Marcus Today SMA | March 2021 Update
MARCH 2021 SMA PERFORMANCE
MARCUS TODAY GROWTH SMA (MT0001)Source: Praemium The Marcus Today Growth SMA fell 1.18% in March, falling short of the 2.3% rise in the benchmark S&P/ASX 300 Accumulation index. The primary reason for the under-performance through the month was our large exposure to the big three iron ore miners in BHP, RIO and FMG, all of which fell around 10% for the month. Further weighing down the portfolio was a poor month for another of our large exposures in the oilers (oil fell 3.8% for the month). Despite the poor month, both iron ore and oil remain themes that we are keen to be exposed to. Both play into the global recovery theme, which has a long way to run as we come out of the pandemic, and we are confident they will perform well for us into the in the long run despite the small pullback last month. Among our best performers through the month were new addition BET (up 18%), ALL (up 12%), SHL (up 10%) and TNE (up 8%). Through the month we made the following changes to the portfolio:
- We initiated a position in APT, which we have been adding to with the stock bottoming out on interest rate fears.
- We added to our BET position as the stock continues to gather support. Now up around 25% on our initial purchase.
- We added to our CBA position as our preferred exposure ahead of bank results season. Inching our total banking exposure closer to market weight.
- We exited our CWY and JIN positions, booking profits and freeing up the cash to be deployed in some more exciting opportunities.
- We took profits on XRO, REA and FMG as the stocks wobbled early in the month.
MARCUS TODAY INCOME SMA (MT0002)Source: Praemium The Marcus Today Equity Income SMA rose 2.1% in March, topping the 1.76% rise in the ASX 200 but short of the benchmark ASX 200 Industrials TR index which rose 4.25% for the month. The Equity Income SMA has a 12-month gross yield of 5.53%, which sits above the market average yield of around 3.5%. The Income SMA held up well through the month despite weakness in our large mining positions, with the likes of JBH (up 16% for the month), MTS (up 9%), AST (up 8%) and TLS (up 8%) doing the heavy lifting. Through the month we also made a couple of changes to the Income SMA:
- We initiated small positions in positions in AX1, HVN and PMV. All three were bought on weakness and are high-quality retailers that we see offer us a strong, reliable yield and the potential for capital growth going forward.
- We took profits on FMG, cutting our large holding in half after the stock went ex-dividend. We still like the stock and our iron ore exposure.
MONTHLY MARKET COMMENTARYThe All-Ordinaries Index added 1.10% in March, recovering some of the losses seen in the back end of February as bond yields (and the accompanying fear of rising rates) topped out in the short term. Source: Refinitiv Eikon Things began to heat up a little more in the US, as the latest round of stimulus coincided with the pullback in bond yields to buoy sentiment. For the month, the Dow Jones rose an impressive 6.62%, the S&P 500 added 4.24% and the NASDAQ carved out a 0.41% gain. The Nasdaq gain was meek in comparison to the other US indices, and significantly more volatile over the journey; the tech-heavy index fell 10.9% between February 12th and March 8th, before rebounding 6.4% through to the end of the month. Source: Refinitiv Eikon In a reversal of form from February, which saw the market fall as bond yields rose, it was the topping out of bond yields that caused the bounce through March. The FOMC meeting during the month, the rapid rise in bond yields that preceded it, and the $1.9 trillion stimulus – as well as the prospect of an infrastructure stimulus bill to follow, further stoked the fears of inflation and weighed on markets. But ultimately investors came to terms with the fact that interest rates will rise, and the markets subsequently calmed and resumed their upward trajectory. Source: Refinitiv Eikon The other major story for the month was that of a ship becoming stuck in the Suez Canal. The 400m-long Ever Given container ship blocked the Suez for six days in total, before it was freed thanks to a little digger and 14 tugboats, allowing the 400 ships stuck behind the blockage to continue on their voyage. Whilst the disruption was localised to the Suez, the impact on the global economy was widespread; 12% of global trade was affected, some US$60 billion of cargo; 1m barrels of oil and roughly 8% of global liquefied natural gas pass through the canal each day. Not to mention the yet to be calculated impact on already disrupted and distressed supply chains as demand surges post the pandemic.
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OTHER THINGS IN MARCH
- Vaccine rollout – More than 726m doses have been administered across 154 countries. Isreal is leading the way with 59% of their population having received at least one dose, followed by the UK with 48%, Chile with 37% and the US with 34%.
- One Year Anniversary - It was the anniversary of the pandemic market low. One year since the market fell from a high of 7197 to a low of 4402 (down 38.83%) in 22 trading days. Not the biggest correction in living history (that was the 54.2% fall in the GFC) but certainly one of the fastest. Up 58% since then.
- House Prices - Sydney properties are up 5.7% since October. New Zealand house prices are up 21.5% in the last year.
- Gold - Turned the corner at the back end of the month, threatening to break its 9-month downtrend.
- The ASX Banking Index – rose another 5.5% in March, backing up the 4.89% rise in February and the 4.06% rise in January. Up 14.77% in the 2021 calendar year.
- The ASX ALL-TECH Index – fell 2% through the month, with most of the damage done early as rising bond yields spooked growth investors. The index staged a nice comeback at the end of the month and into April as bond yields topped out.
- Iron ore – held steady for the month, finishing 0.8% higher.
- Oil – finished the month down 3.83%, though briefly fell into correction territory after suffering a 10% drop on demand concerns.
- Bitcoin – back up close to all-time highs around US$60,000.