Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
ASX halts five-session losing run to gain 0.4%
ASX shakes off sentiment, IT recovery, Charter Hall, Reliance deliver records
The ASX200 (ASX: XJO) shook off a rare negative week to open 0.4% higher on Monday. The IT and property sectors, up 1.7 and 0.9% respectively were the key contributors as reporting season continued.
Energy remains under pressure with Ampol (ASX: ALD) down 4.8% on a weaker earnings report and growing concern about a slowing economy.
Property manager Charter Hall (ASX: CHC) jumped over 6% after reporting a 20% increase in profit to $668 million, with profit growing at double that rate hitting $476 million.
Management have capitalised on the pandemic, acquiring another $6 billion in property, whilst benefitting from $4 billion in revaluations, which took total assets in their managed funds to $52 billion.
The groups on balance sheet property also increased 15% to $1.4 billion with management confirming they hold some $6.7 billion in investment capacity.
Shares in Spark Infrastructure (ASX:SKI) were 1.8% higher to $2.82 after the board agreed to accept KKR’s offer to take over the group at a price of $2.95 per share; the deal will still require regulatory approvals, hence the discount.
Reliance’s record, Ampol acquiring Z Energy, cinemas in trouble
Plumbing supplier Reliance Worldwide (ASX: RWC) fell 1.5% despite doubling profit to $188 million and delivering a record dividend.
The group has seen significant growth in every key market as stuck at home consumers have turned to renovations rather than travel.
The result was a 15% increase in revenue to $1.16 billion with the US up 31%, Europe 25% and Australia 18%, with management confident this is set to continue.
Ampol (ASX: ALD) shares fell 4.8% with management announcing the acquisition of New Zealand-based Z Energy, at the same time as delivering a strong earnings recovery.
Earnings improved to $340 million from $221 million, as revenue continued to recovery, jumped 22% on the back of improving volumes and margins at their refineries.
The company is well positioned following last year’s government support package and was able to more than double their dividend to 52 cents per share.
Finally, Event Hospitality & Entertainment (ASX:EVT) jumped 6.2% after narrowing its loss from $48 to $27 million, as the company was decimated by lockdowns.
US markets rally, China tech bottoms, Pfizer’s approval, economy weakens
The US markets are rallying ahead of this week’s Jackson Hole central bank summit with the growing consensus that any talk of tapering bond purchases will be undone by the Delta Variant.
The result was a 1.5% jump in the Nasdaq, a new record, along with a 0.6 and 0.8% gain for the Dow Jones and S&P 500.
Pfizer (NYSE: PFE) added 2.5% after receiving formal approval of their COVID-19 vaccine, this is on top of the emergency use at the current time. It is a big step forward towards mandatory vaccinations.
The US market appears to be weakening with the services PMI falling to 55.2 from 59.9 and manufacturing to 55.4. On the positive side home sales continue to surprise up 2%.
The Chinese government crackdown on big tech appears in its infancy but shares are turning the corner with the Shanghai Composite improving 1.5% and Tencent (HKG:0700) adding 2.0%.
