benchmark over longer time periods (1, 3
and 5 years), which are the best indicators of overall investment performance, as
summarised in the table below.
SIS Performance versus Benchmark to 30 June 2015
Last 12
months
3 years
5 years
Cash
benchmark
out performance
2.72%
1.58%
1.14%
3.26%
1.85%
1.41%
4.06%
2.65%
1.41%
Capital Stable
benchmark
out performance
4.94%
4.46%
0.48%
6.88%
6.13%
0.75%
6.58%
5.94%
0.64%
Balanced
benchmark
out performance
6.99%
6.87%
0.12%
10.50%
9.91%
0.59%
8.96%
8.43%
0.53%
Growth
benchmark
out performance
8.47%
8.11%
0.36%
13.28%
12.69%
0.59%
10.48%
9.72%
0.76%
Equities
benchmark
out performance
10.99%
10.10%
0.89%
17.75%
17.31%
0.44%
12.30%
11.34%
0.96%
Performance
*After fees
Pleasingly, all of Public Trustee’s investment strategies also exceeded their investment
targets for the year ended 30 June 2015. The investment targets are defined as a margin
above inflation (CPI).
If you would like to add to your portfolio, you may do so at any time. Please contact Elaine
Pringle (08) 8226 1746 for more information.
Debra Contala
Public Trustee
30 June 2015
Quarterly Investment Report, 30 June 2015
Market Overview
Global
Global markets were focused on developments in Europe during the quarter. In late
June Greece failed to come to an agreement with its creditors and defaulted on its 30
June €1.6 billion debt repayment. The issue remained unresolved at quarter-end with
Greece’s Prime Minister calling for a referendum to be held on 5 July, asking his nation
to vote on the proposed bailout terms.
In the US, economic data was generally stronger, with manufacturing, building permits,
non-farm payrolls and consumer confidence all better than expected.
In China, their share market experienced sharp falls following a strong run up over the
previous 12 months.
Australia
The Reserve Bank of Australia (RBA) cut official interest rates by 0.25% to 2.00%. The
Australian Dollar saw mixed results against major currencies during the June quarter,
depreciating against the British Pound and Euro, but appreciating against the US Dollar
and Japanese Yen. The Australian Dollar finished the quarter at 0.77US.
Share Markets
Australian shares (ASX 300) fell by 6.5% over the quarter, after a particularly strong
prior quarter. Global share markets were broadly flat over the quarter, after a negative
month in June.
Key Developments
Key developments over the quarter were:
Outperformance from benchmark for all of Public Trustee’s investment strategies;
Greece missed a debt repayment to the International Monetary Fund, and;
China cut official interest rates to stabilise growth.
Since 1990, funds invested through Public Trustee Common Funds have grown from
$160 million to $895 million today.
Quarterly Investment Report, 30 June 2015
Cash Investment Strategy
The Reserve Bank cut official interest rates during the quarter by 0.25% to 2.00 %. The
fund’s return of 0.60% for the quarter was above the benchmark return by 0.29%. The
strategies 3 and 5 year returns remain at 3.26% and 4.06%, which are 1.41% and
1.41% respectively ahead of benchmark.
Crediting Rate:
The investment return for this fund is calculated daily, based on the net earnings of the
fund.
The average crediting rate for the quarter was 2.41%, and the daily rate at 30 June
2015 was 2.3%.
Fund size: $326 million.
Objective:
Funds assigned to the cash investment strategy are invested in the Public Trustee's
Cash Common Fund. The objective of the Cash Common Fund is the preservation of
capital. The strategy is intended for investors who are seeking secure returns at
prevailing short term interest rates.
Capital Stable Investment Strategy
Cash 19.6%
The strategy’s return for the quarter was
-0.96%. This outperformed the benchmark
return by 0.75%. The strategy’s 3 year and
5 year returns of 6.88% and 6.58% are
0.75% and 0.64% respectively ahead of
benchmark.
Overseas
Fixed Int
10.2%
Quarter %
1 year %
3 year %*
-0.96%
4.94%
Benchmark**
-1.71%
4.46%
Fixed Int
6.13%
10.0%
0.75%
0.48%
0.75%
Difference
Long Term
Fixed Int
15.0%
Cash 19.3%
Aust Shares
11.4%
5 year%**
Overseas
6.88%
Return (after fees)
Overseas
Shares 9.4%
Property
5.0%
Short Term
Fixed Int
29.5%
Fund size: $71 million.
