Since December, risk aversion in equity markets has shifted as inflationary pressures and higher bond yields have placed downside pressure on equity valuations. However, over the last month defensives have started to outperform the market, from healthcare and consumer staples to utilities.

Australia’s headline CPI in the first quarter jumped by 2.1% on the previous quarter, well in excess of the consensus expectation of 1.7%. This marks the largest quarterly rise since the GST-driven spike in mid 2000, though Australian inflation is still well below most other major economies.

Over the last 2 years the focus list has benefited from stocks where we have identified hidden value. We find this subset of the portfolio can provide great returns that are less correlated to the rest of the market. One such stock that has taken our eye is Tabcorp (TAH).

Our quarterly managed funds report outlines the pathway best-suited to deliver on our current asset allocation strategy.

Similar to global value, Australian value has outperformed significantly since November last year, boosted by elevated commodity prices and rising global and local interest rates. We explore why we are still adding value to Australian equity portfolios.

With the prospect of an RBA interest rate tightening cycle beginning as soon as June this year, we look at how the A-REIT sector performs when interest rates are rising.

After a period of significant outperformance for value over the past few months, growth has staged a comeback since mid-March. For investors, a key question is whether value outperformance will endure or will the market revert to its decade-long trend of growth dominance.

This week we share our second quarter outlook for companies within the Wilsons Australian Equity Focus List. We look back on Q1 and share our current positioning for the quarter ahead.