June, 2023
Global equity markets posted another strong quarter, with the MSCI World up 7.0% in the 3-months to the end of June, driven largely by the US, where the S&P 500 was up 8.7%, and Japan, where the TOPIX was up 14.5%. Despite persistent inflation, further increases in interest rates, and a minor banking crisis, the economy remained resilient. GDP growth has remained positive and unemployment remains near all times low in much of the developed world. The artificial intelligence excitement following the introduction of ChatGPT provided a further boon to equity markets, particularly technology stocks. Sentiment in fixed income markets did not match equity markets, with the MOVE index, a measure of volatility expectations on US Treasury bonds, reaching its highest levels since the 2008 global financial crisis. The Australian Shares Fund (Wholesale) outperformed its benchmark (the S&P/ ASX300) by 5.2% over the June Quarter. The funds large cap names were positive relative contributors with insurers IAG, Suncorp and NIB Holdings all featuring in the top ten contributors. We were particularly happy with the Funds small cap names which featured prominently in our contributors. Energy and water billing software company Gentrack appreciated 47% after announcing a revenue upgrade for 2023 and 2024, while mortgage insurer Helia appreciated 20.6% on an improving outlook for Australian residential housing. The Fund benefited from private equity and strategic corporate interest with vitamin company Blackmores, software telematics company Eroad and employee well-being software company Limeade all receiving takeover bids over the quarter. Our investment in body fluid measurement technology company Impedimed appreciated 71% over the quarter on news its technology had entered US medical guidelines, which we expect to quickly translate to health insurance coverage and revenues. The Fund is currently holding elevated cash holdings in anticipation of a weak consumer environment emerging latter in 2023, while the outlook for small companies has improved.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/12FK_en-au_PDF.pdfJune, 2022
The Australian Shares Fund fell -18.2% (-18.0% Wholesale) underperforming its benchmark which fell -12.2% over the June Quarter. The primary reason for the underperformance is the divergence in performance of small companies compared to large cap Australian companies noting the Fund has greater than 50% of its investment outside the ASX100.
This underperformance is specifically attributed to the Funds significant overweight allocation into the information technology sector, the weakest performing sector, with healthcare also a laggard. The technology sell-off has been led out of the US, with microcap and small-cap companies in their earlier stage of commercial development particularly hard hit. We continue to believe superior growth attributes are the primary reason for investing into small and microcap companies, irrespective of interest rates and consequently have been adding to some of our underperforming names. We believe there will be merger and acquisition activity if share prices remain weak.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/188883178.pdfDecember, 2021
The number one issue global investors are grappling with is the emergence of supply chain driven inflation. This inflation is driving future interest rate expectations up. Soft and hard commodity owners are beneficiaries in an inflationary environment as commodity prices tend to keep pace with inflation while high growth companies, particularly those in the earlier stage of commercialisation, are getting penalised by investors through the discounting of their earnings by a higher rate and through the fact significant earnings are still several years off. We attribute our underperformance to global inflationary concerns. The Australian Shares Fund underperformed its benchmark over the quarter: -1.1% vs +2.2% (Wholesale -1.0 vs +2.2%). The underperformance is attributed to small companies underperforming large companies in this quarter and the Funds significant underweight in materials, with mining companies performing very strongly.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/182570189.pdfJune, 2021
Global markets posted another strong quarter with the MSCI World Index appreciating 7.7%. This was driven by the US where the S&P 500 rose 8.6%. Australia kept pace, with the ASX 200 up 8.3% driven by cyclical sectors Financials and Materials. Performance in equity markets was driven by improved economic activity, the roll out of the vaccination program and strong monetary and fiscal support. This improved economic activity was reflected in a rising Purchasing Managers’ Index. Unemployment rates are falling faster than anticipated, and YoY Inflation rates have continued to rise – prompting investors to pay close attention to how Central Banks will react.
