Alpha POWER Shares has outperformed the sharemarket
Alpha POWER Shares has outperformed the sharemarket during recent downturns and new series of Aegis and Lonsec portfolios will be launched this month.
To allow you and your clients to take advantage of the current low sharemarket levels, Alpha will be launching new series of Lonsec and Aegis POWER Shares this month. These will provide your clients with capital protection and equity upside potential from these new, lower levels.
Over the last month the Australian markets have experienced some of their largest falls in the last 25 years. Following the action by the US Fed Reserve on 22 January, (US rates were cut by 0.75%), and last week (the US Fed cut rates a further 0.5%) the US and global markets have stabilised and are now rebounding. The severity of the market falls is evidenced by the pre emptive action from the US Fed – the only previous time the US Fed has cut rates in between its normal monthly meetings was on 17 September 2001. The current market rebound is pleasing and in line with the fundamental strength of good blue chip Aussie stocks – but volatility is set to continue for much of this year.
We can now provide you with commentary on the performance of Alpha POWER Shares. Alpha POWER Shares has performed exactly as it has been designed, with the embedded 90% put options providing the protection against severe falls of the sort experienced this week. The last re-balance date for these portfolios was 20 December 2007. Between 20 December 2007 and 22 January 2008, the stock baskets within POWER Shares had fallen by 14.77% (Lonsec) and 13.25% (Aegis). When multiplied by the internal leverage in POWER Shares, this represents a decline of 20.54% (Lonsec) and 18.58% (Aegis) (as at 22 January 2008). With the inclusion of the embedded put options, the net falls in NAV for the Alpha POWER Shares portfolios has been significantly lower, with POWER Shares prices falling by 6.95% (Lonsec) and 6.65% (Aegis).
This shows how Alpha POWER Shares significantly outperforms in falling markets, compared to an investment in the underlying shares themselves.
The Lonsec Alpha POWER Shares portfolio NAV is currently $82.04 and the Aegis Alpha POWER Shares portfolio NAV is $80.00. The NAV of these portfolios has appreciated by around 2% since their lows on 22 January 2008.
Tony Rumble, PhD.
