In the latest cross-asset review produced by Foresight analyst, we highlight 4 key themes.
Risk assets quickly recover their Q418 losses, Small and mid-caps lead
- After a notable volatility and drawdown of capital from growth assets in Q32018, markets rallied quite strongly in the March quarter 2019. The risk on behavior of investors was triggred by the shift in the monetary policy stance of the Federal Reserve Bank of United States.
- The level of strength in performance turnaround across the growth assets means many of the asset classes have recovered their Q4 2018 losses.
Bond Proxy assets advance strongly on the back of policy shifts by Fed, GREITs – EM and AREITs standout
- Bond proxy assets such as REITs and Infrastructure deliver strongest returns over the quarter
- GREITs – Emerging markets and Australian REITs were the best performing asset classes over the quarter, delivering 15% and 14.4% returns, respectively.
Negative currency effects noted across major growth assets over the latest quarter
- Australian Dollar Index strengthened against the major currencies over the quarter.
- The biggest gains were noted against the Euro (+2.9%), Korean Won (+2.7%) and Swiss Franc (+2.04%).
Analysis of correlations and volatilities continue to demonstrate the benefits of multi-asset diversification for investors
- Longer-term volatility trend continues to rise for growth and long-duration assets such as GREITs and Infrastructure.
- The most volatile asset over the past 12 months in AUD was GREIT -EM, followed by Global small caps and Australian small caps.