Australian domestic equities delivered strong returns in the first quarter of 2017 despite weakness in January, according to Mercer.
The S&P/ASX 300 index grew 4.7 per cent over the first three months despite a -0.8 per cent movement in January, Mercer’s March 2017 Sector Surveys found.
The best performing sector of the market was the S&P/ASX 50 Accumulation index, which returned 5.3 per cent for the quarter, while the S&P/ASX Small Ords index delivered the lowest performance with 1.5 per cent, the survey said.
In industry, healthcare and utilities performed the best, returning 14.7 and 10.7 per cent respectively, while the telecom sector’s -4.5 per cent was the worst, Mercer said.
Mercer’s data found that the median Australian shares manager “performed broadly in line with the index over the quarter” but is 0.6 per cent behind the index for the year to March.
“Over the longer term periods of three and five years, the median manager has outperformed by 0.8 per cent and 1.3 per cent respectively,” the company said.
Mercer manager research principal Clare Armstrong said that the year “still belongs to value managers”, noting some had delivered returns of 26 per cent compared to the market’s 20 per cent gains, but added that many high conviction stock pickers had climbed to the top of the performance tables in recent months.
Small cap managers continue to face a “tough operating environment”, Ms Armstrong said.
“A number of large cap investors went searching for earnings growth down in the small cap space and have since retreated, putting pressure on share prices in the absence of any other newsflow,” she said.