The Victorian Funds Management Corporation’s (VFMC) $33.2 billion Treasury portfolio rose in value during the December 2009 quarter led by gains in stock investments.
The Treasury portfolio, which counts ESSSuper and Victorian WorkCover Authority as its largest clients, added 3.42 per cent gross of fees and tax in the three months, outperforming the benchmark’s 2.78 per cent increase.
“VFMC client portfolios benefited from the continued rebound in markets post the global financial crisis, for which we were well positioned. From an asset allocation perspective we were overweight in the best performing asset – equities,” VFMC chief investment officer Justin Pascoe said.
The Treasury portfolio’s international equities investments gained 4.44 per cent in the December quarter, while Australian equities added 4.26 per cent. Stocks make up 54.6 per cent of the portfolio.
Diversified fixed interest investments returned 2.76 per cent over the period, while absolute return funds jumped 4.53 per cent.
“In Australian equities our internally-managed portfolios outperformed the market. In both Australian and international equities our external multi-manager programs also did well and in fixed income and absolute return funds we benefited from the strong rebound in credit markets in particular,” Pascoe said.
“Many of the positions that are performing well today were hurt during the global financial crisis and have impacted our longer-term numbers, which are beginning to slowly improve.
“As long-term investors we were comfortable continuing to own those positions and confident that they would rebound, albeit that it was painful in the short term for both us and our clients.”
For all of 2009, VFMC’s Treasury portfolio returned 11.9 per cent, compared to a 14.42 per cent surge for the benchmark.
The portfolio returned an annualised 4.99 per cent in the five years to December 2009, compared to a 6.12 per cent gain in the benchmark.
