October, 2021
The Fund returned -0.8% in October, underperforming the benchmark by 0.7%.
Our overweight holding in Orica (+10%) was a positive contributor to performance. Sentiment has improved towards the stock, following a positive trading update in late September that largely de-risked FY22 earnings. Improving explosives market conditions have provided an additional tailwind. Our overweight holding in Origin Energy (+7%) outperformed. The company gave a trading update at its AGM, maintaining guidance for the Energy Markets division but flagging higher than anticipated profitability from its Queensland LNG JV due to both higher oil and spot LNG prices. They subsequently announced the sale of a 10% stake in the LNG JV to global energy investor EIG, reducing their interest to 27.5%. The transaction was well-received by the market, with the sale proceeds of A$2.1bn removing any remaining balance sheet risk and providing flexibility for investment in growth or capital management. Our overweight holding in Ampol (+9%) also contributed positively. The company entered into a binding Scheme Implementation Agreement to acquire NZ fuel retailer Z Energy at a price consistent with the offer made in August. The deal has strategic appeal and is expected to be materially Earnings per Share accretive. The stock also benefited from improvement in refining margins consistent with tightness in global energy markets.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-10.pdfSeptember, 2021
The Fund returned 1.0% in September, outperforming the benchmark by 2.9%
Our energy holdings were amongst the key positive contributors to performance, including overweight positions in Woodside Petroleum (+23%) and Origin Energy (+8%). The Brent oil price increased 10% over the month and closed at levels not seen since 2018. The recent price moves reflect strong demand from reopening economies against a backdrop of constrained investment in production, in part due to decarbonisation trends. Our overweight position in Alumina (+18%) contributed positively, reflecting a material increase in the alumina commodity price during the month. The price spike has been driven by a range of factors, including a fire at a major alumina plant in Jamaica and the military coup in Guinea, which is a key bauxite producer. Our overweight holding in Incitec Pivot (+9%) also outperformed. The stock benefited from strength in fertiliser prices and the expectation that recent operational issues will soon be resolved.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-2-1.pdfAugust, 2021
The Fund returned 2.4% in August, underperforming the benchmark. Our overweight holding in The Star Entertainment Group (+19%) was a key positive contributor to performance. The company released a sound full year result in difficult operating conditions, with particular strength from its Queensland assets.
The stock also benefited from management disclosing plans to release capital through sale and leaseback of property assets, discussions with the NSW Government to increase gaming machine numbers at the Sydney casino and speculation around potential options with Crown Resorts Limited assets. Our overweight holding in Suncorp Group (+12%) outperformed. The company released a full year result well ahead of expectations, with improving underlying performance from both the insurance and banking businesses and some provision releases. The market also reacted favourably to a sharp increase in the dividend, an 8c special dividend and a $250m buyback. Our decision not to hold Fortescue Metals Group (-16%) also contributed positively. Whilst delivering a strong full year result in line with expectations, the stock was impacted by the lower iron ore price
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-9.pdfJuly, 2021
The fund returned 1.1% in July, in line with the benchmark. Our overweight position in Spark Infrastructure Group (+24%) was a significant positive contributor to performance. There was heightened corporate activity in the listed infrastructure sector during the month, including a takeover bid for Spark from a consortium consisting of Ontario Teachers’ Pension Plan Board and private equity firm KKR. After initial rejections from the Spark board, the bid was revised up to $2.89, a 26% premium to the pre-bid share price, and access for due diligence was granted.
Our overweight holding in Incitec Pivot (+13%) contributed positively. Having experienced a series of issues at its Waggaman ammonia plant in recent months, the stock was buoyed by news that the plant was back in operation and well placed to benefit from the cyclical recovery we have seen in fertiliser prices. Our overweight position in BHP Billiton (+10%) also outperformed. Prices for key commodities including iron ore and oil remained elevated during the month and the announcement of a record dividend from Rio Tinto highlighted the level of cash generation in the sector and scope for capital management at BHP’s August full-year result.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-8.pdfJune, 2021
The portfolio returned 1.2% in June, underperforming the benchmark. June saw a broad rotation towards ‘growth’ and ‘yield’ stocks, providing a headwind to our performance. This shift was apparent across global markets and consistent with the decline in bond yields, which tends to favour such stocks. Our decision not to hold a number of strongly performing growth stocks materially detracted from performance, including Afterpay Touch Group (+27%), Goodman Group (+10%) and Resmed (+21%). Of stocks held in our portfolio, our overweight position in The Star Entertainment Group (-9%) contributed negatively.
