Deeming of ABPs: impact and opportunities?

 Download Deeming Fact Sheet

Q: How do Centrelink and the Department of Veterans’ Affairs (DVA) currently assess account based pensions for the purpose of the income test?

An annual ‘income-free’ amount, also known as a ‘deduction amount’ applies to assets-tested account-based income streams. The ‘deduction amount’ is determined by a number of factors, such as your original pension account value, any lump sum payments made to you on top of your regular pension payments, and your life expectancy at the time you started the pension.

Generally speaking, only the actual annual income drawn in excess of your ‘deduction amount’ is captured for Centrelink assessment. Therefore, if your actual annual income payments are less than your ‘deduction amount’, your account based pension will not have an impact on the income test.

Q: If I am not eligible for an income support payment or won’t be commencing an account based pension until after 1 January 2015, how will the new rules impact me?

When you become eligible for an income support payment, or commence an account based pension after 1 January 2015, the ‘deeming rules’ will apply for the income test rather than the ‘deduction amount’ to determine your income for Centrelink/DVA purposes. ‘Deeming’ means that Centrelink will ‘assume’ a set level of income is paid to you from your pension, regardless of what you are drawing per annum. This means that the ‘income’ for Centrelink/DVA purposes could be more or less than the income payments you actually receive from your account based pension.

As at 1 July 2014, the deeming rates and thresholds are:

Deeming Rates Single Couple
2% First $48,000 of financial investments First $79,600 of financial investments
3.5% Above $48,000 Above $79,600

Other financial investments, such as bank accounts, term deposits, and shares are also income tested in this way.

Q: Will these changes impact Centrelink and DVA income support recipients?

Yes, this new income-test will be applied by both Centrelink and DVA. It will alter the income test assessment for people receiving an ‘income support payment’. An income support payment includes:

  • Newstart Allowance
  • Partner Allowance
  • Parenting Payments
  • Parenting Allowance
  • Age Pension
  • Disability Support Pension
  • Wife Pension
  • Carer Payment

You may also be impacted if you receive a Low Income Health Care Card and have commenced an account based pension.[1]

Q: So, if I have an existing account based pension and I am receiving an income support payment as at 1 January 2015, how will I be assessed?

If you have commenced an account based pension before 1 January 2015, and  are receiving an income support payment from Centrelink as at 1 January 2015, you will be eligible for the ‘grandfathering rules’. That is, you will continue to be assessed under the pre-1 January 2015 rules (ie nominated pension less deduction amount).

Q: If I am eligible for the ‘grandfathering’, does this mean that the new rules will never affect me and my income-support assessment?

No, this does not guarantee that you will not become subject to the new rules in the future. There are a number of ‘trigger events’ which could result in your account based pension being assessed under the new deeming rules. Therefore, it is very important that before you make any changes to your investments or financial circumstances, that you contact your financial adviser to understand what the impact will be on your Centrelink/DVA position.

These ‘trigger events’ include, but are not limited to:

  • becoming ineligible for income support payment for a period, and regaining entitlement in the future
  • switching from one account based pension product to another
  • consolidating a range of account based pension and superannuation accounts
  • the account based pension owner passes away

To understand the implications for yourself, speak to your us on 02 9875 2966.


[1] The Government is also proposing to change the way account based pensions are assessed for eligibility of  the Commonwealth Seniors Health Card. You should speak to your financial adviser to understand these changes.

ThreeSixty Research Market Update October 2014




The Pulse

  • Continuing geopolitical tensions in Ukraine and the Middle East and concerns over the Ebola virus dominate global events.

  • Stronger US dollar due to global currency realignments in September.

  • Further expansion of US economic growth provides a source of stability in 2015.

  • Eurozone data remains weak, impacted by the ongoing crisis in the Ukraine and the Middle East.

  • Stabilising Chinese economy, although a weaker property sector.

  • Australian consumer and business credit growth grinds higher coupled with a slide in the AUD.

Global economies

Despite geopolitical tensions, and weak European data, global economic growth continues at a moderate pace. The IMF recently lowered its global growth forecast for 2014 to 3.3% and 3.8% in 2015 and indicated that the Eurozone and Japan provide considerable headwinds.

