How the
portfolios
performed
in Q3 2023

October 2023

It was a challenging quarter for investment markets, with returns from major asset classes down from previous quarters. This required us to make decisions to optimise returns from the Cornerstone portfolios. Here are the highlights.

What worked

• The lull in interest rate changes allowed us to dig deeper into the merits of individual stocks and securities. As a result, our parcel of 30 direct Australian shares outperformed  the S&P/ASX 100 by 1.5%, adding approximately 0.3% to the overall gains of the Cornerstone Balanced Portfolio¹.
• Some fund managers within our multi-asset portfolio used the same approach to deliver strong results too, including Oaktree Capital Management and J O Hambro Capital Management.

What posed challenges

• Government bonds in our portfolios have not delivered to the forecast extent but, nonetheless, it made sense to accumulate them at the prices on offer. Once the dust settles on still uncertain markets, this element of our strategy should deliver as anticipated.

What we’re thinking now

• We’re sticking to our game plan to gradually reduce exposure to growth assets such as shares, as well as credit investments like high-yield debt. In fact, we cut our exposure to the latter to close to zero in the September quarter and trimmed our global loan holdings too.
• Instead, we’re adding fixed income to portfolios – gradually buying assets when the market dips. The yield on offer makes it sensible to top up holdings and diversify our investments.
• Our exposure to Australian real estate investment trusts (A-REITs) is up by a modest 1% as valuations in the sector are now better.
• The biggest risk to our strategy is that interest rates keep going up instead of stabilising. But the above decisions have positioned the portfolios to withstand the impact if that risk transpires.

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¹ Source: Bloomberg, Russell Investments as at 30 September 2023.

Past performance is not a reliable indicator of future performance. An individual investor’s performance will differ from the performance shown above depending on a range of factors.

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) is the Investment Manager of the Cornerstone Managed Portfolios.