September, 2023
After a relatively benign few months, volatility returned in the third quarter of 2023. The outlook for interest rates was (once again) the primary cause, with the U.S. Federal Reserve now guiding that interest rates will likely need to remain higher for longer than previously anticipated. In part, this relates to inflation, which continues to sit well above the Federal Reserve’s target. In this regard, recent strength in the oil price has not helped sentiment, although it is worth noting that both headline and core inflation numbers have moderated significantly from their post-COVID highs. More broadly, however, this further reflects expectations that the real interest rate required to keep the economy balanced is probably higher than previously thought, given resilient economic data of late. In addition, concerns around fiscal discipline in the U.S., given another narrowly averted debt ceiling crisis, has exacerbated the upward pressure on interest rates (with many now focused on the magnitude of additional debt needing to be issued in order to fund the increasing U.S. budget deficit).
The impact on financial markets was most pronounced through surging longer term bond yields. The Australian and U.S. Government 10-year bond yields, for instance, closed the quarter just shy of 4.5% and 4.6% respectively, their highest level in more than 12 years. This has implications for share market investors, both in terms of the potential impact on economic growth and corporate profitability that higher rates bring, but also given how investors fundamentally value these assets, with the value of future earnings being worth less in today’s dollars, in a higher interest rate environment.
With this, the Australian share market more than erased earlier gains, to close the quarter slightly down. Pleasingly, however, the Australian companies in the portfolio delivered a positive contribution, in aggregate, buoyed by an encouraging annual reporting season. Notably, outperformance was quite broad, with AMP, Carsales.com, Cochlear and Worley delivering strong results, reflecting good momentum in executing their strategy. ANZ and Virgin Money UK also enjoyed a strong quarter, the latter as it passed a key regulatory standard (i.e., a “stress test”) and commenced a sizeable buyback of its shares. Treasury Wines saw improved sentiment amid resilient earnings and hopes of positive developments regarding Chinese tariffs levied on Australian wine, while Woodside and Santos benefited from stronger energy prices. By contrast, slower than expected margin recovery in CSL’s plasma business weighed on the company’s share price, while cost inflation and regulatory issues continue to see poor sentiment toward Endeavour. New portfolio addition, ResMed, also struggled due to weaker margins and concerns over the potential impact on demand from weight loss injection, Ozempic. That said, while these are fierce headwinds, ResMed is a quality business, in our view, which we are buying at a compelling price.
Looking forward, it remains an uncertain investment environment, with investors facing the increased likelihood of a prolonged period of higher interest rates, not to mention elevated geopolitical risk. This potentially sets the scene for further volatility, particularly when coupled with pockets of overvaluation in the Australian share market. Nonetheless, we continue to find attractive investment opportunities and believe that the portfolio is appropriately positioned to achieve its longer-term objective.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/205534382.pdfAugust, 2023
− The S&P/ASX 300 Accumulation Index returned -0.8% and the MSCI ACWI Ex Australia NR Index (A$) +1.2%.
− In fixed income, the Bloomberg AusBond Composite 0-5Yr TR Index returned +0.7% and the Bloomberg Global Aggregate TR Hedged Index -0.3%.
− The A$ declined -3.9% to $0.648.
− Within the Australian equities, the strongest sector performers were Consumer Discretionary (+6.5%), Real Estate (+3.1%) and Energy (+0.2%) while Utilities (-3.8%), Information Technology (-3.3%) and Consumer Staples (-3.2%) were the weakest performers. Large Caps (S&P/ASX 100) -0.7% outperformed Small Caps (S&P/ASX Small Ordinaries) -1.3%.
− Within the International equities, North America (MSCI North America AUD) +2.1% outperformed Europe (MSCI Europe AUD) -0.1% while Developed Markets (MSCI World AUD) +1.6% outperformed Emerging Markets (MSCI EM AUD) -2.4%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/204330243.pdfJuly, 2023
− The S&P/ASX 300 Accumulation Index returned +2.9% and the MSCI ACWI Ex Australia NR Index (A$) +2.4%.
− In fixed income, the Bloomberg AusBond Composite 0-5Yr TR Index returned +0.7% and the Bloomberg Global Aggregate TR Hedged Index -0.0%.
− The A$ rose +1.2% to $0.674.
