In this month’s Cross Asset Review, we look at the performance of various asset classes in August 2019 and what this means for investors. In this edition, we introduce Global and Australian equity volatility indices to track market risk appetite and investor sentiment. Our analysis shows that investors continued to bid for safe haven assets such as gold, bond and bond proxy assets in August. Geopolitical risks, trade tensions and dark clouds over global growth lead to massive rise in fear gauges.
1. Safe haven assets and real assets continue to outperform as investor fear spikes
- Global and Australian VIX (volatility) indices Indicate a rising fear amongst Investors.
- Amid this backdrop, it wasn’t surprising to see continued outperformance of safe haven assets such as gold, government bonds and bond-proxy assets such as infrastructure and real estate.
- The US equity market volatility Index (CBOE VIX) rose 39% in August to be 60% higher over 12 months. Australian equity market VIX rose more modest 16% to be 22% higher (yoy).
- Gold topped our asset class table (8.82%) followed by Developed REITs (4.22%) and Global Infrastructure (2.61%).
- In equities, Frontier Markets and Developed Market (ex-Australia) were the only ones to deliver positive returns this month (0.67% and 0.27%, respectively).
- The worst performing asset sectors were EM REITs (-5.83%), Aus Small Cap (-3.85%) and EM Equities (-2.69%).
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