It has been a volatile month for global equity markets, impacted by the ongoing geopolitical tensions in the Ukraine and the Middle East. The political protests in Hong Kong and growing concerns over the spread of the Ebola virus have also been of influence.

The US economy continues its upward trend, with Q2 GDP data increasing to 4.6%, from 4.2%. Fixed business investment was a key feature (with a 9.7% increase), and manufacturing data has continued to improve.

Chinese growth remained sluggish in September but has generally been in line with objectives. A weak property market continues to be a challenge in the short term.

Eurozone manufacturing data remains weak with inflation data at marginally lower levels. The European Central Bank (ECB) has provided stimulus to the lagging Eurozone economies, with further measures expected.

There has been continued improvement in Australian business and consumer confidence, albeit from low levels, with further momentum across the residential construction sector.

The RBA kept the cash rate at 2.5% in October and it is anticipated that interest rates will remain at this level well into 2015.


Over to the US, we have seen a stronger US dollar due to a continued increase in economic growth, the prospect of increased interest rates, the weakness in the Eurozone and Japan and the weakness in commodity prices.

The services sector continued to expand, with a rise in new business volumes. The private sector has been driven by weaker energy prices, with capital expenditures improving over recent months.

Stronger non-farm payrolls data resulted in the unemployment rate declining to 5.9%, from 6.1% in August. Job creation has increased significantly from August; however flat hourly earnings indicate there is little to no wage inflation.

The August CPI declined marginally with the annual core CPI at 1.7%.

The US Q3 2014 corporate earnings reporting season has commenced, with expectation that earnings will grow by 4.4% in Q3 yoy – largely due to the earnings growth in the Telcos, Materials, Healthcare and Financial sectors.

Expectations are that the Federal Reserve will scale back quantitative easing (QE3) in October. Federal Reserve officials stressed ‘patience’ in waiting to raise interest rates, concerned about weaker foreign economic growth and the stronger USD.


Heading over to Europe, economic data remains weak; impacted by the geopolitical tensions in the Middle East and the Ukraine.

The Markit UK Manufacturing PMI recorded its lowest level since April 2013.  Growth in new orders slowed for a third straight month, largely due to the strength of the sterling and weak demand in Europe.

Germany and France recorded weaker manufacturing PMI data – a disappointment given these core Eurozone economies showed substantial growth earlier in the year.

An inadequate monetary policy easing has put increased pressure on the ECB to head off the threat of falling prices as annual inflation fell to 0.3% (from 0.4% in August). The unemployment rate across the Eurozone remained unchanged at 11.5%.

The rapid growth in the UK services sector eased slightly in September. Despite the slower economic conditions, the Bank of England has forecast that the British economy will grow by 3.5% this year, putting it on track to be the world’s fastest-growing, major advanced economy. 


Over in China, manufacturing growth stabilised in September.

It is anticipated that the Chinese government’s monetary and fiscal policies will remain accommodative until there is a more sustained recovery in economic activity.  

The August core inflation at 2.0% yoy is significantly below the targeted 3.5%, with the likelihood that the government will undertake additional stimulus measures.

Manufacturing PMI data remained unchanged. The factory sector showed signs of stabilisation; however, the property sector remains a source of concern for the economy.

Interestingly, new export orders (a gauge of external demand) expanded to anear five year-high of 54.5, though domestic demand appeared soft.

Asia region

The Japanese economy continues its slow move forward, with an increase in manufacturing activity in Q3. To continue its growth trend, the government will need to assess consumer spending and wage growth before making any further increases to the sales tax again in 2015.

Core inflation eased to 3.1% in August from 3.3% in July. However, excluding the impact from the sales tax increase, the core CPI is only 1.3%, well below the 2% inflation target.

The continued weakness in the Japanese Yen and the impact on corporate earnings should provide considerable tailwinds for the Japanese equity market through 2015.

The Hong Kong economy has been slightly impacted by the tension between the Chinese government and student protestors over the directive given by Beijing for the Hong Kong elections in 2018.