− Within the Australian equities, the strongest sector performers were Energy (+8.8%), Financials (+4.9%) and Information Technology (+4.9%) while Consumer Staples (-1.9%), Health Care (-1.6%) and Materials (+1.6%) were the weakest performers. Large Caps (S&P/ASX 100) +2.8% underperformed Small Caps (S&P/ASX Small Ordinaries) +3.5%.
− Within the International equities, North America (MSCI North America AUD) +2.1% outperformed Europe (MSCI Europe AUD) +1.8% while Developed Markets (MSCI World AUD) +2.1% underperformed Emerging Markets (MSCI EM AUD) +4.9%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/202891180.pdfJune, 2023
The second quarter of 2023 was much more benign than the first, with concerns around the U.S. regional banking crisis giving way to a stronger period for global share markets. In part, this reflects surging sentiment behind the artificial intelligence theme, while investors have also taken further encouragement from solid employment data, relatively resilient corporate earnings, and expectations that we are largely through the interest rate hiking cycle, in hoping that a recession may be avoided or, at the very least, be much more muted than what had been previously feared. Time will tell if this positive sentiment proves premature. Inflation, while moderating in some countries, continues to soar in others (for example, the U.K.).
Regardless, it remains above acceptable levels, suggesting that higher interest rates may be with us for some time yet, which, in turn, raises the prospect of lower economic growth moving forward.
The portfolio delivered a positive return this quarter, although slightly underperformed its benchmark. Our overweight position in James Hardie added value, as the manufacturer of building products delivered a resilient quarterly update. Being overweight engineering and construction services provider, Worley, and supply-chain logistics company, Brambles, also added value, as they delivered positive updates around the continued shift in their business mix toward more sustainable projects and their recovery from COVID headwinds, respectively. Virgin Money benefited from abating concerns around the U.S. banking sector, while holding a lower weighting to BHP (than the index) added relative value, with the stock falling in response to weak Chinese economic data.
By contrast, Amcor, Endeavour, a2 Milk and Treasury Wines are all experiencing challenging operating conditions which weighed on sentiment, during the quarter. IDP also detracted (see below), while private hospital operator, Ramsay, underperformed, with cost pressures impacting earnings. Despite being a relatively small part of the Australian market, not holding any technology stocks (notably Wisetech and Xero) impacted returns compared to benchmark, as the sector soared amid buoyant global sentiment.
There were two key additions to the portfolio this quarter, in IDP Education and Aurizon. IDP Education is a leading provider of student placement and English language testing services, being a one-stop shop for international students looking to gain a student visa and study abroad. The timing of our purchase was somewhat unfortunate, however, with confirmation shortly after that a competitor’s English tests have also been approved for use by those seeking a Canadian student visa, leading to weakness in the stock. While this is disappointing, the long-term investment case for the company remains strong, as we look for growing revenues and market share, primarily via Indian student demand.
Aurizon owns and operates rail infrastructure and provides haulage services for coal and bulk commodities nationally. Aurizon is a high cash flow generating business, which underpins their attractive dividend. In addition, the company’s bulk business is well positioned to benefit from the structural demand for future facing commodities such as lithium, copper and nickel. These trades were funded by selling Lendlease and trimming several holdings.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/202271986.pdfDecember, 2022
There were no Portfolio changes during the month.
The model portfolio (-2.8%) outperformed its benchmark (-3.2%) with stock selection adding to relative performance while sector positioning detracted from it.
From a sector perspective being underweight Materials and overweight Consumer Discretionary were the largest detractors from relative performance. In terms of stock selection, positive contributions were driven primarily from positions within the Consumer Staples, Financials and Real Estate sectors, partially offset by positions within the Materials and Information Technology sectors.
The top three contributors to relative performance were the positions in A2 Milk (+0.4%) & Virgin Money (+0.3%) and from not owning Commonwealth Bank (+0.2%). The largest detractors were Aristocrat (-0.3%) & Flight Centre (-0.2%) and the underweight position in BHP (-0.2%).
The largest overweight positions relative to the benchmark based on average weighting during the month were Amcor (+3.5%), Endeavour Group (+3.4%) and Cochlear Limited (+3.4%). The largest underweights were due to not owning Commonwealth Bank (-9.2%) or National Australia Bank (-5.0%) and from being underweight BHP (-6.9%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/195569119.pdfNovember, 2022
Portfolio changes saw the inclusion of Mirvac (ASX: MGR) and the sale of the Vaneck Australian Property ETF (MVA). The weightings to WiseTech, Worley, Virgin Money, Lendlease, Flight Centre, AMP and A2 Milk were also reduced.
