It has been a challenging period for multi-asset investors with both equity and bond markets recording some of the worse starts to a year in decades. Global equity markets fell significantly over the quarter and domestically the ASX 300 index has fallen more than 10% since the start of the calendar year.
ESG and sustainable portfolios in general have felt the pain more acutely given the wide dispersion seen in sector returns and the Lonsec Sustainable portfolios were no exception. The portfolios have had a difficult quarter, lagging the peer group benchmark by some margin. Over the quarter, Dynamic Asset Allocation added value in the Balanced risk profile which benefited most from our underweight position in Fixed Income. In the higher risk profiles, DAA was flat to slightly negative as our overweight position in real assets more than offset the gains made in Fixed Income.
Looking ahead, our Sustainable positions remain diversified in order to be resilient to further market volatility. We continue to monitor developments regarding inflation, monetary policy and the global economy and we will adjust our portfolios if necessary to navigate through the challenges ahead.
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