Back home, the Australian economy enjoyed only moderate growth; adjusting to the decline in investment spending in the resources sector. The RBA expects that growth will remain slightly below trend in the short term.

Inflation is expected to be in line with the 2-3% target over the next two years. The RBA left the cash rate unchanged at 2.5% at its October meeting.

Monetary policy remains accommodative and interest rates remain low. The AUD declined in September, largely due to the strengthening US dollar – but still remains high by historical standards, particularly given the further declines in key commodity prices in recent months.

The job market appears optimistic, despite the unemployment rate increasing to 6.1% in September. The expectation is that the labour market is gradually improving and the official jobless rate will stabilise at just above 6% for the next few quarters before decreasing. The upward trend in job ads continues to suggest solid employment growth in coming quarters.

House price increases have become a concern for the RBA. Specific focus is on the investor market in Sydney and Melbourne where loan approvals are 90% higher than two years ago in NSW and 50% higher in Victoria. Interestingly, average clearance rates across Sydney and Melbourne remain at 78%.

The AiG Performance of Construction Index (PCI) was strong in September – a nine year high due to an increase in house and apartment construction. The industry is expected to continue this trend due to a growing pipeline of residential work.


Equity markets

  • Global equity markets were extremely mixed in September, with considerable country divergence.

  • The Japanese Nikkei Index had a strong month, up 4.9%.

  • The Hong Kong Hang Seng Index was down -7.3%.

  • The US Dow Jones Equity Index was relatively flat (-0.3%).

  • UK (-2.9%) and Germany (0%) reflected the divergence in performances across the Eurozone.

  • Australia was down sharply with the S&P/ASX All Ordinaries Index down -5.8% in the month.

Australian equities

Following the recent positive gains, the S&P/ASX 300 Accumulation Index in September had an extremely disappointing month, declining by -5.37%. The Australian equity market was impacted by weaker commodity prices, the prospect of the completion of the dial down of the US Federal Reserve’s QE3, the prospect of a continued stronger US dollar and a weaker AUD, and global investors withdrawing funds from the higher yielding securities such as banks and A-REITs. The S&P/ASX 300 Industrials Accumulation Index was also disappointing in September, down -5.07%.

The broader S&P/ASX All Ordinaries Index was down -5.8% in September.

For the 12 months to 30 September 2014, the S&P/ASX 300 Accumulation Index posted a solid gain of 5.73%; while the large market caps, represented by the S&P/ASX 50 Accumulation Index, had a similar performance, returning 5.94%.

Interestingly, after strong performances across all sectors in August, sector performances were significantly lower in September. Financials (ex-A-REITs), Materials and Energy were the worst performing sectors, declining by -6.5%, -6.4% and -5.7%, respectively. Although all sectors declined, Healthcare was the best relative performer, down -0.1%.

Big movers this month

Going up:      All sectors were down                     

Going Down:  Financials (ex-A-REITs): -6.5%

                   Materials: -6.4%

                   Energy:  -5.7%

Global equities

The MSCI World ex-Australia (unhedged) Index posted a strong positive return in September, up 4.3%. However, the MSCI World ex-Australia (hedged) Index was down -1%.

Continuing the recent pattern, the global indices recorded extremely divergent performance for the month.

The US S&P 500 Index was down -1.55% in September.

The Euro 100 Index was a strong relative equity market performer in September, up 1.3%.

The Japanese Nikkei Index was the standout performer across global markets in September, up 4.9%.

Over the 12 months to 30 September 2014, the S&P 500 Index was up 17.29%, the Dow Jones up 12.6%, the Nikkei up 11.9%, while the Hong Kong Hang Seng, the Australian All Ordinaries and the UK FTSE were up 0.3%, 1.5% and 2.5%, respectively.


In September, the S&P/ASX 300 A-REIT Accumulation Index was down -5.2%, marginally outperforming the broader Australian market.

On a 12 month rolling basis, Australian listed property was up 12.28%, which significantly outperformed the ASX300 Accumulation Index.

