The latest Lonsec review of the large caps Australian equities funds sector has revealed a particular investment style did not dictate outperformance in 2010.
“A key factor influencing fund performance during 2010 was the disparity in returns delivered by small, medium and large cap stocks,” Lonsec investment analyst Andrew Scifo said.
In regard to fund flows, investors favoured passive managers with those products employing active strategies experiencing flat movement of flows.
“The increasing popularity of ETFs [exchange-traded funds] and availability of SMAs [separately managed accounts] has created increased competition for the traditional managed fund,” Scifo said.
In all, the performance of the sector as measured by the S&P/ASX300 Accumulation Index during 2010 was modest, providing investors with a gain of 1.9 per cent.
The resources sector performed well in the second half of the year but in all the small and mid cap sectors delivered stronger returns than large cap stocks.
“The market could best be described as lacking direction in 2010, with large deviations in month to month performance,” Scifo said.
“In the absence of a broad sharemarket rally, individual stock picking proved to be critically important, with global macro-economic factors contributing to sharemarket volatility during the year,” he added.
The research house assessed 36 active funds in its review of the sector.
Of this group 10 funds, including the Ausbil Australian Active Equity Fund, the Integrity Australian Share Fund, and the Solaris Core Australian Equity Fund were awarded the top rating of highly recommended.
Lonsec predicts the current events happening around the world will have a significant impact on Australian equities in 2011.
“The key macro factors likely to impact the Australian market this year include the recent events in Japan, impediments to US recovery, China’s inflationary pressures, ongoing European debt issues and the high Australian dollar for exporters,” Scifo said.