The stock was impacted by the announcement that AUSTRAC had launched an investigation into potential anti-money laundering breaches. Our exposure to the banks also detracted. We were overweight the underperforming sector and materially underweight the premium-rated Commonwealth Bank of Australia (0%), which was the best performing bank.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-7.pdfMay, 2021
The portfolio returned 1.9% in May, underperforming the benchmark by 0.4%.
The broad rotation from ‘growth’ into ‘value’ that we have seen in recent months wasn’t a key feature of markets during May, with sector and stock specific issues driving performance. Technology stocks underperformed consistent with a global sell off, influenced by fears around inflation, interest rates and valuations. Accordingly, our performance benefited from not holding names including Afterpay Touch Group (-21%) and Xero Limited (-6%) and we note that Australian tech stocks remain amongst the most expensive in the world. Our overweight holdings in general insurers QBE Insurance (+11%) and Suncorp (+6%) outperformed, reflecting an improving cyclical outlook for the sector. Our overweight position in Ampol (+12%) also contributed positively. The Federal Government announced a plan to support Australian refineries including Ampol’s Lytton, reducing downsi
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-6.pdfApril, 2021
The portfolio returned 0.7% in April, underperforming the benchmark by 2.8%.
The broad rotation into ‘value’ stocks seen globally over the last 6 months retraced somewhat during April, providing a headwind to our performance. This shift was unexpected given the continued economic improvement, which tends to favour ‘value’ stocks, but should be viewed in the context of what has been a sharp swing
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-5.pdfMarch, 2021
The Australian equity market had a solid month, with the S&P/ASX 200 Index (Total Returns) rising 2.4%. Australia underperformed what were buoyant global markets, driven higher by increased optimism around the emergence from the COVID-19 pandemic and associated economic recovery. Local economic data was positive, with highlights including 4th quarter GDP above expectations, improvement in the labour market and continued strength in housing. Global bond yields rose over the month, however, local yields fell slightly after their sharp rise in February. The AUD edged lower against the USD and commodity prices also fell modestly. Looking at performance by sector, Consumer Discretionary (+7%) was strongest, followed by Utilities (+7%) and A-REITs (+7%). Financials (+4%) also outperformed. Materials (-3%) was weakest, followed by Information Technology (-3%) and Energy (0%).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-4.pdfFebruary, 2021
The portfolio returned 3.5% in February, outperforming the benchmark by 2.0%.
Improving economic conditions and an associated increase in expectations for inflation and interest rates supported a further rotation into cyclicals and other ‘value’ stocks. This shift, often called the ‘reflation trade’, was a key driver of the market and provided a tailwind to our performance. Our exposure to the major banks was a significant positive contributor to performance. We were overweight the sector, which benefited from the improving outlook and value rotation. We also had our holdings focused in the more valueoriented names, which materially outperformed. Our overweight position in BHP Billiton (+13%) contributed positively. The company released a solid half year result, with a dividend above expectations, and the stock further benefited from strength in iron ore and oil prices. Our decision not to hold CSL (-3%) and Wesfarmers (-8%) was also supportive, given the broader rotation away from growth stocks. Both companies also released financial results during the month and, whilst current performance is strong, there were some concerns around the outlook.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-3.pdfFebruary, 2021
The portfolio returned 3.5% in February, outperforming the benchmark by 2.0%.
Improving economic conditions and an associated increase in expectations for inflation and interest rates supported a further rotation into cyclicals and other ‘value’ stocks. This shift, often called the ‘reflation trade’, was a key driver of the market and provided a tailwind to our performance. Our exposure to the major banks was a significant positive contributor to performance. We were overweight the sector, which benefited from the improving outlook and value rotation. We also had our holdings focused in the more valueoriented names, which materially outperformed.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-2.pdfJanuary, 2021
The portfolio returned 1.5% in January, outperforming the benchmark by 1.2%.
The rotation into ‘value’ stocks experienced in recent months continued in January, supported by increased economic optimism. This saw many of our out-of-favour cyclical holdings outperform and provided a tailwind to our performance. Our overweight holding in Incitec Pivot (+16%) was a significant positive contributor. The stock benefited from rising fertiliser prices, consistent with improvement in agricultural markets and higher energy prices. Our exposure to the major banks was supportive. We were modestly overweight the outperforming sector and further benefited from our focus on the more value-oriented names, which performed better. Our overweight position in Woodside Petroleum (+8%) contributed positively, aided by strength in the oil price. Our decision not to hold CSL (-4%) was another positive, with the stock impacted by the value rotation. To date, its de-rating has only been modest and we continue to view its 40x price to earnings multiple as excessive.
