How the portfolios performed over the September 2024 quarter
The September quarter delivered strong returns across all major asset classes despite periods of market volatility. Recession fears sparked sell-offs in global share markets, with sharp declines in early August and September, followed by strong recovery rallies as concerns eased. There was also a broadening of returns from shares, with previously underperforming areas showing strength. Value-style sectors, small companies, infrastructure, property, and Chinese shares all posted strong gains. Fixed interest (bond) markets saw falling bond yields in response to softer growth prospects, which resulted in rising bond prices and positive returns for investors. Economic headlines were dominated by the long-awaited rate cut from the US Federal Reserve and a series of stimulus measures announced by China’s central bank. All portfolios produced strong returns over the quarter.
Key Contributors
Australian credit manager Yarra Enhanced Income — which invests in fixed and floating corporate bonds from high-quality issuers such as the big four banks — outperformed its RBA Cash Rate benchmark, positively impacting the returns of the Partners Short Term, Medium Term, and Multi-Asset Income Portfolios.
An overweight allocation to global infrastructure contributed to the returns of the Partners Medium Term Portfolio. Our preferred active manager in this asset class — ClearBridge RARE Infrastructure Income — produced a strong quarter of outperformance thanks to portfolio positioning and was also a key contributor within the Partners Long Term and Multi-Asset Income Portfolios.
International shares saw returns broaden into previously overlooked sectors, including value-style sectors (e.g. undervalued companies from cyclical or mature sectors). Defensive, income-focused Talaria Global Equity benefited from this rotation, with its high-conviction portfolio delivering strong performance and contributing positively to the Partners Medium Term and Multi-Asset Income Portfolios.
Key Detractors
Manager selection in the international shares component of the Partners Medium Term and Long Term Portfolios negatively impacted performance. The dynamic-quality strategy GQG Partners Global Equity faced a challenging quarter due to its substantial exposure to the technology sector, which lagged the market after being a strong performer over the past two years.
Looking Ahead
We see the start of the current rate-cutting cycle by global central banks as a positive for risk assets. Asset classes such as infrastructure, property, small companies, and long-duration growth assets are well-positioned to benefit from falling interest rates and bond yields. Despite elevated valuations, robust earnings growth and resilient economic activity should continue to support international shares more broadly. However, risks remain. An economic slowdown accelerated due to rising unemployment or weakening consumer demand could challenge this outlook. In Australia, we remain cautious about earnings growth and broader economic conditions.
The upcoming US election will be a focal point for markets in the last quarter of 2024. While there are some clear differences in style and policy between the two candidates, most notably on fiscal, trade and immigration policy, we don’t see the election outcome having a material impact on markets. Our primary focus remains on the fundamentals of the US and global economy and the companies and debt securities we invest in. All these complex factors underscore the need for a careful and strategic approach to portfolio allocation.
Ironbark Advice is the sponsor of the Partners Portfolios. Ironbark Advice is comprised of the following wholly owned entities of Ironbark: Advice First Pty Ltd, Advisory Group Pty Ltd, ARTT Group Pty Ltd, Brisbane Financial Services Pty Ltd, Elevate Financial Solutions Pty Ltd, Emohruo Financial Services Pty Ltd, Invest Blue Armidale Pty Ltd, Invest Blue Brisbane Pty Ltd, Invest Blue Coffs Harbour Pty Ltd, Invest Blue Direct Pty Ltd, Invest Blue Gladstone Pty Ltd, Ogilvie Financial Services Pty Ltd, TDT (Tas) Pty Ltd, The Bravien Group Pty Ltd, Vintage Wealth Pty Ltd and Wainscott Financial Planning & Advice Pty Ltd, trading as Ironbark Advice are authorised representatives and credit representatives of Akumin Financial Planning Pty Limited, Australian Financial Services Licence and Australian Credit Licence No. 232706. Countrywide Advice Pty Ltd and GrowUp Financial Pty Ltd trading as Ironbark Advice are authorised representatives and credit representatives of Charter Financial Planning Limited, Australian Financial Services Licence and Australian Credit Licence No. 234665. GR & LC Thompson Pty Ltd trading as Ironbark Advice, is an authorised representative and credit representative of Hillross Financial Services Limited, Australian Financial Services Licence and Australian Credit Licence No. 232705. LFC Advice Pty Ltd (ABN 19 647 509 466) trading as Ironbark Advice, is a Corporate Authorised Representative of LFC Group Pty Ltd (ABN 35 644 576 965), AFSL 526600.