Morningstar High Growth Fund aims achieve capital growth through investing in a diversified portfolio of predominantly growth asset classes. It is an actively managed multi-asset Fund invested predominantly in growth asset classes such as shares, property, and infrastructure. The Fund will be invested dynamically across managed funds, direct securities, exchange traded funds, foreign exchange contracts and/or derivatives.
Generally speaking, equities performed well. However, it was the more economically sensitive sectors, such as energy and financials that have especially surged, year-to-date (we added materially to these positions in 2020, having identified great value in these assets). By contrast, previously much-loved technology stocks were among the worst performers in recent times. These same themes have further contributed to the European and Japanese sharemarkets outperforming U.S. peers 2021-to-date. That said, while sharemarkets understandably continue to attract media headlines, recent developments in bond markets have been equally, if not more, remarkable. Indeed, the current yield on the Australian Government 10-year bond (of around 1.7%) is almost double what it was in the days before the COVID-19 vaccine announcement and near triple what it was in the COVID-19-selloff 12- months ago. This has resulted in seemingly rare losses for this asset class, over 2021, especially for bonds with longer maturities.
All in all, portfolio returns appear strong, with rolling 12-month numbers as high as they have been for a number of years – but we must apply a note of caution in assessing over such a short time frame. While returns associated with this recovery are gratefully received, now is not the time to drop our guard when managing our behaviour. With this in mind, we continue to draw on the insight from our valuation framework in order to identify attractively priced assets that we think will help deliver longer term returns to the portfolio
What is Morningstar High Growth Fund Morningstar High Growth Fund is an Managed Funds investment product that is benchmarked against Multi-Asset Aggressive Investor Index and sits inside the Multi-Asset - 81-100% Multi-Manager Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Morningstar High Growth Fund has Assets Under Management of 113.07 M with a management fee of 0.63%, a performance fee of 0.01% and a buy/sell spread fee of 0.2%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Morningstar High Growth Fund has returned -5.4% in the last month. The previous three years have returned 1.94% annualised and 8.66% each year since inception, which is when the Morningstar High Growth Fund first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Morningstar High Growth Fund first started, the Sharpe ratio is 0.61 with an annualised volatility of 8.66%. The maximum drawdown of the investment product in the last 12 months is -11.43% and -18.08% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Morningstar High Growth Fund has a 12-month excess return when compared to the Multi-Asset - 81-100% Multi-Manager Index of 2.09% and -0.18% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Morningstar High Growth Fund has produced Alpha over the Multi-Asset - 81-100% Multi-Manager Index of 0.12% in the last 12 months and 0.04% since inception.
What are similar investment products? For a full list of investment products in the Multi-Asset - 81-100% Multi-Manager Index category, you can click here for the Peer Investment Report.
What level of diversification will Morningstar High Growth Fund provide? Morningstar High Growth Fund has a correlation coefficient of 0.97 and a beta of 0.95 when compared to the Multi-Asset - 81-100% Multi-Manager Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Morningstar High Growth Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Morningstar High Growth Fund with the Multi-Asset Aggressive Investor Index? For a full quantitative report on Morningstar High Growth Fund compared to the Multi-Asset Aggressive Investor Index, you can click here.
Can I sort and compare the Morningstar High Growth Fund to do my own analysis? To sort and compare the Morningstar High Growth Fund financial metrics, please refer to the table above.
Has the Morningstar High Growth Fund been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Morningstar High Growth Fund. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - December 31, 2020 Share markets continued their strong recovery through to the end of the year. The start of the COVID-19 vaccine rollout and the conclusion of the U.S. election prompted confidence in investors. Economically sensitive investments made a comeback after an extended period of relative weakness. For humanity, we gladly wave goodbye to 2020, but for financial markets, we endured a period of surprising benefit. Not even the wildest of market predictions would have been right. If someone asked you how the market would perform if a global pandemic hit, causing widespread job losses and the biggest contraction in the economy for around 90 years, we doubt you’d describe today’s reality. Global stocks, corporate bonds, real estate, gold, commodities and bitcoin have all moved forward and delivered positive performance. The final quarter of 2020 was a strong one by historical measures. It is a clear case of market participants looking over the horizon, spurred on by the vaccine rollout combined with a perception of greater political stability. The wave of “good news” comes with many fascinating and constructive sub plots. One of the most interesting happened in the fourth quarter of 2020, where value stocks bucked a multi-year trend to join the winner’s list. This was partly marked by President-elect Biden’s victory but is also a vision for life after lockdowns and COVID-19, with the reopening of the economy considered a positive for economically sensitive sectors. Company defaults and bankruptcies also remain low globally, defying the doomsayers, supported by record stimulus and the cheapest borrowing rates ever seen.
Here are some of the fourth-quarter and full-year 2020 highlights:
Global shares rose meaningfully in the fourth quarter, finishing 2020 with healthy overall returns. Returns from this asset class have been somewhat muted for unhedged investors, however, given the stronger Australian dollar. At year-end, the U.S. market had rallied as much as 70% from the March lows.
Shares in emerging market companies outperformed developed market peers, during the fourth quarter and on a 12-month view. This sector was buoyed by renewed confidence in the outlook for global growth and low U.S. interest rates.
Energy and financials were the best performing sectors in Q4 2020 recording gains of more than 20%! Nonetheless, returns from these sectors finished down on a calendar year view, materially so in the case of energy. Even accounting for the recent rally, this sector continues to appeal as an attractive investment opportunity given its compelling valuation, in our view. Among fixed income assets, interest-rate-sensitive bonds were one of the rare assets to fall in the fourth quarter. Meanwhile, riskier high-yield and emerging-markets bond categories performed the best on the back of the improved outlook for global growth.
Above all else, while it may feel like a good time to invest, investors still need to weigh up the prices that they are paying, as we’ve seen extreme divergence in asset prices, which potentially raises the risk of loss. As Warren Buffett once said, “Only when the tide goes out do you discover who’s been swimming naked”. That said, we continue to see opportunities and remain confident that our positions are in the best long-term interests of our clients—acknowledging tomorrow’s challenges and working towards a prosperous 2021 and beyond with good financial decision making.
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