Australian Fund Monitor’s index of Australian hedge and absolute return funds has almost regained the previous high water mark set in October 2007 after adding 2.64 per cent in March to be up 1.41 per cent year-to-date.
Equity based funds rose 3.51 per cent in March, while non-equity based funds rose by 1.62 per cent.
The Australian equity markets continue to range trade between 4,500 and 5,000, although the rise of 5.13 per cent in the ASX200 in March only just managed to claw back losses in January to be up 0.10 per cent YTD.
As a result, with April’s decline of 1.4 per cent and following the sharp falls in May MTD, the market is basically back to levels last seen in September 2009.
That puts in stark perspective the extent of the rally since March 2009 which effectively took the market up 50 per cent in just six months, but still left it a long way short of the November 2007 peak.
April’s results are just starting to come in, and based on this small sample it looks as if the month will be reasonably flat against the ASX’s decline of 1.4 per cent. What had shaped up as a positive result gave way in the final week of the month as Europe’s debt and fiscal woes continued to weigh on markets, and coming at the end of the month left managers with little chance to adjust portfolios to reflect the increase in risk.
The local market has sold off further (as at 5 May), not only on concerns over Greece and Europe, but as a result of proposed changes to Australia’s tax regime announced last weekend.
The changes followed a major review of Australia’s taxation system (excluding a major component, the broad based consumption tax, or GST) which made over 100 recommendations, of which only a handful has been acted on.
The most significant aspect of these was the introduction of a proposed “Resource Super Profits Tax” on Australia’s mining sector from FY 2012, which although well flagged prior to the announcement, has subsequently stunned investors. Of interest to the fund management sector was the proposed increases in the compulsory superannuation levy from nine to 12 per cent by 2020.
The AFM Fund of Fund Index climbed 1.91 per cent in March and the AFM Single Fund Index rose 2.89 per cent.