Over the 3, 5 and 7 year periods, global REITs outperformed Australian REITs (A-REITs) and was only marginally lower compared to A-REITs over the 1 year. Global property, as represented by the FTSE EPRA/NAREIT Index, was up 12% over the rolling one year period.

Fixed interest

US 10-year bond yields were up 6.30% in September, closing the month at 2.49%. Australian 10-year bond yields were up 6% and closed the month at 3.48%.

For September, the UBS Composite Bond 0+YR Index was up 1.01%. On a 12 month basis, Australian bonds returned 6.02%, underperforming unhedged global bonds.

Global bonds (unhedged), as measured by the Barclays Capital Global Aggregate Index, posted positive returns for the one year period ended 30 September 2014, up 8.13%. The hedged index posted a strong one year gain of 8.11%.

Australian dollar

In September, the Australian Dollar (AUD) was down relative to all the major international currencies. The AUD declined by 6.3% against the US Dollar (USD), to finish the month at 87.5 US cents. Over the past 12 months, the AUD has declined by -6.17% against the USD.

The AUD declined against the Euro, down -2.57% in September. On a 12 month basis, the AUD was up 0.46% against the Euro.

Against the Japanese Yen, the AUD was down -1.32% in September. On a 12 month basis, the AUD was up 4.74% against the Yen.

Against the British pound, the AUD was down -4.07% in September. On a 12 month basis, the AUD was down -6.34% relative to the British pound.


The information contained in this Market Update is current as at 8/10/2014 and is prepared by GWM Adviser Services Limited ABN 96 002 071749 trading as ThreeSixty Research, registered office 105-153 Miller Street North Sydney NSW 2060. This company is a member of the National group of companies.

Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs. 

Past performance is not a reliable indicator of future performance.

Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.

Economic Update April 2014

Parker reviews events in markets during March. He discusses how improving US economic data means the US Federal Reserve can continue winding back its quantitative easing program, why the European Central Bank, on the other hand, may need to do more to stimulate growth, why the Reserve Bank of Australia is likely to keep interest rates on hold, and how MLC’s multi-asset portfolios are positioned.


2013: The year in review


Strategies for a comfortable retirement

Most of us have retirement dreams where we can live comfortably, travel widely and spend time pursuing our interests. The key to achieving them is to have a clear retirement plan. An early start on it will have less financial impact on your lifestyle today while buying you time to build more savings for the future.

Because we’re living longer, retirement could last for over 20 years, so having enough income for your desired lifestyle is paramount.

According to the ASFA Retirement Standard, to fund a comfortable retirement, a home-owning couple will need $57,195 a year or $33,120 for a modest lifestyle.1 A home-owning single will need $41,830 a year for a comfortable retirement or $23,032 for a modest lifestyle.

The capital you’d need to generate that income will depend on a range of factors. These include your own savings, the impact of financial markets on your savings, and whether you’re eligible for a Part Government Age Pension to supplement your income.  

What’s a comfortable retirement?

It usually means having enough income to be involved in a broad range of leisure and recreational activities and to live comfortably. It takes into account the cost of household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, domestic travel and occasional international holidays.   

A modest retirement is considered to be better than one the Aged Pension could provide but with far fewer lifestyle choices than the comfortable option.

Key considerations include:

  • Timing

    Goals should be set roughly 10-15 years before you retire so you can start any strategies as early as possible with minimal financial impact today. Consider how many years from now and how old you’d prefer to be when you retire. If you have a partner, will they be retiring at the same time?

  • Funding

    Will you have enough to retire on? Try using a retirement calculator 2 to make some rough calculations on what superannuation savings you may end up with based on your current level of contributions. Consider the difference any voluntary contributions could have, what impact career breaks may have and how long your savings may last.  


Strategies in the early years of planning for retirement include:

  • Consolidating your super accounts

    You may be able to save money in fees by combining multiple funds into one account.

  • Salary sacrificing

    This is where you make voluntary pre-tax super contributions as part of an agreed salary packaging arrangement with your employer.3 These contributions are taxed at 15% rather than your marginal tax rate which could be up to 46.5%.

