Fund Performance for September 2006
Welcome to the monthly update on your Fund's investment performance.
ARIA's primary responsibility is the management and investment of the CSS Fund in the equitable and best interests of all members. ARIA approaches this task by setting an investment objective to maximise the real returns earned on investments subject to a tolerable level of short-term volatility.
CSS default Fund
Table 1: The CSS in 2006-07 as at end September 2006 (%)
Asset Class as at end September 2006 |
Allocation 3 Months to end September 2006 |
Fund Return 3 Months to end September 2006 |
Benchmark Return |
|---|---|---|---|
Australian shares |
31 |
1.6 |
2.1 |
International shares |
23 |
4.8 |
5.5 |
Long/Short equities |
5 |
1.6 |
4.0 |
Property |
14 |
0.7 |
3.9 |
Bonds |
14 |
2.0 |
3.6 |
Market Neutral strategies |
10 |
1.8 |
2.4 |
Cash |
3 |
1.5 |
1.5 |
Total Fund |
100 |
1.9 |
3.5 |
The return numbers in the table above are after fees and before tax, except for the Total Fund return number, which is after both fees and taxes. Benchmark return numbers are before fees and taxes.
The asset class sector benchmark return numbers show the market performance of the sector, while the Fund return numbers show what your Fund's performance was in that sector.
Table 2: Historical Fund Returns over the last five years (% p.a.)
Year |
Return |
|---|---|
2001-02 |
-5.6 |
2002-03 |
3.0 |
2003-04 |
13.9 |
2004-05 |
13.9 |
2005-06 |
13.3* |
* unaudited
Commentary:
Global equity markets continued to advance in the month of September, culminating in strong returns for the September quarter. Markets in the September quarter were buoyed by a perceived peaking in US interest rates, a sharp decline in the oil price, continued strong corporate profits growth and heightened takeover activity. The Australian equity market also rose in the September quarter, but at a more moderate pace than its global counterparts. This was due to a decline in the price of resource shares, which were constrained by a fall in commodity prices.
Global fixed interest markets also benefited from the perceived peaking in US interest rates. US 10 year bond yields declined by 0.5% in the September quarter, thereby fuelling strong capital gains and impressive bond market returns. The US gains were repeated in other global bond markets, with the correlation between markets at very high levels.
The Fund's after tax return for the quarter was 1.9%. While strong in an absolute sense, the return was below benchmark, due to underperformance from a majority of our active managers.
CSS Cash Investment Option
Table 3: The CSS Cash Investment Option in 2006/2007 as at end September 2006 (%)
The Fund return in the table below is after fees and tax, whereas the Benchmark return is before fees and tax.
Fund Return |
Benchmark Return |
|---|---|
1.2 |
1.5 |
Table 4: Historical Fund Returns (%)
Year |
Return |
|---|---|
2004-05 (7 months to 30 June 2005) |
2.7 |
2005-06 |
4.9* |
*unaudited
Commentary:
The Cash Investment Option continues to deliver returns in line with the benchmark return once account is taken of fees and taxes.
Andre Morony
CIO
26 October 2006
