Listed property trusts

The S&P/ASX 300 A-REIT Accumulation Index had another stellar quarter, gaining 16.2%. This stellar performance was driven mainly by the share price performance of the largest security in the A-REIT index, Goodman Group, which return 33.6% for the quarter. Goodman has been swept up in the AI theme, with the company increasing its focus on data centre assets over the last 12 months or so.

Interestingly, while Q4’s REIT returns seem to have been mainly driven by declining bond yields, this was not a factor this quarter, as Australian yields were virtually unchanged over the quarter.

International shares

International markets had an exceptional quarter. On a currency unhedged basis, international shares gained 13.8%. During this quarter, the AUD helped unhedged Australia investors, as the AUD depreciated by around 4% against the U.S. dollar.

From a style perspective, all styles were positive for the quarter, with Momentum being an absolute standout. The worst performing styles were Small Caps and Equal Weight, which both still produced a solid return of 7.4%.

In the U.S., resilient economic data helped investors get into the Spring spirit during the first quarter of 2024. The U.S. economy expanded by more than expected during Q4 2023, while survey data from the composite Purchasing Managers’ Index remained firmly in expansionary territory, boosting investor sentiment.

However, the best performing market of the quarter was Japan. The Topix ended up around 18% for the quarter, despite the Bank of Japan beginning normalisation of its monetary policy in March.

Fixed interest

The December quarter produced small positive returns which were pretty much in line with expectations. The main Australian Fixed Interest index, the Bloomberg AusBond Composite 0+ Years Index rose by 1.0% for the quarter.

Australian yields very marginally increased over the quarter, with the short end (3-year) of the curve rising by 0.02%. At the long end of the curve, the 10-year yield rose by 0.01%.

The yield to maturity at the quarter’s end was around 4.3% for Australian Bonds, with the index having around 5 years duration. This makes most mainstream Australian Fixed Interest funds significantly more attractive than they were at the start of 2022, when the yield to maturity of the Index was around 1.7% with approximately 5.7 years duration.

Cash

The Cash benchmark, the Bloomberg AusBond Bank Bill Index, was up 1.1% for the March quarter. At both Board meetings during the quarter, the RBA maintained its official cash rate at 4.35%. This is the highest official cash rate since Q4 2011.

Historical one and ten year returns

The chart below compares one and ten year returns for the major asset classes, as at 30 March 2024.