The Australian share market delivered a return of (-3.3%) during March. The market was down (-3.9%) for the first 3 months of the year which is the worst start since Covid. The 12 month return looks a little better at (+2.6%).
Utilities (+1.5%) was the only sector with a positive return during the month. The big losers were the Information Technology (-12.3%) and Consumer Discretionary (-7.8%) sectors.
The world share index fell (-5.0%) for the month after big falls by the large technology companies. The US was down (-5.8%) and the NASDAQ (-8.2%). March marked the worst month for US shares since December 2022. The UK (-2.0%), Germany (-0.8%), France (-3.2%) and Japan (‑3.3%) all fell, while China ended slightly higher (+0.5%). Over the past 12 months China has surprisingly been the best performing major share market.
While Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla are down (-25%) on average for the year to date, one company has benefited significantly from the change of President. Fox Corporation (owner of Fox News in the US) is up 85% for the 12 months to the end of March. With the benefit of hindsight, that seems like an obvious stock pick in the Donald Trump era.
House prices grew (+0.4%) for March with both Syndey (+0.3%) and Melbourne (+0.5%) posting gains. Gross rental yields are 3.5% which is the highest they’ve been since 2019.
Interest rates and the unemployment rate both remained unchanged at 4.1% with inflation now back within the target 2-3% range.
The Iron Ore price fell (-4.2%),Oil went up (+2.5%) and Bitcoin was down (-4.2%). Gold continued its great run up (+10.8%) for the month and (+19.0%) for the year to date. In the 15 years from March 2008 to November 2023 the gold price doubled in value. In the past 18months it’s jumped (+61%).
Active Investment Funds
Australian’s have approximately $5 trillion invested in managed funds, with a significant proportion of this held by super funds.
Each year the research house S&P Global looks at the results produced by the funds trying to deliver a return above the benchmark index. The idea being that paying for a higher return should deliver one. Unfortunately for the fund managers, every year the results show exactly the opposite.
Looking at last year, only 15% of fund managers who invested in global shares and 44% of those investing in Australian shares managed to beat the benchmark. If you take a longer timeframe the results get worse. Over a 15 year period, only 5% of global share funds outperformed and 15% of Australian share funds.
Apart from medical research, I can’t think of any other industry with such a high failure rate that still exists. The only thing keeping it going, seems to be that people keep falling for the marketing.
