Key Insights

In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. In June, risk on theme continued with real assets rebounding strongly. The top performing assets were Commodities and Global Small Caps followed by Australian Micro, Small and Mid Caps. The Australian dollar index rose by 5% with the increase in commodity demand and prices.

1. Real assets rebounded strongly

  • Risk assets continued to see strong interest from investors.
  • As expected in this type of sustained risk-on environment, safety assets delivered negative or flat returns.
  • Among the losing assets were VIX (Volatility), Gold and Global Corporate Bonds (unhedged). Domestic and offshore government bonds delivered flat returns.
  • The top-performing assets were Commodities and Global Small Caps (unhedged), which delivered returns in excess of 40%, followed by Australian Micro-, Small- and Mid-caps that delivered returns in excess of 30%.
  • Global emerging markets beat Developed and Frontier markets. Additionally, Listed Real assets, such as GREITs and Global Listed Infrastructure, delivered healthy returns over the year.
  • The AUD index (TWI) was up 5% over the year, imposing modest headwinds for unhedged investors.
  • It remains to be seen if the latest inflationary fears will dampen the bull market in equities. It has certainly caused bond investors to pause and wonder if the threat to inflation expectations is transitory or secular
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