Performance
Aust Shares
11.3%
6.58%
5.94%
Overseas
Shares 9.2%
Property
5.6%
0.64%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to achieve a higher return than cash by strategically
Short Term
allocating 25% of the funds in growth assets and the balance
in fixed interest and cash.
Fixed Int
This strategy is suitable for investors who are seeking higher
returns
than cash over
28.8%
time and are prepared to accept a slight increase in risk in terms of downward
movements in the value of their capital from time to time.
Long Term
Fixed Int
14.9%
Quarterly Investment Report, 30 June 2015
Balanced Investment Strategy
The strategy’s return for the quarter was
-2.19%. This outperformed the benchmark
return by 0.73%. The strategy’s 3 year and
5 year returns of 10.50% and 8.96% are
0.59% and 0.53% respectively ahead of
benchmark.
Quarter %
1 year %
3 year %*
Australian
Shares
22.4%
Property
9.8%
Overseas
Shares
18.5%
5 year%**
Return (after fees)
-2.19%
6.99%
10.50%
8.96%
Benchmark**
-2.92%
6.87%
9.91%
8.43%
0.73%
0.12%
0.59%
0.53%
Difference
Cash 4.9%
Long Term
Fxd Int
24.7%
Fund size: $209 million.
Performance
Overseas
Fixed Int
Short Term 10.0%
Fxd Int 9.7%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to gain a higher return by strategically allocating 50% of
the funds in growth assets and the balance in fixed interest and cash. This strategy is
suitable for medium term investors who seek higher returns and are prepared to accept
some volatility in the value of the funds invested.
Growth Investment Strategy
The strategy’s return for the quarter was
-2.80%. This outperformed the benchmark
by 0.54%. The strategy’s 3 year and 5 year
returns remain at 13.28% and 10.48%,
which are 0.59% and 0.76% respectively
ahead of benchmark.
Short Term
Fxd Int 4.8%
Benchmark**
Difference
Cash 4.8%
Long Term
Fxd Int
14.7%
Property
9.7%
Fund size: $209 million.
Performance
Return (after fees)
Overseas
Fxd Int 5.0%
Quarter %
-2.80%
1 year %
8.47%
3 year %*
13.28%
5 year%**
10.48%
-3.34%
8.11%
12.69%
9.72%
0.54%
0.36%
0.59%
0.76%
*Annualised **Index return on Strategic Asset Allocation
Objective:
The objective of this strategy is to attain high long term returns in excess of inflation. It
has a 70% strategic allocation to growth assets and the balance in fixed interest and
cash. This strategy is suitable for long term investors who are prepared to accept high
volatility in the value of the funds invested.
Australian
Shares
32.4%
Overseas
Shares
28.6%
Quarterly Investment Report, 30 June 2015
Equities Investment Strategy
Australian
Shares
49.7%
The strategy’s return for the quarter was
-3.58%. This outperformed the benchmark
by 0.29%. The strategy’s 3 year and 5 year
returns remain at 17.75% and 12.30%,
which are 0.44% and 0.96% respectively
ahead of benchmark.
Overseas
Shares
50.3%
Fund size: $80 million.
Performance
Return (after fees)
Benchmark**
Difference
Quarter %
-3.58%
1 year %
10.99%
3 year %*
17.75%
5 year%**
12.30%
-3.87%
10.10%
17.31%
11.34%
0.29%
0.89%
0.44%
0.96%
Objective:
The equities strategy offers 100% exposure to the world’s share markets. Over the long
term, it offers the prospects of high returns but with the likelihood that capital values will
fluctuate broadly in line with the fortunes of the share markets. Typically, this strategy
may be used as a return booster in conjunction with one of the other investment
strategies.
The objective of this strategy is to gain exposure to both domestic and overseas share
markets. This strategy has a 55/45 strategic allocation to the two markets respectively.
NB: All the above investment strategies are exercised through investment in one, or a
combination of, the Public Trustee Common Funds.
The investment returns presented in this quarterly report relate to past performances and must not be
taken to imply that this predicts future returns of the funds. The information and opinions contained in this
report have been compiled or are arrived at by Public Trustee from sources believe to be reliable, but no
representation or warranty, expressed or implied, is made as to their accuracy, completeness or
correctness.
The information in this report is of a general nature. Public Trustee strongly recommends that you contact
the Office to discuss your particular circumstances. Public Trustee does not accept any liability whatsoever
for any direct or consequential loss arising from any usage of information herein contained.
PUBLIC TRUSTEE
GPO Box 1338 Adelaide South Australia 5001
T 08 8226 9200 | F 08 8226 9350
Country freecall 1800 673 119 | www. publictrustee.sa.gov.au