How your portfolio performed
April 2024
Another strong quarter for financial markets meant the Cornerstone portfolios got off to a good start in 2024. The flagship balanced portfolio delivered 5.24%1 net of fees in the March quarter, highlighting the benefits of spreading capital across different assets to optimise returns and minimise risks.
What worked well
- Share market investments added the most value to Cornerstone portfolios in headline terms during the first quarter by sheer virtue of the record-breaking run of both global and local shares.
- Drilling deeper into those gains, our exposure to Australian listed property (AREITs) was a standout, with company Goodman Group (a large constituent holding of the AREITs index) rallying during the quarter due to its financial results released as well as its strategic plans to expand into the data centre space.
- Locally, the direct stock portfolio in the flagship Cornerstone portfolios performed similarly to the benchmark. We did see, however, strong performance from the Russell Investments Australian Opportunities Fund versus the S&P/ASX 300 benchmark during the quarter, with manager Platypus (an aggressive growth manager), generating strong outperformance.
- A small exposure to commodities also paid off as the price of both gold and oil rallied, for example.
What posed challenges
- Our decision to hold an underweight position in US shares – due to the market and economic outlook – limited gains from Cornerstone portfolios relative to some competitors who have much larger positions. In the long term, though, those competitors are potentially taking more risk than we consider prudent given the market outlook.
- Exposure to government and treasury bonds detracted over the quarter, as market participants sold off these assets (resulting in their yields inclining). This was the result of continued strong economic data paired with higher-than-expected inflation data during the quarter.
What we’re thinking now
- The extended rally in technology stocks suggests the US market may be nearing a peak, so it’s a good time to look at opportunities elsewhere. Instead of concentrating on US growth stocks, we’re also considering European holdings that have similar traits but are better priced. Examples which fall into this bucket include Dutch company ASML, accounting software company SAP and pharmaceutical company Novo Nordisk.
- Two new investment managers were added to the Cornerstone portfolios in the quarter to capture these and other opportunities: European growth manager Berenberg Asset Management and US value manager Brandywine Global.
- Our corporate bond managers had been cautious by focusing on quality companies with relatively high credit ratings but are now taking on a moderate amount of extra risk.
- The biggest risk to the Cornerstone portfolios is a rebound in inflation. If inflation were to rebound strongly, then it could lead to higher interest rates and weakness in economic growth.
1. Source: Russell Investments, March 2024
Past performance is not a reliable indicator of future performance.
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Cornerstone Financial Group Pty Ltd is a wholly owned subsidiary of Invest Blue Pty Ltd (ABN 91 100 874 744) which is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327, Australian Financial Services Licence and Australian Credit Licence No. 232706.
This website contains factual information only about the Cornerstone Portfolios. The information provided is not intended to imply any recommendation or opinion about a financial product. This website has not been prepared having regard to any retail investor’s objectives, financial situation or needs. Before making an investment decision, an investor should also consider the latest disclosure document in respect of the Cornerstone Managed Portfolio (‘‘Disclosure Document’’) and / or seek financial advice in deciding whether to make or continue to hold, an investment in the Cornerstone Managed Portfolio. The Disclosure Document can be obtained by contacting a financial adviser or the platform operator(s) offering the Cornerstone Managed Portfolio.
Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 (RIM) the investment consultant to Invest Blue Pty Ltd for the Cornerstone Retirement Solution and Cornerstone Managed Portfolios. RIM is also the investment adviser to the issuers of the Cornerstone Managed Portfolios.