The last few months have been difficult for investment markets in Australia and abroad. As a long term investor, we take a long-term view of the markets in Australia and globally. That said, we thought we would provide commentary on some recent events.
What’s going on at home?
First of all we are not surprised that Australian share markets are falling, in fact we have been concerned about valuations for the last 12 months. Therefore we have been holding a reasonable level of cash as a defensive buffer (up to 20%) in the Crescent Australian Equity Fund.
Being a value based and Shariah compliant investor, means we have no exposure to banks and other financial institutions which have been hit hard in the latest sell off. We are invested mostly in small companies which have outperformed the rest of the market during the sell-off in August.
In August, focus turned from Greece (after securing another bailout) to China as the People’s Bank of China shocked markets on 11th August with an unexpected devaluation of the its currency, the Yuan. The move was seen by many as an attempt by Chinese authorities to boost their exports to counteract a faltering economy. US economic data remained generally strong during the month Q2 real GDP growth was revised up to a 3.2% annualised rate.
Let’s dive into property
The Australian Real Estate Investment Trust (REIT) market fell 4.1% over the August month. Over the same period, the general equity market (S&P ASX200) fell a more dramatic 7.8%. This highlights the defensive qualities of REITs as an asset class. While no-one can accurately predict interest rate movements in the short-term, based recent Reserve Bank comments and the weak GDP (2.0% annualised), the possibility for further rate cuts in Australia cannot be ruled out. This is potentially a supportive environment for reasonable returns from the real estate asset class.
The Crescent Wealth Diversified Property Fund also purchased an asset in South Melbourne recently and represents about 50% of the total fund (the other half is in listed REITs and a small amount of cash). This purchase was timely and means the high performing fund will have an extra element of stability. The fund’s diversified strategy should see its future returns delivered in a fashion with lower volatility than general equities.
Want to find out more?
The easiest way is to speak with one our Relationship Managers in Sydney, Melbourne and Brisbane. You can call our offices between 8:30AM and 6PM Monday to Friday to make an appointment on 1300 926 626. You can also find information on our website at www.crescentwealth.com.au
This article has been prepared by Crescent Funds Management (Aust) Ltd. ABN 32 144 560 172 AFSL No: 365260 based on its understanding of current regulatory requirements and laws as at 28/09/2015. It is not financial advice and provides information only. It does not take into account your individual objectives, financial situation or needs. Past performance is not an indicator of future performance. You must read the relevant Product Disclosure Statements available from www.crescentwealth.com.au and assess whether the information is suitable for you and consider talking to a financial advisor before making an investment decision. Copyright © 2015 Crescent Funds Management (Aust) Ltd. All rights reserved.