In this month’s Cross Asset Review produced by Foresight Analytics, we look at the performance of various asset classes in the last Financial Year. Central Bank policy pivot was the single largest factor in our opinion that defined the cross-sectional variation of asset class returns. Falling interest rates, both short- and long-term, resulted in significant outperformance of real assets such as gold, infrastructure and real estate. Developed market equities also benefited from the falling cost of debt and a weaker AUD over the period benefited unhedged investors.
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Central bank policy pivot central to cross-sectional return variation
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Central bank policy pivot created a v-shaped recovery for most asset classes in the second half of the FY
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A weaker AUD against all major trading partners was reflective of domestic growth and interest rate differentials
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A broad weakness in AUD over recent years deliver positive currency effects for unhedged investors.
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Analysis of cross-asset correlations and volatilities demonstrate the benefits of multi-asset diversification for investors.
Check complete report here.
