How the portfolios performed over the March 2024 quarter
The late surge in global share markets last year carried over into the first quarter of 2024, with investors encouraged by robust United States (US) company earnings and economic data that further supported the prospect of a soft landing scenario. The quarter was more challenging for fixed interest markets, with stickier inflation and resilient economic activity pushing back the timing and pace of central bank rate cuts to later this year. This culminated in an uplift in yields and mixed returns for bonds. All portfolios produced strong positive returns over the quarter.
Key Contributors
Manager selection contributed to outperformance within the Partners Short Term Portfolio, with Australian short-term credit (corporate bond) managers Realm Short Term Income and Daintree Core Income delivering solid results.
A positive half-year earnings season for many of the high-quality Australian businesses owned through the Evidentia Quality Core Portfolio helped the direct share strategy post another strong quarter, outpacing the S&P/ASX 200 Index and contributing positively to returns for the Partners Medium Term, Long Term, and Multi-Asset Income Portfolios.
Dynamic global share manager GQG Global Partners Equity — held in the Partners Medium and Long Term Portfolios — posted an impressive quarterly return of over 24% thanks to its underweight defensive positioning and targeted exposure to some of the high-flying ‘Magnificent 7’ US companies.
Having zero targeted exposure to global property, an asset class that came under further pressure as US Treasury yields rose, also contributed positively to excess returns.
Key Detractors
Within the Partners Medium Term and Multi-Asset Income Portfolios, income-focused manager Talaria Global Equity lagged global shares. A significant cash position and lack of exposure to the technology sector weighed on relative performance.
Looking Ahead
Central banks worldwide remain on hold but are indicating a readiness to lower rates. While the ongoing debate about the timing and pace of these anticipated rate cuts is expected to influence investor sentiment and market volatility in the near term, the anticipated direction of the rate adjustments is clear.
Solid economic growth, declining inflation, and the prospect of rate cuts this year should offer a favourable environment for risk assets. However, with valuations stretched and credit spreads (the compensation bondholders receive for taking on risk) tight in some pockets of the market, an optimistic but selective approach is warranted when seeking opportunities.
In light of recent developments, we are adjusting the portfolio strategies towards a stronger global economy with a diminished risk of recession, targeting areas offering fairer valuations like global small companies and high-quality Australian credit.
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.