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SQM Research Newsletter and Ratings Update - April 2021

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Market Roundup

by Rob da Silva, Head of Research


In taking a helicopter view of the markets and products in Q1 2021 the clear and obvious conclusion is: its good to be a risk asset!  (see our return tables later on for markets, ETFs and SQM-rated funds)
 
Markets were RISK ON all the way:
 
Fixed Income BAD (except for high yield)
Credit GOOD, Duration BAD
Equity GOOD (including REITs and Infra)
 
Highlights
Risk assets did extremely well in March – gigantic stimulus of both the monetary and fiscal variety have turbo-charged markets, including non-traditional stuff like Bitcoin and NFTs.

A-REITs            6%+ for the month
Infrastructure 5-6%
US Equity        6%
World DM       5%(ish)
Small Cap      4-5%
Global HY      4.6% (for a fixed income market!)
           
Lowlights
China EQ       -4.7%
Bonds             Negative! 
 
Everything crushes inflation! Except for fixed income, which barely got over the line.
SQM Research - Market Benchmarks
Mar-21

What About ETFs?


Huge dispersion of returns over the year: from a high of 146% to a low of -42%. That’s a range of 188%
 
Dominated by Equities
  • Geared US equities (146% for the year!)
  • Geared Australian equities (92.9% for the year!)
  • FANG (73%)
  • Anything tech-related
  • small cap and micro cap
  • Vanguard Global Value Equity 51%+ !!  (no. 22 on our ETF list)
  • Australian banks! 60%
Fixed Income                                                                        
           
Currency
            
Precious Metals (its all crypto now!)
           
Hedges Gone Wrong!
            
SQM Research - Top 50 ETFs Ranked by 1 Year Total Return
at Mar-21
Top 5 SQM Rated Funds by Asset Class
  • Alternatives posting some pretty spectacular results after a long spell in the wilderness
  • A-REITs made a stunning comeback - thank you low rates and a re-opening economy
  • Fixed income dominated by credit – especially anything high yield
  • G-REITs and Infra posting strong returns (high teens to mid-thirties)
  • Equites dominated by small and micro-cap and disruption-themed funds
  • Mortgage Trusts - single digits but healthy margins over cash
  • Multi-Asset - crushing inflation objectives
SQM Research - Top 5 Rated Funds Ranked by 1 Year Total Return

* Funds with international investments can have dissimilar FX hedging patterns, from hedged to unhedged or variable hedging.

This may have an impact on fund returns. Please refer to the Fund’s product disclosure statement for details.

Discontinued or Not Renewed
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https://sqmresearch.com.au/funds/newsletterarchive.php
For further information:
Rob da Silva - Head of Research, SQM Research
Tel: (02) 9220 4606
Email: rob@sqmresearch.com.au

Louis Christopher - Managing Director, SQM Research
Tel: (02) 9220 4666
Email: louis@sqmresearch.com.au
 
About SQM Research
SQM Research is an investment research house that specialises in providing fund ratings, fund research, investment and property data to financial institutions professionals and investors.
For more information please visit www.sqmresearch.com.au
 
Research Methodology
Please see below for descriptions of each star rating, whose purpose is to act as a guide for dealer group research teams and investment committee:
4.5 stars and above - Outstanding. Highly suitable for inclusion on APLs.
4.25 stars - Superior. Suitable for inclusion on most APLs.
4 stars - Superior. Suitable for inclusion on most APLs.
3.75 stars - Favourable. Consider for APL inclusion.
3.5 stars - Acceptable. Consider for APL inclusion.
3.25 stars - Caution required. Not suitable for APLs.
3 stars - Strong caution required. Not suitable for APLs.
Below 3 stars – Avoid or redeem. Not suitable for APLs.
Hold - Rating is suspended until SQM Research receives further information.
Withdrawn - Rating no longer applies.

* The definitions above are not all-encompassing. Not all individual items mentioned will necessarily be relevant to the rated Fund. Users should read the current a comprehensive assessment.
Disclaimer
The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure sta licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment.
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