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Growth outstrips value: Frontier

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Growth-focused equities managers outshone value managers by a considerable margin during the final quarter of the financial year, according to Frontier Advisors.

The investment consultancy has released its analysis on the performance of equities fund managers across the June quarter. 

It found growth-focussed managers performed better, particularly across international markets, with managers holding technology-related stocks faring relatively better through COVID-19. 

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With the ASX 300 up 16.8 per cent for the quarter, individual stock selection was reported to have had a marked impact on manager performance in Australia, with exposure to technology, energy and consumer discretionary sectors each delivering double-digit performance. 

Flipping from the previous quarter, healthcare, consumer staples and utilities were said to provide a drag on performance for the period despite being among the best performers for the full 12 months.

Frontier senior consultant Simone Gavin said: “Growth managers continued to outperform core and value managers in relative terms, although this difference was less significant in the March quarter.” 

“Active managers broadly provided an excess return over the benchmark for investors with cyclical stocks rallying and defensives generally underperforming.”

Active management paid off for managers investing in a growth style; however most core and value managers across international portfolios underperformed, Frontier noted. 

Active management in emerging markets produced mixed results. 

“[High-growth], technology-focussed managers continued to generate extremely strong returns for the quarter with a small number returning in excess of 40 per cent for the period,” Mr Gavin said. 

“Broadly, we saw global growth managers achieve a mean over 10 per cent for the quarter compared with a 2 per cent loss average for their value manager counterparts.”

Globally the performance across sectors was quite different to Australia: only the technology, consumer discretionary and material sectors registered a positive result for the quarter to June.

 

Growth outstrips value: Frontier
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