An update on Rivkin Local's Strategies

An update on Rivkin Local's Strategies

Now that we are a few days into the new financial year, it is a good time to review the results of our Rivkin Local strategies over the past year.

It was a bumpy second half for the ASX with a large sell-off in February disrupting a steadily climbing market that had, until that point, been characterised by unusually low volatility.

The spike in volatility was, in the end, positive for the market which continued to work its way higher into the end of financial year.

Although an investor who simply bought the index would have performed well, investors in Rivkin’s strategies would have performed even better.

The Rivkin Local Momentum strategy has been running since May 2016 and has produced excellent results since then.

The strategy picks stocks that have shown strong share price gains over the preceding 12 months on the premise that these gains tend to continue into the future.

For the 2018 financial year, Momentum produced a total return of 20.3%* compared to the 12.7% return for the ASX 100 (including dividends). This 20% return is in line with our back-tested results which show an average annual return of 22.7% over the 15 year back-tested period.

The Rivkin Local Value Strategy was only started earlier this year on 5 February, in what turned out to be awkward timing.

Prior to this date, the market had displayed extremely low volatility and had been moving steadily higher. On the morning of February 5, the market opened 0.4% lower than the prior day but this was just the beginning of a larger fall. Throughout February 5, the market fell a further 1.2% and the following day it lost 3.2%.

Starting a new strategy on the morning of February 5 was, therefore, not the ideal timing. Despite this, the strategy has so far performed even better than we expected. Since inception, the total return is 10.0%* compared to the ASX 200 total return of 5.0% over this same period.

The charts below show the portfolio return over time compared to the level of the ASX 100 and ASX 200 for Momentum and Value respectively.

 


Rivkin’s Event Strategy has had a significant uptick in the number of event recommendations so far this year. The 2017 calendar year was relatively quiet for Events so it is pleasing to see an increase in takeover activity this year.

The portfolio return for the last 12 months was 7% although this return was achieved with remarkably low volatility. The Event Strategy is a great all-weather strategy that is expected to perform consistently regardless of market conditions.

The Blue-Chip Strategy had a tough year with poor returns from the Big four banks, as well as Telstra (TLS) and AMP Ltd. (AMP) underperforming.

Dividend yields on these stocks, however, are currently very high as most of these companies have maintained their dividend payout despite the lower share prices (with the exception of TLS).

This provides us with a good level of dividend return while we wait for a recovery in the share prices.

Finally, the Rivkin Local Income Strategy continues to perform as expected. So far, in 2018, we haven’t seen the capital gains that we saw in 2017, but we have continued to receive a steady stream of income payments.

The return on this strategy over the last 12 months has been 5.6% but, as with the Event Strategy, this return comes with very low volatility. This gives Rivkin Members with a lower risk tolerance to still achieve a return that far exceeds bank interest.

In summary, the Rivkin Local Strategies have had a strong FY18 financial year with the newly launched Value Strategy one of the standout performers. Readers who wish to gain access to these strategies can contact us on 1300 748 546.

Furthermore, we will be running a webinar covering the Value and Momentum Strategies on Thursday the 19th of July. Click here to register.  

*Past performance is no guide to future performance.   

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