The model portfolio (+3.55%) underperformed its benchmark (+6.7%) with both sector positioning and stock selection detracting from performance.
From a sector allocation perspective being underweight Materials was a substantial detractor from relative performance, only partially offset by the underweight to Financials. In terms of stock selection, positive contributions from positions within the Financials and Health Care sectors were more than offset by positions within the Materials and Real Estate sectors.
The top three contributors to relative performance were the position in Virgin Money UK (+0.5%) and from not owning National Australia Bank (+0.4%) or Commonwealth Bank (+0.4%). The largest detractors were James Hardie (-0.6%), Lendlease (-0.5%) and the underweight position in BHP (-0.4%).
The largest overweight positions relative to the benchmark based on average weighting during the month were Endeavour Group (+3.6%), Treasury Wine Estates (+3.6%) and Cochlear Limited (+3.6%). The largest underweights were due to not owning Commonwealth Bank (-9.3%) or National Australia Bank (-5.8%) and from being underweight BHP (-6.1%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/193234477.pdfOctober, 2022
− Portfolio changes for the month were limited to reducing the weighting of Brambles (BXB.ASX) by -0.5% and increasing Lottery Corporation (TLC.ASX) by +0.5%.
− The model portfolio (+5.7%) marginally underperformed its benchmark (+5.9%) due to sector positioning.
− From a sector allocation perspective, positive contributions from being underweight Materials and overweight Energy were more than offset from being underweight Financials and overweight Consumer Staples. Stock selection was positive across all sectors except the Communication Services, Industrials and Real Estate sectors.
− The top three contributors to relative performance were from the underweight position in BHP (+0.5%) and holdings in Flight Centre (+0.3%) and CSL (+0.3%). The largest detractors were the position in a2 Milk Company (-0.2%) and from not owning Commonwealth Bank (-0.8%) and National Australia (-0.4%).
− The largest overweight positions relative to the benchmark based on average weighting during the month were Endeavour Group (+3.6%), Treasury Wine Estates (+3.6%) and Cochlear Limited (+3.6%). The largest underweights were due to not owning Commonwealth Bank (-9.1%) or National Australia Bank (-5.3%) and from being underweight BHP (-6.1%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/192482668.pdfSeptember, 2022
− Portfolio changes for the month were limited to reducing the weighting of Amcor (AMC.ASX) by -0.5% and increasing Ramsay Health Care (RHC.ASX) by +0.5%.
− The model portfolio (-6.1%) underperformed its benchmark (-5.7%), with stock selection and sector allocation detracting from relative performance.
− From a sector allocation perspective, positive contributions from being overweight Energy and underweight Utilities was more than offset by the underweight Materials and overweight Real Estate positioning. From a stock selection perspective, positive contributions from holdings within the Consumer Staples and Industrial sectors were not enough to offset the drag from holdings in the Energy, Health Care and Materials sectors.
− The top three contributors to relative performers were from not owning Goodman Group (+0.2%), Transurban (+0.1%) or Commonwealth Bank (+0.1%). The largest detractors were positions in Flight Centre (-0.5%), BHP (-0.4%) and Virgin Money (-0.4%).
− The largest overweight positions relative to the benchmark based on average weighting during the month were Amcor (+3.8%), Endeavour Group (+3.5%) and Treasury Wine Estates (+3.5%). The largest underweights were due to not owning Commonwealth Bank (-8.8%) or National Australia Bank (-5.2%) and from being underweight BHP (-5.7%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/191350424.pdfJuly, 2022
− Outright portfolio changes saw the inclusion of Ramsay Health Care, funded from the sale of Origin Energy. Weighting changes included an increase to Santos and Woodside Energy while the weighting to Lendlease was decreased.The model portfolio (+5.4%) outperformed its benchmark (+5.3%), driven by sector allocations.
− From a sector allocation perspective, the underweight to Materials and overweight to Real Estate were the primary contributors to relative performance. Positive stock selection within the Materials and Information Technology sectors was more than offset by positions in the Energy and Consumer Discretionary sectors.
− The top three positive relative contributors were the underweight position in BHP (+0.8%) and positions in Wisetech Global (+0.6%) and AMP (+0.2%). The largest detractors were from not owning Commonwealth (-0.5%) or National Australia Bank (-0.3), and the position in Santos (-0.2%).