    You could salary sacrifice a dollar amount or a percentage of your income. The earlier you start, the smaller the amounts that need to be sacrificed and the lesser the impact on your take home pay.

  • Using co-contributions

    If you earn less than $48,516 4 a year, the Government may add to the contributions you make to your super.5 The amount of the Government co-contribution will depend on your income and how much you contribute to super from your after-tax income.

    For 2013/2014, the maximum co-contribution you can receive is $500 (for those earning $33,516 or less and contributing $1,000).

Strategies closer to retirement could include:

  • Transitioning to retirement (TTR)

    A TTR strategy can be a tax-effective way for older workers to boost their nest egg without reducing their current income.

    To benefit from this strategy, you need to be 55 years or over and arrange to make salary sacrifice or personal deductible super contributions.

    To maintain your income, you invest some of your existing super in a TTR pension and then draw down income from the TTR pension to replace the salary that’s been sacrificed to super.3

  • Clearing your debts

    Aim to clear major debts like mortgages before you retire.

  • Making decisions about location

    If you think you want to retire to the coast or the country, consider likely timing and costs. Consider renting in your desired location first to ensure it provides what you expect. If you intend to downsize your family home and contribute some of the proceeds to super make sure you’ll still be legally able to contribute at that time.

It’s also worth seeing a financial planner to help you work out a timetable, recommend any super savings strategies and highlight potential social security entitlements.

As always, consider any consequences, such as exit fees or loss of insurance held, before making changes to your super.

  1. Association of Super Funds of Australia (ASFA) Retirement Standard July, 2013


  3. The concessional contribution cap for 2013/14 is $25,000 for taxpayers aged 58 or under on 30 June 2013. Taxpayers aged 59 or over on 30 June 2013 have a concessional contribution cap of $35,000.

  4. Includes assessable income, reportable fringe benefits and reportable employer super contributions.

  5. Subject to conditions of eligibility: see

August economic update with Ben McCaw


What’s the outlook for Australia’s housing market?


You Talk – pros and cons of packaging childcare

Brooke asks: I have the option to package childcare through my employer or pay for it at an approved centre. What are the pros and cons?

Hi Brooke.

If you send your child to approved care, the Government will generally pay or reimburse you for at least 50% of up to $15,000 in fees through the Child Care Benefit and/or Child Care Rebate.

Conversely, if the employer provided child care is located on the business premises, you can pay the cost of care from your pre-tax salary and income tax and fringe benefits tax will generally not be payable.

Financially, the best option for you will depend on:

  • the marginal tax rate you pay on your income

  • the daily fee each centre charges, and

  • the number of days care is required..

As a rule of thumb, approved care will be more cost-effective at all marginal tax rates, so long as the daily fee is the same (or similar) to the employer provided centre and the total fees paid are less than $15,000 pa.

However, employer provided care could be more cost-effective if the total fees payable exceed $15,000 pa for your child and you pay tax at a high marginal rate. It could also be attractive if you pay tax at the top rate of 46.5% and the fees are less at the employer provided centre.

You should do your sums to see which will cost you less. But make sure you also consider other factors such as location, convenience and reputation.

ThreeSixty Research Market Update – May 2013



Global economies

Last month global economic data on world trade and industrial output produced relatively underwhelming results. However, they were an improvement on the virtually idle results seen throughout much of 2012.

While business surveys in the advanced economies showed a lift in sentiment over future output, emerging markets still remained a key contributor to global growth.

US Economy

In the US, Gross Domestic Product (GDP) results for the March quarter grew by 0.6%. This result was much stronger than the growth seen in the December quarter and reflected a pick-up in consumer consumption, as well as a faster rate of inventory accumulation.

Consumer consumption grew at its fastest pace in over two years, despite the tax increases that came into effect at the start of the year. This was a result of the pick-up in services consumption – which recorded its fastest growth rate since 2005.

The US housing sector continues to be a stand-out, growing by 3.0% in the March quarter to be 13% higher than this time last year. And while the level of activity still remains very low by historical standards, it’s still one of the most rapidly growing sectors.