Our overweight position in Link Administration Holdings (-14%) was a negative contributor to performance. The company has been the target of two takeover offers in recent months, however, the withdrawal of one of the bidders during January created uncertainty around the likelihood of a transaction. Our position in The Star Entertainment Group (-6%) underperformed. The stock should eventually benefit from an emergence from the COVID-19 pandemic but has been volatile in recent months given the imposition of new social distancing measures in New South Wales and uncertainty created by the opening of Crown Sydney. Our decision not to hold growth stocks Afterpay Touch Group (+15%) and Wesfarmers (+8%) also detracted. Afterpay Touch continues to defy gravity, with a market capitalisation now exceeding Telstra yet never having made a profit. Wesfarmers has been a beneficiary of COVID-19, driving very strong sales at its Bunnings and Kmart chains. Whilst continued consumer strength is clearly a positive for the stock, we question the premium multiple on which it trades given risks around the sustainability of its current very favourable operating environment.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MBA-Aus-Share-Wholesale-Commentary-1.pdfDecember, 2020
The portfolio returned 1.3% in December, outperforming the benchmark by 0.1%.
Our resource holdings were significant positive contributors to performance, including positions in BHP Billiton (+12%) and Sims Group (+19%). BHP was supported by strength in prices for its key commodities including iron ore and oil. Similarly, Sims Group benefited from improved steel scrap demand and prices. Our overweight holding in Metcash (+17%) also performed very well. Metcash’s three divisions of grocery, liquor and hardware wholesale have all seen an uplift in demand due to COVID-19 and this drove a very strong half-year result released during the month. Our decision not to hold health care growth stocks CSL (-5%) and Cochlear (-14%) also contributed positively, lagging due to currency headwinds and a rotation out of defensives.
Our decision not to hold Fortescue Metals Group (+29%) was a significant negative contributor to performance. Fortescue is particularly sensitive to the iron ore price and has been the biggest beneficiary of the strength noted earlier. Our decision not to hold hyper-PE growth stocks Afterpay Touch Group (+24%) and Xero Limited (+11%) also detracted. We view the valuations on these stocks as incomprehensible, with Afterpay now capitalised at more than Coles Group yet never having made a profit. Of stocks that we hold, QBE Insurance (-15%) contributed negatively. The company provided a disappointing trading update, with earnings impacted by rising re-insurance costs and claims inflation.
September, 2020
PORTFOLIO COMMENTARY
The Fund returned -4.6% in September, underperforming the benchmark by 0.9%.
The portfolio's energy exposure, including overweight positions in Origin Energy (-22%) and Woodside Petroleum (-10%), was the key detractor and alone accounted for more than the total portfolio underperformance. The sector was impacted by lower oil prices, due to growing concerns around the pace of global economic recovery. Our overweight position in QBE Insurance (-19%) underperformed. The insurance sector was generally weaker, due to the risk-off shift in sentiment and some concerns around the potential for successful business interruption claims due to COVID-19. QBE was further impacted by the unexpected departure of its CEO following a breach of group policy relating to his personal conduct. Our decision not to hold CSL (+1%) and Transurban Group (+5%) also contributed negatively, with both stocks benefiting from the rotation into defensives.
Our overweight position in Boral (+14%) was a key positive contributor to performance. Following some early strategic commentary from the new CEO at the August financial result, market confidence is growing that management can execute a successful turnaround. The appointment of four new directors to the Board during September further demonstrated an appetite for change in the group. The risk of an equity raising is also reducing, a factor that had been keeping many investors on the sidelines. Our overweight position in Healius (+8%) also contributed positively. The companys pathology division is benefiting from the uplift in COVID-19 testing, with the government announcing a 6-month extension to its funding regime during the month. The market is also starting to attribute value to the companis improved strategic focus and significantly strengthened balance sheet, following the sale of the Medical Centres business earlier in the year.
File:ticker: ADV0046AU
commentary_block: Array
factsheet_url:
https://ironbarkam.com/funds/maple-brown-abbott-australian-share-fund-wholesale/
Under Performance -> Latest Commentary
Ose OCR https://www.onlineocr.net/
release_schedule: Monthly
fund_features:
Maple-Brown Abbott Australian Share Fund is an actively managed Australian share portfolio that aims to provide a tax-effective income stream and long-term capital growth from a wide range of shares including property trusts listed, or expected to be listed, on the Australian Securities Exchange.
- Aims to outperform (before fees) the Benchmark over rolling four-year periods.
- The Fund typically holds at least 30 stocks.
- Invest in a wide range of Australian shares, chosen for their perceived ‘fundamental value’, including the level of franking credits.
- The allocation to cash can play an important part in managing the volatility of investment returns.
manager_contact_details: Array
asset_class: Domestic Equity
asset_category: Australia Large Value
peer_benchmark: Domestic Equity - Large Value Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund