Page 6 - 2020 PSK Portfolio - Client Name

Market commentary

Below is a summary and highlights from the movements this quarter and major changes to
some of the key asset areas:

Australian equities

Australian shares underperformed global markets during the June quarter, with the S&P/ASX
300 Accumulation Index returning 0.9% over three months. As in the previous quarter, utilities
(7.3%) emerged as the top performing sector, followed by energy (5.1%) and financials (2.3%).
The worst performers were materials (-3.1%), health care (-1.9%) and consumer discretionary
(-1.6%).
International equities

Global equity markets posted gains during the quarter, recovering from the first quarter’s
losses. The MSCI World ex Australia Accumulation Index returned 3.0% and 5.1% in
unhedged and hedged Australian dollar terms, respectively.
Unhedged returns were reduced as a result of the appreciation of the Australian dollar.
Regionally, Japan and emerging markets posted the highest return for the quarter of 4.7%,
followed by the UK (4.1%). Europe (ex UK) posted the lowest return of 0.2% (all returns are
in unhedged A$ terms).

Property

The Australian listed property sector outperformed the broader Australian share market by
8.3%, with the S&P/ASX300 Property Accumulation Index returning 9.2% for the June quarter.

Australian listed property outperformed the global listed property which returned 8.0% for the
second quarter as measured by the UBS Global Investors ex-Australia Index (hedged).
Unlisted property, as measured by the Mercer/IPD Australian Pooled Property Fund Index
returned 2.5% over the quarter.

Looking forward

We expect that global growth continues on its path to recovery, although downside risk
remains a concern. In particular, geopolitical risks are elevated in a number of regions. Highly
accommodative monetary policy remains the status quo in most advanced economies, which
has seen many investors transition into riskier assets in the search of higher returning
investments.

Domestically, low interest rates are helping to foster demand, although it remains to be seen
the extent to which this will offset the anticipated substantial decline in mining investment.
GDP growth is expected by many to be a little below trend over the next 12 months.

Chris Lioutas - PSK Chief Investment Officer