Year to date VIP’s flagship Growth portfolio has returned strong performance up 6.63%, outperforming its benchmark by 1.15%. Similarly over the June Quarter the Growth portfolio surpassed its benchmark by 8bps. This period benefited from some strategic adjustments in response to market fluctuations, reflecting VIP’s ability to adapt to changing economic conditions.
The Australian Equities held in the Growth Portfolio were up 1.80% for the quarter beating the ASX200 (-1.05%) return. The result reflected strong stock selection with a pleasing performance across the holdings, outperformance was delivered by a number of stocks including: South32 (+22%) Macquarie Technology (+14%) and Whitehaven (+17%). The international equities held within the Growth Portfolio also performed well up 17.0% for the quarter compared to the MSCI world ex Australia index which was up 14.0%. The fixed interest holdings in VIP’s managed portfolios also outperformed the benchmark up 1.37%, most importantly providing the return we expected at very low risk, which is key to VIP’s philosophy of protecting capital.
Looking forward, Inflation has once again established itself as a significant threat confronting markets as it remains above the RBAs 2-3% goal. With a dual mandate of price stability and full employment, the RBA faces a critical juncture. Deputy Governor Andrew Hauser has stressed the importance of upcoming economic indicators such as retail sales and labour market reports. However, some economists believe that if we were to see further rate rises the RBA will potentially overshoot and push the economy into a recession.
Geopolitical risk also remains elevated. Recent elections in India, Mexico, and Europe have already demonstrated potential for elections to disrupt markets. Recent polls show that US voters prioritising the economy ahead of November’s presidential election, once again highlighting potential for political issues to increase market volatility. Despite the ongoing Israel-Hamas and Russia-Ukraine wars, oil prices have remained stable between $72 and $82 USD. This stability reflects confidence in global supply and demand dynamics and indicates effective management by OPEC.
The VIP Growth portfolio remains conservatively positioned with a high weighting in fixed interest and defensive assets at 40.08%, capitalizing on the strong and stable returns as the market shifts, additionally funds have been strategically allocated toward US and Australian small caps (2.7%), in anticipation for a potential equity-market turnaround. This positioning installs confidence that the portfolios managed will withstand increased volatility and adapt to shifting markets.