Investment update 23 July 2018

Last week in the markets

Over the past week Australian shares rose 0.3% with small company shares increasing 0.5%. Shares in developed countries rose 0.2%, while in the US market little changed. Shares in emerging markets fell 0.5%. The Australian dollar declined 0.1% to 74.15 US cents. The Australian 10-year bond yield fell slightly to 2.62%, with the US 10-year bond yield moving higher to 2.89%. The oil price fell 0.8% to 70.46 US dollars per barrel.

Which sectors are behind Australia's strong share market performance?

In our update a few weeks ago, we discussed the strong performance from Australian shares over the past financial year. In this week’s note we look at which share market sectors contributed to this strong performance and which detracted.

A sector is a grouping of companies that generally operate in the same or similar industries. Sectors in the S&P / ASX 200 Accumulation Index that posted the largest gains and losses included:

Best performers

Worst performers

Automobiles and ComponentsTelecommunication Services
Pharmaceuticals, Biotechnology and Life SciencesUtilities
Food, Beverages and TobaccoBanks
EnergyConsumer Durables and Apparel
MaterialsRetailing

The best performing sector, Automobile and Components, was up 44%, while the worst performing sector, Telecommunication Services, was down about 34%. This highlights the potential value-add from being invested in the right sectors.

Broadly, our Australian shares managers were underweight in the Banks and Telecommunication Services sectors while managing to pick some winners among the stronger performing sectors. Overall this helped our portfolio of Australian shares managers outperform the broader market.

Signing off

David Bell | Chief Investment Officer

Past performance isn't necessarily an indicator of future performance.

Data sourced from Bloomberg, Sydney Morning Herald and News.com.au.