In the March quarter US inflation remained soft, with core inflation results only slightly increasing, recording an annual rate of 1.3%.

Over to employment and the labour market continues to recover slowly, regardless of a weak March employment report. The unemployment rate fell again, this time by 0.1% to 7.6%, however these results largely reflected a fall in the participation rate.

US net exports recorded their largest decline since the December quarter in 2011. However, imports recovered strongly last month, rising 1.3%, their fastest quarterly growth rate in two and half years.


Over to Europe and the ongoing issues in Cyprus eroded market confidence in late March, and the decision to “bail-in” depositors has only added to the sentiment.

In response to the uncertainty in Europe, the European Central Bank (ECB) kept monetary policy unchanged in April. Preliminary inflationary data from the Eurozone forecast annual inflation to be 1.2% in April, down from 1.7% in March.

 Unemployment in the Eurozone area continued to increase in March, as the seasonally-adjusted figures showed the unemployment rate at 12.1%, up from 12.0% in February. Compared with a year ago, the unemployment rate has increased in 19 member states and fallen in eight.

Another potential area of concern for the Eurozone is the decrease in business investment seen in the fourth quarter of 2012, with the business investment rate recorded at 19.7%. This result was compared to 20% in the third quarter of 2012.

The February trade estimates for the Eurozone area in comparison with the rest of the world, gave a €10.4 billion surplus, compared with the €1.3 billion surplus in February 2012.


The Chinese economy grew 1.6% in the March quarter, which was a 7.7% increase on the same period last year. This result is softer than the 8% expected and casts some doubt over expectations for a robust recovery in the first half of the year. Official data showed that growth over the last 12 months was primarily driven by consumption (contributing 4.3%) followed by investment (2.3%).

Over to consumer consumption and retail sales growth picked up slightly in March, but remained relatively subdued at 12.6% over the year.

Chinese industrial production eased further in March, dipping below 9% for the first time since last August. This is in contrast to the timelier manufacturing Purchasing Managers Index (PMI) which recorded marginal improvements in the month. The official PMI rose to 50.9 in March (up from 50.1), driven by a pick up in production. Net exports also made their first meaningful contribution to the economy in three quarters.

On a more positive note, inflationary pressures have so far been kept within acceptable levels, meaning that authorities may have more scope to further stimulate the economy in the second half of the year if necessary. Year-ending consumer price index growth eased to 2.1% in March (from 3.2% in February), helping to allay concerns that authorities would need to tighten economic policies sooner rather than later. Lower inflation was driven mostly by an easing in food costs – following the traditional spike during Lunar New Year – although non-food inflation also eased slightly.

Asian region

Monetary policy has continued to dominate headlines in Japan, following the decision by the Bank of Japan (BoJ) in early April to dramatically loosen monetary policy. The BoJ said it would expand its balance sheet by purchasing longer-term debt and more exotic securities like exchange traded funds. The new purchases – made at an annual pace of ¥60-70 trillion – will double the BoJ’s monetary base over a two-year period.

The purpose of the stimulus is to drive up annual inflation to a target of 2%. The need for the stimulus was further highlighted by the 0.5% fall in Japan’s consumer price index in March.


With all eyes on the May Federal Budget, and any changes to fiscal policy prior to the September election, attention has momentarily diverted to monetary policy following the release of the March quarter consumer price index.

Against expectations of a 0.6% rise for the March quarter, the consumer price index only rose 0.4% for an annual pace of 2.5%. This is well within the Reserve Bank of Australia’s (RBA) target range of 2-3% for annual inflation, which provided room for the RBA to cut the cash rate by 0.25% to 2.75% at its May meeting.

Meanwhile, domestic unemployment rose to 5.6% in March, from 5.4% in February, reversing the surprise surge in employment numbers in February. This rate is the highest level recorded in more than three years.

Business confidence improved significantly in the March quarter, and produced the first quarterly rise in sentiment since December 2011 – however confidence still remains below long-run average levels. Much of the improvement in confidence reflects the lessening concerns surrounding a number of external risks, including the US fiscal cliff, a hard landing in China and the reduced risk of a further European crisis.

