Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 57

What’s going on in Australian equities?

Managing a diversified equity portfolio is sometimes similar to being a farmer in that at any stage you are likely to be ‘harvesting’ or selling good stocks that are now over-valued and ‘planting’ or buying companies that appear undervalued.

When you look at the collection of stocks in any portfolio, it is both unlikely and probably undesirable to face a situation where all the stocks are dramatically ahead of the index and also ahead of our valuations. This turn of events would probably indicate a lack of selling discipline by the fund manager. Furthermore if this was the case, the following month or quarter could show those very same stocks all down simultaneously as well.

Over the last 12 months the ASX 200 has given investors a total return (price appreciation plus dividends) of +12.5%. As you can see from the chart there has been a significant dispersion of returns amongst the 11 sectors that make up the ASX.

In this piece we present an overview of the sectors in the market, as well as looking at those securities that have performed well over the last 12 months and those that have lagged.

What's working?

Telecoms have been the best performing sector over the past year with heavyweight Telstra (+17%) finally increasing dividends and capturing mobile market share. This performance from Telstra was eclipsed by the second tier players such as TPG (+105%) and iiNet (55%) which have benefited from strong customer growth.

Consumer Discretionary has benefited from investors looking to capitalise on a recovery in Australian consumer spending. However, unlike telecoms there has been a wide dispersion in returns amongst this sector. Previous market darlings like The Reject Shop (-43%), Wotif.com (-43%) and Myer (-20%) have struggled over the year. Alternatively investors have bid up RealEstate.com (+77%) and Harvey Norman (+19%) to take advantage of a housing market recovery.

Financials continued their run of providing solid returns to investors mainly due to falling bad debts boosting bank profits. Bank returns were understandably tightly clustered as they are influenced by similar dynamics with ANZ (+20%) the leader and Westpac (+18%) bringing up the quite respectable rear. Sizzle in the Financials sector was provided by companies like Henderson (+97%) and Macquarie (+63%) whose profits are directly linked to bullish equity markets.

What's lagging

Consumer Staples was the worst performing sector in the market as reasonable performances from Woolworths (+10%) and Wesfarmers (+7%) were dragged down by a collection of other companies like Treasury Wines (-34%), Metcash (-30%), Graincorp (-25%) and Coca-Cola (-19%) which fell due to a range of stock-specific issues.

After being the glamour sector in 2012, Listed Property has turned in a rather pedestrian performance, essentially tracking the sector's distribution yield. If an investor’s focus is on owning trusts whose earnings come from collecting recurring rents such as IOF (+11%) and SCA Property (+6%) rather than development profits, they should be happy with this. Some portfolio returns were assisted by the takeover of Commonwealth Office (+18%).

As a sector, Utilities returned 5% over the last year. Regulated utilities like electricity and gas distributors SP Ausnet (+15%), Envestra (+15%) and Spark (+9%) were generally higher due to tariff increases. Electricity retailers like AGL (flat) struggled during the year due to elevated levels of competition for customers and discounting eroding margins.

What's missing?

Typically any piece discussing the ASX mentions the rock diggers, as this is a large part of the index and for Australian equity fund managers, correctly picking the resources over or underweight is a key determinant of relative performance. Whilst as a sector over the last year, Materials trailed the index returning 6%, the main miners, BHP (+12%) and Rio Tinto (+13%), have mostly matched the index.

 

Hugh Dive is Head of Listed Securities at Philo Capital Advisers.

 


 

Leave a Comment:

RELATED ARTICLES

What were the big stockmarket listings in record 2021?

What drives Australian versus global equity performance?

Bounce back delivers super second-half for IPOs

banner

Most viewed in recent weeks

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

The 2025 Australian Federal election – implications for investors

With an election due by 17 May, we are effectively in campaign mode with the Government announcing numerous spending promises since January and the Coalition often matching them. Here's what the election means for investors.

Finding the best income-yielding assets

With fixed term deposit rates declining and bank hybrids being phased out, what are the best options for investors seeking income? This goes through the choices, and the opportunities and risks involved.

What history reveals about market corrections and crashes

The S&P 500's recent correction raises concerns about a bear market. History shows corrections are driven by high rates, unemployment, or global shocks, and that there's reason for optimism for nervous investors today. 

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 605 with weekend update

Trump's tariffs and China's retaliatory strike have sent the Nasdaq into a bear market with the S&P 500 not far behind. What are the implications for the economy and markets, and what should investors do now? 

  • 3 April 2025

Latest Updates

Investment strategies

4 ways to take advantage of the market turmoil

Every crisis throws up opportunities. Here are ideas to capitalise on this one, including ‘overbalancing’ your portfolio in stocks, buying heavily discounted LICs, and cherry picking bombed out sectors like oil and gas.

Shares

Why the ASX needs dual-class shares

The ASX is exploring the introduction of dual class share structures for listed companies. Opposition is building to the plan but the ASX should ignore the naysayers and bring Australia into line with its global peers.

The state of women's wealth in Australia

New research shows the average Australian woman has $428,000 in net wealth, 40% less than the average man. This takes a deep dive into what the gender wealth gap looks like across different life stages.

Investing

The two most dangerous words in investing

Market extremes are where the biggest investment risks and opportunities lie. While events like this are usually only obvious in hindsight, learning to watch out for these two words can alert you to them in real time.

Shares

Investing in the backbone of the digital age

Semiconductors are used to make microchips and are essential to a vast range of technology and devices. This looks at what’s driving demand for chips, how the industry is evolving, and favoured stocks to play the theme.

Gold

Why gold’s record highs in 2025 differ from prior peaks

Gold prices hit new recent highs, driven by a stronger euro, tariff concerns, and steady ETF buying – all while the precious metal’s fundamental backdrop remains solid amid a shifting global economic landscape.

Now might be the best time to switch out of bank hybrids

In this interview, Schroders' Helen Mason discusses investing in corporate and financial credit securities, market impacts of tariffs, opportunities for cash investments, and views on tier two and hybrid bonds.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.