As at 31 December 2015
A performance summary of the FirstChoice Multi-Index portfolios available on FirstChoice. The
FirstChoice Multi-Index portfolios are constructed using passive investment strategies within
each asset class.
Overview
All FirstChoice Multi-Index portfolios recorded positive returns over the 12 months to 31 December 2015,
despite experiencing substantially weaker equity markets than the previous quarter. Figure 1 shows the
absolute performance of the FirstChoice Multi-Index Conservative, Diversified, Balanced and High Growth
portfolios. The FirstChoice Multi-Index Moderate portfolio does not yet have a 12 month performance
history.
Please note that we have provided performance figures for the Wholesale trust after fees. However, later
in this paper, when looking at asset class and stock level analysis, the figures are provided before fees.
This is because fees are applied at the portfolio level rather than the stock level.
Performance (after fees)
Figure 1: Performance (after fees) for the 12 months to 31 December 2015
3%
2.2%
2.2%
1.9%
2%
2%
0.9%
1%
1%
0%
FirstChoice
FirstChoice
FirstChoice
FirstChoice
Wholesale Multi- Wholesale Multi- Wholesale Multi- Wholesale MultiIndex
Index Diversified Index Balanced
Index High
Conservative
Growth
Source: Colonial First State. Figures shown are in Australian dollar terms and after fees. As at 31 December 2015. Past performance is no indication
of future performance.
Adviser use only
Typically, the performance of these multi-sector portfolios relative to each other primarily reflects the
asset allocation. While this was a factor over the last year, performance has also been impacted by the
underperformance of equity manager Realindex and those portfolios with higher exposures to the
manager have lagged more.
At the sector level, Australian shares performed poorly over the year, with the sector returning 2.6%1 in
the 12 months to December 2015. Global shares appeared to perform well, with the benchmark returning
10.0%2 for the same period. However, much of this return was due to the lower Australian dollar rather
than strength in equity markets. The equivalent hedged benchmark only returned 2.7%.
Figure 2: FirstChoice Multi-Index Diversified contribution by asset class for the 12 months to
31 December 2015
2.78%
2.50%
2.00%
1.50%
0.53%
0.13%
-0.04%
0.45% 0.46% 0.40% 0.33%
Global Propery
Securities
Global Bond
Australian Small
Companies
Australian Bond
Global Share Hedged
Global Share
Australian Share
-0.50%
Cash
0.00%
0.11% -0.14%
Emerging Markets
0.55%
0.50%
Global
Infrastructure
Securities
1.00%
FirstChoice
Wholesale MultiIndex Diversified
Contribution (before fees)
3.00%
Source: Colonial First State. Figures shown are before fees. As at 31 December 2015. Past performance is no indication of
future performance.
As shown in Figure 2 above, most asset classes provided a positive contribution to total return. Cash
provided the largest contribution to return. The next strongest contributor to the FirstChoice Multi-Index
Diversified portfolio came from the 9% allocation to global shares (unhedged to movements in the Australian
dollar). This allocation was helped by the lower Australian dollar increasing the Australian dollar value of
those holdings as well as small positive returns within equity markets. The total allocation to global shares
(hedged and unhedged and including emerging markets) makes up 20.5% of the portfolio. Although,
accounting for a fifth of the portfolio’s allocation, it contributed slightly less than that to the 2.8% total
return due to the negative contribution from both global shares (hedged) and emerging markets.
Providing an outsized contribution to the portfolio as a whole was the 3.5% allocation to Australian small
companies.
Australian small companies substantially outperformed large companies over 2015.
Consequently, the contribution from small companies exceeded that of the broader Australian share
allocation despite a much lower allocation.
In the defensive part of the portfolio, the 12% allocation to global bonds and 18% allocation to Australian
bonds contributed well, combining to provide nearly a third of the portfolio return.
1
2
S&P/ASX200 Accumulation Index
MSCI All Country World ex-Australia Net Index
Stock contributors for the global share portfolio
For the unhedged global share allocation, the top ten stocks that made a positive contribution to
benchmark relative performance are shown in Figure 3. The majority of the stocks were held overweight
relative to the benchmark.