Business conditions are still clearly signalling below trend growth, as the NAB quarterly business survey returned a domestic demand growth of 2¼% in the March quarter. Of more concern, forward indicators of demand remain subdued – notably forward orders, stocks and capital expenditure – suggesting activity will soften into the June quarter.

Australian Equities

 Australian Equities

The Australian market rebounded in April with the S&P/ASX 300 Accumulation Index posting 4.3%, following a negative month in March.

The S&P/ASX All Ordinaries Index continues to perform strongly over the rolling 12 month period to April 2013 returning 15.7%.

For the 12 months to April, the S&P/ASX 300 Accumulation Index posted strong gains of 22.7%, while the large market caps comprising the S&P/ASX 50 Accumulation Index performed even better returning 27.7%.

The mixed performance across sectors persisted in April with the traditionally defensive sectors continuing their strong returns over the past year.

The resources-based Materials and Energy sectors posted another negative month, returning -4.4% and -1.7% respectively, and are the only two sectors to have negative returns over a rolling 12 month period.

The Telecommunications and Financials (ex-Property) sectors were the better performing sectors, while Property and Consumer Staples also had solid returns in April. 

Australian Equities - sectors
Note these are accumulation indices.

Big movers this month

Going up – Telecommunications +10.6%

Going down – Materials -4.4%

Equity markets

The US Dow Jones reached another all-time high in April, as indications of a recovering US economy continue to surface.

The Japanese Nikkei Index remains the global equity market standout continuing its strong performance in recent months.

Global equities

Global equities

The MSCI World (ex-Australia) Accumulation Index was up 2.3% in April continuing its positive run for the year.

The major global markets posted another month of positive returns during April which saw US markets reaching all-time highs. The Dow Jones continued higher in April and is up 12.3% on a rolling 12 month basis.

The Japanese Nikkei Index continues to be the equity market standout, returning an incredible 11.8% in April. Over a rolling 12 month period, the Nikkei has returned a stellar 45.6%.

Even European equity markets, who have been recent laggards, were positive during April with gains seen throughout the region.



In April, the S&P/ASX 300 A-REIT Accumulation Index rebounded strongly from its fall in March, posting 8.2% and outperforming the ASX 300 Accumulation Index. On a 12 month rolling basis, property continues to outperform the ASX 300 Accumulation Index as investors continue to be attracted to the relative attractive yield produced by the sector. 

On a one and three year time horizon, the Australian listed property sector continues to outperform global property. However, global property has still marginally outperformed over the five year and seven year time periods.

Fixed interest

Fixed interest

Australian bonds rebounded strongly in April following a negative performance in March, with the UBS Composite Bond All Maturities Index posting 1.5%.

In comparison to global bonds, currency movement determined relative performance with Australian fixed interest. In April, hedged global bonds, as measured by the Barclays Global Aggregate Index Hedged, posted a 1.3% gain, while the unhedged equivalent returned 1.8%.

On a 12 month basis, Australian bonds performed strongly relative to unhedged global bonds, while hedged global bonds also performed strongly.

Australian dollar (AUD)

In April, the Australian Dollar (AUD) continued to strengthen against the Yen, and was up 3.0% at the end of the month. The Japanese government’s easy monetary policy has been reflective of a weakening currency, which has resulted in the AUD gaining 21.3% over a rolling 12 month period.

 However, with respect to other major currencies, the AUD didn’t perform as well, falling -3.1% against the Euro and -0.4% against the USD, with the AUD depreciating to USD1.037.

While the AUD also fell against the British Pound, down -2.6% last month, over the rolling 12 month period it is up 3.9%.

The information contained in this Market Update is current as at 08/05/2013 and is prepared by GWM Adviser Services Limited ABN 96 002 071749 trading as ThreeSixty, registered office 150-153 Miller Street North Sydney NSW 2060. This company is a member of the National group of companies.

Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs. 

Past performance is not a reliable indicator of future performance.

Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.

May economic update with Brian Parker

May economic update video will load shortly

If you’d like to discuss anything in this report please contact us on 02 9875 2966.