Each month we release the Market Wrap that is compiled by our Chief Investment Office (CIO). Please do not hesitate to contact your adviser to discuss any points which trigger your interest!
Ending on a high
- The US Federal Reserve raised interest rates by 0.25% as global economic conditions continued to improve. This was widely anticipated by the market.
- Share markets performed strongly due to prospects of stronger earnings and rising confidence and ended the year on a high.
- Bonds sell-off continued but credit rallied as spreads were bid down by investors on expectations of higher growth and inflation.
- The US dollar (USD) continued to strengthen and the Australian dollar (AUD) fell. This helped to enhance unhedged returns from global shares.
- Emerging market shares and bonds regained some ground from November’s decline as commodity prices rose. However, higher US interest rates and a stronger USD remain headwinds.
- In China growth indicators remained stable but interest rates tightened as the authorities cracked down on shadow bank financing. Capital outflows remain a concern.
- Australian economic indicators were somewhat soft as consumer confidence fell on the back of a slowdown in housing activity. Rising commodity prices helped to strengthen the terms of trade.
Major asset class performance (%)
| Asset classes | 1 month | 12 months | 5 years (p.a.) |
| Australian Shares | 4.3 | 11.8 | 11.6 |
| Global Shares (hedged) | 2.9 | 10.3 | 15.2 |
| Global Shares (unhedged) | 4.5 | 7.9 | 18.6 |
| Global Emerging Markets (unhedged) | 2.3 | 11.7 | 8.6 |
| Global Small Companies (unhedged) | 4.5 | 13.2 | 20.7 |
| Global Listed Property | 4.3 | 6.7 | 13.8 |
| Cash | 0.2 | 2.1 | 2.8 |
| Australian Fixed Income | -0.2 | 2.9 | 5.0 |
| International Fixed Income | 0.4 | 5.2 | 6.1 |
Source: JP Morgan & ANZ Wealth, 31 December 2016. Indices: Australian Shares – S&P / ASX300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia, Global Emerging Markets – MSCI Emerging Free Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg Composite Bond All Maturities, International Fixed Income – Barclays Global Aggregate Bond Index (hedged). Please note: Past performance is not indicative of future performance. |
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Currency
| At close on 31/12 | % change 1 month | % change 12 months | |
| AUD/USD | 0.72 | -2.4 | 2.2 |
| AUD/euro | 0.68 | -1.9 | 1.9 |
| AUD/yen | 84.22 | -0.4 | -5.0 |
| Trade weighted index | 63.9 | -2.1 | 2.7 |
Source: Bloomberg & ANZ Wealth, 31 December 2016. All foreign exchange rates are rounded to two decimal places.Please note: Past performance is not indicative of future performance. |
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Disclaimer: This information is current as at 6 January 2017 but is subject to change. This information is issued by OnePath Funds Management Limited (OFM) ABN 21 003 002 800 AFSL 238342. OFM is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 but is not a bank. The information is general in nature and does not take into account a potential investor’s personal needs, objectives and financial circumstances. This information is not to be construed as investment or financial product advice, and should not be relied upon as a substitute for professional advice. Before acting on this information, potential investors should consider the appropriateness of the information, having regard to their objectives, financial situation and needs. Potential investors should read the relevant Product Disclosure Statement (PDS) available at onepath.com.au and consider whether the particular product is right for them. Although all the information in this document is obtained in good faith from sources believed to be reliable no representation of warranty, express or implied is made as to its accuracy or completeness. Whilst care has been taken in preparing this material, ANZ and its related entities do not warrant or represent that the information, opinions or conclusions contained in this document (“information”) are accurate. To the extent permitted by law, ANZ and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of subscribed capital is not guaranteed. RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429.