Portfolio highlights

iShares International Equity Index Fund - Performance was supported by strong global equity returns, underpinned by a strong US earnings season. As at the end of July, 66% of S&P 500 companies had reported with 82% exceeding earnings expectations, further reinforcing investor sentiment and driving market strength. The portfolio further benefited from added global equity exposure in May, positioning it well to capture the upswing in international markets.

MLC Real Return Fund - MLC Real Return Fund performed strongly. Performance was driven by global equities, and further bolstered by the increased allocation to the asset class. Later in the month, the fund initiated a small position in a ‘global bank basket’ strategy aimed at capturing the quality attributes of the big 4 banks, simultaneously looking to avoid in part their unappealing valuations.

US share prices made new historic highs in July with encouraging profit reports. Investors are confident that US corporate profit margins will continue to benefit from strong productivity gains from Artificial Intelligence. US economic activity has generally been modest with American consumers being more cautious about their spending. The immediate prospect of lower interest rates settings by the US central bank has faded with the Federal Reserve being cautious about the future impact of tariffs on inflation at their July policy meeting. European shares made modest gains with investors preferring to increase their allocation to Wall Street. The European Central Bank also held interest rates stable in July. China’s tariff negotiations with the Trump Administration remain a potential concern ahead of upcoming deadline(s).

Australian shares also made new historic highs in July. The Health Care sector led the charge higher with a 9% gain. The Energy sector made a very strong 5.7% gain given President Trump’s threat of increased sanctions on Russian oil supplies. There was also strong 5% gains for the Information Technology and Utilities sectors. There was a notable exception to this positive run with the financial sector shares disappointing with a -1% decline in July. However, this weakness comes after a very strong performance from Australia’s major banks this year. Australia’s economic data remains modest. The labour market is showing signs of slowing job growth with the unemployment rate edging up to 4.3% which is its highest level since November 2021.

Global government bond yields rose in July with cautious commentary from the American and European central bank on future interest rate settings. Credit markets spreads narrowed further in July given the strong investor appetite for yield.

The Portfolio generated a positive return for the month, with global share prices making strong gains in July with optimism that President Trump’s tariff proposals will not be as severe as feared. Europe and Japan have seemingly agreed to 15% tariffs being applied to their exports to the United States ahead of the August 1st deadline.

iShares International Equity Index Fund - Performance was supported by strong global equity returns, underpinned by a strong US earnings season. As at the end of July, 66% of S&P 500 companies had reported with 82% exceeding earnings expectations, further reinforcing investor sentiment and driving market strength. The portfolio further benefited from added global equity exposure in May, positioning it well to capture the upswing in international markets.

MLC Real Return Fund - MLC Real Return Fund performed strongly. Performance was driven by global equities, and further bolstered by the increased allocation to the asset class. Later in the month, the fund initiated a small position in a ‘global bank basket’ strategy aimed at capturing the quality attributes of the big 4 banks, simultaneously looking to avoid in part their unappealing valuations.

US share prices made new historic highs in July with encouraging profit reports. Investors are confident that US corporate profit margins will continue to benefit from strong productivity gains from Artificial Intelligence. US economic activity has generally been modest with American consumers being more cautious about their spending. The immediate prospect of lower interest rates settings by the US central bank has faded with the Federal Reserve being cautious about the future impact of tariffs on inflation at their July policy meeting. European shares made modest gains with investors preferring to increase their allocation to Wall Street. The European Central Bank also held interest rates stable in July. China’s tariff negotiations with the Trump Administration remain a potential concern ahead of upcoming deadline(s).

Australian shares also made new historic highs in July. The Health Care sector led the charge higher with a 9% gain. The Energy sector made a very strong 5.7% gain given President Trump’s threat of increased sanctions on Russian oil supplies. There was also strong 5% gains for the Information Technology and Utilities sectors. There was a notable exception to this positive run with the financial sector shares disappointing with a -1% decline in July. However, this weakness comes after a very strong performance from Australia’s major banks this year. Australia’s economic data remains modest. The labour market is showing signs of slowing job growth with the unemployment rate edging up to 4.3% which is its highest level since November 2021.

Global government bond yields rose in July with cautious commentary from the American and European central bank on future interest rate settings. Credit markets spreads narrowed further in July given the strong investor appetite for yield.