The Australian Shares Fund (retail) returned 9.1% (Wholesale class: 9.3%), outperforming its benchmark index over the quarter by 0.6% (Wholesale class: 0.8%) with technology names leading this outperformance. The strong technology companies include SaaS company Bigtincan, telematics company Eroad, wealth management software company Bravura Solutions, PDF and e-signature company Nitro Software. The strongest individual stock contributor was real-estate company Mirvac which appreciated strongly after its property portfolio was not significantly impacted by Covid-19. Another individual strong stock performer was neurologically focussed contract research organisation Cogstate after an Alzheimer’s drug was approved by the FDA. Hearing company Cochlear business continues to rebound while renewable energy company Contact Energy recovered some of its previous losses on news it was expanding its geothermal generation
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/174702961.pdfFebruary, 2021
The opportunity to invest in a diversified share portfolio of companies predominately listed on the ASX and selected on the basis of their social, environmental and financial credentials. The Fund utilises an active stock-picking management style with stocks generally selected for growth rather than income, with a bias towards smaller capitalisation stocks listed on the ASX. All stocks are chosen on the basis of relative value where we deem the risks are being adequately priced.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/168508650.pdfDecember, 2020
For the quarter, the Fund achieved an absolute return of 19.5% (19.8% Wholesale Fund) against the fund’s benchmark, the S&P/ASX 300 Index, which advanced 13.8%. The Australian Shares Fund 12-month performance was +19.9% (21% Wholesale Fund) against 1.7% gain for the benchmark. We were very pleased with the relative outperformance of the fund over recent periods.
Over the quarter Financials, Healthcare, Materials and Utilities sectoral exposures drove the outperformance with both small and large capitalised companies contributing to this outperformance.The US general election win by Joe Biden is seen as a positive for climate change, while the growth of ESG funds around the world saw the market chasing many renewable and adjacent assets. The renewable energy generators and retailers out of New Zealand including Meridian Energy (+51.7%), Contact Energy (+35.6%) and Mercury Energy (29.6%) were among the leading contributors while lithium producer Pilbara Minerals (+187.4%) was among our top 10 performers.
The December quarter saw banks make strong recoveries with regional bank Bendigo & Adelaide Bank the strongest single contributor to performance, appreciating 54%, with Bank of Queensland not far behind +35.1%. We were also pleased to see mortgage insurer Genworth Australia bounce back 52.7% with all banking related stocks benefiting from an improved outlook for residential property.The Fund continues to be actively managed.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/163872919.pdfSeptember, 2020
For the quarter, the Fund pleasingly achieved an absolute return of 9.1% (9.4% Wholesale Fund) against the fund’s benchmark, the S&P/ASX 300 Index, which declined 0.1%. The Australian Shares Fund’s 12-month performance was 1.5% (2.4% wholesale) against negative 10% for the benchmark.
The Australian market started the quarter strongly, with August particularly strong (ASX 200 up 2.2%) boosted by some better-than-expected earnings in the reporting season, solid economic data and renewed hopes for a vaccine. However, September saw the five-month rally end with the ASX 200 falling 4% as investors became nervous about fears of a second global COVID-19 wave, poor sentiment regarding the US Presidential election and growth concerns.
Locally, the effects of the lockdown in Victoria became more apparent, with a higher level of unemployment and Federal Treasurer Josh Frydenberg warning the Australian economy was set to contract by 6% more than forecast by the end of 2021. The quarterly outperformance is attributed to both the fund being tilted towards small companies (which outperformed large companies) and very strong stock selection in our small-cap names.
The key sector contributors were IT and healthcare with PDF and e-signature software company Nitro Software appreciating +88% while sales enablement software-as-a-service company Bigtincan was up 82%. Other good contributors included educational technology company 3PL, the owner of Mathletics, which appreciated +55% benefiting from a takeover offer
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/australian-shares-fund-wholesale-september-2020.pdfticker: AUG0018AU
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The Australian Ethical Australian Shares Fund invests in a diversified share portfolio of companies predominately listed on the ASX and selected on the basis of their social, environmental and financial credentials.
- Utilises an active stock-picking management style with stocks generally selected for growth rather than income.
- The robust process combines detailed ethical screening and fundamental bottom-up stock analysis.
- The well-developed ethical screening procedures are based on Australian Ethical Investments’ Ethical Charter, which was remained unchanged since 1986.
- The positive screen traditionally leads the strategy to be overweight the healthcare, information technology and utilities sectors, while the negative screen leads it to avoid stocks in the energy and mining sectors.
manager_contact_details: Array
asset_class: Domestic Equity
asset_category: Australia Mid/Small Blend
peer_benchmark: Domestic Equity - Mid/Small Blend Index
broad_market_index: ASX Index MidCap 50 Index
structure: Managed Fund