Figure 3: Positive relative contributors to performance over the 12 months to 31 December
2015
Stock name
Relative value
added
Portfolio
weight
Active
weight
Change in
active weight
over the year
Nippon Telegraph & Telephone
0.25%
0.60%
0.52%
Increased
Vale Sa Pref
0.18%
0.00%
0.00%
Increased
ROYAL DUTCH SHELL PLC 'A' ORD
0.12%
0.00%
-0.41%
Decreased
NTT Docomo Inc
0.09%
0.29%
0.21%
Increased
Kinder Morgan Inc
0.09%
0.01%
-0.07%
Decreased
AXA SA
0.06%
0.35%
0.20%
Increased
China Mobile Ltd
0.06%
0.53%
0.33%
Decreased
Nissan Motor Co Ltd
0.05%
0.23%
0.16%
Increased
Deutsche Telekom Ag-Reg
0.05%
0.34%
0.17%
Increased
SK Holdings Co Ltd
0.05%
0.00%
0.00%
Decreased
Source: Colonial First State. As at 31 December 2015. Closing position relative to stock weighting in the MSCI All Countries World
index (ex-Australia). Past performance is no indication of future performance.
Conversely, the portfolio suffered from holding these stocks (or being underweight these stocks) for some
period during the 12 months to 31 December 2015.
Figure 4: Negative relative contributors to performance over the 12 months to 31 December
2015
Stock name
Relative value
lost
Portfolio
weight
Active
weight
Change in
active weight
over the year
Vale SA
-0.42%
0.00%
-0.01%
Decreased
Alphabet Inc/CA
-0.38%
0.28%
-1.04%
Increased
Amazon.Com
-0.37%
0.07%
-0.70%
Increased
Petrochina Co Ltd-H
-0.22%
0.60%
0.56%
Decreased
Petrobras - Petroleo Bras-Pr
-0.21%
0.31%
0.29%
Increased
Facebook Inc-A
-0.18%
0.03%
-0.61%
Decreased
Apple Inc
-0.14%
0.80%
-0.92%
Increased
Royal Dutch Shell Plc-A Shs
-0.14%
0.81%
0.81%
Decreased
Microsoft Corp
-0.13%
0.70%
-0.51%
Increased
Source: Colonial First State. As at 31 December 2015. Closing position relative to stock weighting in the MSCI All Countries World
index (ex-Australia). Past performance is no indication of future performance.
To provide additional context, Figure 5 shows the difference in sector weights between the Realindex
Global Share portfolio and the market capitalisation index. The largest weight in the portfolio, relative to
the index, was in the energy sector while the IT sector was the largest relative underweight.
Figure 5: Sector comparison: Realindex Global Share versus MSCI All Country World (exAustralia) Index
Sector
Portfolio weight
Index weight
Active
weight
Energy
11.64%
6.23%
5.42%
Financials ex Property Trusts
24.63%
20.71%
3.92%
Telecommunication Services
6.78%
3.75%
3.03%
Utilities
5.07%
3.18%
1.90%
Futures & FX Forwards
1.53%
0.00%
1.53%
Materials
5.25%
4.35%
0.90%
Property Trusts
0.79%
0.00%
0.79%
Other
0.49%
0.00%
0.49%
Industrials
8.90%
10.41%
-1.51%
Consumer Staples
8.61%
10.29%
-1.67%
Consumer Discretionary
10.60%
13.21%
-2.61%
Health Care
6.85%
12.66%
-5.81%
Information Technology
8.85%
15.22%
-6.37%
Source: Colonial First State. As at 31 December 2015. Past performance is no indication of future performance.
The regional allocation is shown in Figure 6. The Realindex Global Share portfolio was overweight
emerging markets, Europe and Japan, and underweight North America and the UK, compared to the
market capitalisation index.
Figure 6: Region comparison: Realindex Global Share versus MSCI All Country World (exAustralia) Index
Region
Portfolio weight
Index weight
Active
weight
North America
40.67%
57.28%
-16.61%
Europe
22.31%
16.02%
6.29%
UK
5.85%
6.87%
-1.02%
Japan
10.22%
8.31%
1.91%
Developed Asia
2.14%
1.54%
0.60%
Emerging Markets
17.24%
9.93%
7.32%
Pacific
0.00%
0.06%
-0.06%
Other
1.56%
0.00%
1.56%
Source: Colonial First State. As at 31 December 2015. Past performance is no indication of future performance.
Overall, the overweight exposure to energy stocks and the underweight exposure to IT stocks, coupled
with the underweight exposure to North America and overweight to emerging markets, resulted in the
global share allocation underperforming the return from the equivalent market cap benchmarks.
Stock contributors for the Australian share portfolio
In the Australian share asset class, the top ten positive contributors to relative performance (compared to
the ASX/S&P 200 Accumulation Index) came mostly from stocks in the industrial or consumer
discretionary sectors. The majority of these holdings were overweight positions. The overweights ranged
in size from significant (e.g. CIMIC Group) to very close to benchmark (e.g. Toll Holdings), with some
having increased over the year and others having decreased.
Figure 7: Positive relative contributors to performance over the 12 months to 31 December
2015
Stock name
Relative value
added
Portfolio
weight
Active
weight
Change in
active
weight
over the
year
Qantas Airways Ltd
0.28%
0.57%
-0.04%
Decreased
Australian Pharma Indus Ltd
0.20%
0.27%
0.22%
Increased
Toll Holdings Ltd
0.14%
0.00%
0.00%
Decreased
Slater & Gordon Ltd
0.13%
0.00%
-0.02%
Decreased
St Barbara Ltd
0.12%
0.04%
0.04%
Increased
CIMIC Group Limited
0.12%
1.14%
0.97%
Decreased
Australia & New Zealand Banking Group Ltd
0.09%
5.57%
-0.31%
Increased
Air New Zealand Ltd
0.08%
0.44%
0.44%
Increased
Auckland International Airport Limited
0.07%
0.26%
0.26%
Increased
Event Hospitality and Entertainment Ltd
0.07%
0.23%
0.23%
Increased
Source: Colonial First State. As at 31 December 2015. Closing position relative to stock weighting in the ASX/S&P 200 index.
Past performance is no indication of future performance.
On the negative side, the portfolio’s relative return suffered from holding BHP Billiton, despite a decrease
in holding over the year. An underweight holding in CSL Ltd and overweight holdings in Arrium and
Fortescue Metals also cost the portfolio relative performance in this period.
Figure 8: Negative relative contributors to performance over the 12 months to 31 December 2015
Stock name
Relative
value lost
Portfolio
weight
Active
weight
Change in
active
weight
over the
year
BHP Billiton Limited
-0.63%
6.15%
2.01%
Decreased
CSL Ltd
-0.31%
1.53%
-2.01%
Decreased
Arrium Ltd
-0.24%
0.13%
0.13%
Decreased
Fortescue Metals Group Ltd
-0.23%
1.01%
0.78%
Increased
Worleyparsons Ltd
-0.21%
0.37%
0.29%
Increased
Transurban Group
-0.20%
0.35%
-1.18%
Decreased
Macquarie Group Ltd
-0.16%
1.23%
-0.80%
Increased
Domino's Pizza
-0.15%
0.00%
-0.26%
Decreased
Sydney Airport
-0.13%
0.54%
-0.48%
Increased
Scentre Group
-0.13%
1.07%
-0.54%
Increased
Source: Colonial First State. As at 31 December 2015. Closing position relative to stock weighting in the ASX/S&P 200 index.
Past performance is no indication of future performance.
Summary for FirstChoice Multi-Index portfolios
The FirstChoice Multi-Index portfolios were all weaker than in previous periods, with the major growth
asset classes contributing little to performance. Both domestic and global bonds contributed well, and in a
reversal of the ‘normal’ risk/return profile it was those portfolios that had a larger allocation to these
defensive sectors that managed to perform better over this period.
Appendix A: FirstChoice Multi-Index performance by portfolio
3.00%
2.80%
2.50%
2.00%
1.50%
1.13%
0.34%
0.22%
0.07% -0.10%
Emerging Markets
0.27%
Global Infrastructure
Securities
-0.03%
Global Propery
Securities
Global Share
Australian Share
-0.50%
Cash
0.00%
0.51%
Global Bond
0.29%
Australian Bond
0.09%
Global Share Hedged
0.50%
Australian Small
Companies
1.00%
FirstChoice Wholesale
Multi-Index
Conservative
Contribution (before fees)
FirstChoice Multi-Index Conservative contribution by asset class for the 12 months to 31
December 2015
Source: Colonial First State. Figures shown are before fees and taxes. As at 31 December 2015.
Past performance is no indication of future performance.
3.00%
2.60%
2.50%
2.00%
Source: Colonial First State. Figures shown are before fees and taxes. As at 31 December 2015.
Past performance is no indication of future performance.
0.15%
-0.20%
Emerging Markets
0.44%
Global
Infrastructure
Securities
0.33%
Global Propery
Securities
Global Share
-0.50%
0.64%
-0.12%
0.00%
Australian Bond
0.13%
0.37%
Global Share Hedged
0.13%
Australian Share
0.50%
Cash
0.73%
Australian Small
Companies
1.00%
Global Bond
1.50%
FirstChoice
Wholesale MultiIndex Balanced
Contribution (before fees)
FirstChoice Multi-Index Balanced contribution by asset class for the 12 months to 31 December
2015
2.00%
1.41%
Global Propery
Securities
-1.04%
Emerging Markets
-1.50%
0.23%
Australian Small
Companies
-1.00%
0.65%
-0.05%
Global Share - Hedged
-0.50%
0.08%
Australian Share
0.00%
0.01%
Cash
0.50%
0.71%
Global Infrastructure
Securities
0.82%
1.00%
Global Share
1.50%
FirstChoice Wholesale
Multi-Index High
Growth
Contribution (before fees)
FirstChoice Multi-Index High Growth contribution by asset class for the 12 months to 31
December 2015
Source: Colonial First State. Figures shown are before fees and taxes. As at 31 December 2015.
Past performance is no indication of future performance.
FirstChoice Multi-Index Moderate
The FirstChoice Multi-Index Moderate portfolio commenced in May 2015 and so performance has not been
shown in this document.
Appendix B: Disclaimer for client use
Advisers: Please use below disclaimer if presenting this document to clients.
Disclaimer
Investments in any of the Colonial First State managed investment funds are offered by Colonial First
State Investments Limited ABN 98 002 348 352, AFS Licence 232468. This document may include general
advice but does not take into account your individual objectives, financial situation or needs. You should
read the relevant Product Disclosure Statement (PDS) carefully and assess whether the information is
appropriate for you and consider talking to a financial adviser before making an investment decision. PDSs
are available from colonialfirststate.com.au or by calling us on 13 13 36. Past performance is no
indication of future performance.
Fundamental Index is a trademark of Research Affiliates, LLC and is used with permission. Patent
pending: WO 2005/076812, WO 2007/078399, WO 2008/118372. Research Affiliates, LLC, is a US
Securities and Exchange Commission registered investment advisor. Research Affiliates, LLC and its
related entities do not warrant the accuracy of the information provided herein, either expressed or
implied, for any particular purpose.
Want more information?
To find out more about this Fund, please contact your local Business Development Manager, Adviser
Services on 13 18 36 (8am to 7pm Sydney time) or visit colonialfirststate.com.au/investments/
Disclaimer - Adviser use only
This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS
Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and
laws as at 8 February 2016. While all care has been taken in the preparation of this document (using
sources believed to be reliable and accurate), to the maximum extent permitted by law, no person
including Colonial First State or any member of the Commonwealth Bank group of companies, accepts
responsibility for any loss suffered by any person arising from reliance on this information. Colonial First
State also issues interests in investment products made available under FirstChoice Investments and
FirstChoice Wholesale Investments, other than FirstRate Saver, FirstRate Term Deposits and FirstRate
Investment Deposits which are products of Commonwealth Bank of Australia ABN 48 123 123 124, AFS
Licence 234945 (the Bank). Colonial First State is a wholly owned subsidiaries of the Bank. The Bank and
its subsidiaries do not guarantee the performance of FirstChoice products or the repayment of capital from
any investments. This document provides information for the adviser only and is not to be handed on to
any investor. It does not take into account any person’s individual objectives, financial situation or needs.
You should read the relevant Product Disclosure Statement (PDS) before making any recommendations.
Clients should read the PDS before making an investment decision and consider talking to a financial
adviser. FirstChoice PDSs can be obtained from colonialfirststate.com.au or by calling us on 13 18 36.
Fundamental Index is a trademark of Research Affiliates, LLC and is used with permission. Patent
pending: WO 2005/076812, WO 2007/078399, WO 2008/118372. Research Affiliates, LLC, is a US
Securities and Exchange Commission registered investment advisor. Research Affiliates, LLC and its
related entities do not warrant the accuracy of the information provided herein, either expressed or
implied, for any particular purpose.
Adviser use only. For use with clients please ensure appropriate disclaimer is used.
Past performance is no indication of future performance.
Stocks mentioned are for illustrative purposes only and are not recommendations to you to buy
sell or hold these stocks.