The 2016 financial year was a disaster for returns from Australian shares.
The ASX 200 index fell 4.1% in the 12 months to June 2016 and, including dividends, the total return was up a mere 0.6%.
However, there were some who picked winners. The active, high-conviction share fund managers did well in the tough market of 2015-16.
“The benefits of active management is usually most evident in more challenging markets,” says Clare Armstrong, a principal in Mercer’s manager research group.
“The last year provided plenty of evidence that this remains the case.”
There was a big spread between the returns from managed funds, from a positive 32.2% at Macquarie Alpha Opportunities to -5.8% at Schroder Aust Equity.
According to Mercer, these were the top five Australian share funds in 2015-16:
And these were the bottom five:
Armstrong says equity markets were hampered by significant bouts of volatility spurred by fears of global economic destabilisation.
“Markets were volatile from month to month, rising half the time and falling the other half without much sideways in between,” she says.
“In the two most difficult months, falls were greater than 5%, the managers that protected portfolios best during the most volatile months were the strongest performers over the year.”