− The largest average overweight positions compared to the benchmark were Amcor (+3.7%), Brambles (+3.6%) and Treasury Wine Estates (+3.6%), while the largest underweights were due to not owning Commonwealth Bank (-8.9%) or National Australia Bank (-5.1%) and from being underweight BHP (-5.9%)
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/189777495.pdfJune, 2022
− The S&P/ASX 300 Accum. Index finished down – 8.9%, while the MSCI ACWI Ex Australia NR Index (A$) ended -4.4% lower.
− The A$ depreciated -4.1% against the USD and -2.2% on a trade-weighted basis.
− In fixed income, the Bloomberg AusBond Composite 0-5Yr TR Index fell -0.5%, while the Barclays Global Aggregate TR Hedged Index finished down -1.6%.
− The best performing sectors domestically were Consumer Staples (+1.3%), Energy (+0.9%) and Health Care (-2.8%), while the worst performers were Financials (-12.1%), Materials (-11.6%), and Real Estate (-11.2%).
− The best-performing stocks in the S&P/ASX 100 were Tabcorp Holdings (+14.5%), Atlas Arteria (+9.5%) and Woodside Energy (+7.0%). The worst performers were Evolution Mining (-38.0%), Block Inc (-28.1%) and OZ Minerals (-26.3%).
− Global markets remained under pressure during June as concerns around slowing growth and the increasing risk of recession weighed as financial conditions continued to tighten in the face of stubbornly high inflation. June’s close marked the end of a historically dismal first half for markets; the S&P 500 Index fell -8.4% in June to be down –20.6% in the first six months, the worst 1H performance since 1970. Meanwhile the pan-European Stoxx 600 Index returned -6.4% to be -15.8% lower for the half. The MSCI World Index dropped -8.8% to be down -20.0% with emerging market equities (MSCI EM Index) being a relative outperformer with losses of -2.6% for the month and -12.9% for the half. Chinese equities enjoyed a late quarter surge (Shanghai CSI Index +9.6%) on easing Covid-19 lockdown measures and positive government data showing that factory activity in China grew in June. This helped offset the weakness in the more commodity-centric emerging markets.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/188877123.pdfMay, 2022
− The S&P/ASX 300 Accum. Index finished down -2.8%, while the MSCI ACWI Ex Australia NR Index (A$) ended -0.8% lower.
− The A$ appreciated +0.9% against the USD and +0.2% on a trade-weighted basis. − In fixed income both the Bloomberg AusBond Composite 0-5Yr TR Index and the Barclays Global Aggregate TR Hedged Index finished down -0.2%. − The best performing sectors domestically were Materials (+1.0%), Industrials (-0.1%) and Utilities (-0.2%), while the worst performers were Real Estate (-9.0%), Information Technology (-8.9%) and Consumer Staples (-6.8%).
− The best-performing stocks in the S&P/ASX 100 were Allkem Limited (+11.9%), Amcor (+9.5%) and Mineral Resources (+9.1%). The worst performers were Charter Hall Group (-15.3%), Nine Entertainment Group (-18.2%) and ARB Corporation (-20.1%).
− May again saw volatility across markets as investors continue to grapple with ongoing monetary tightening, the impacts of the zero-Covid strategy in China and of course the implications of Russia’s prolonged invasion of Ukraine. Brent Crude (+12.3%) advanced for a 6th consecutive month, marking its longest run of gains since 2011. Across developed markets the MSCI ACWI Value Index (+1.0%) outperformed the MSCI ACWI Value Index (-2.9%), helped by the Materials and Energy sectors. In the US the S&P 500 Index ended marginally higher with a gain of 0.2% but the technologyheavy Nasdaq Composite Index ended -2.1% lower to be down –22% in the last 6 months. European markets mostly fell after Eurozone inflation hit 8.1%, the highest level since record-keeping began in 1997. The pan-European Stoxx Europe 600 Index finished -0.7% lower. The announcement of easing Covid restrictions in Shanghai along with new stimulus out of Beijing saw China’s equity markets stabilise after a torrid 12 months which helped limit the loss on the MSC.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/187594427.pdfApril, 2022
− The S&P/ASX 300 Accum. Index finished down -0.8%, while the MSCI ACWI Ex Australia NR Index (A$) ended -2.8% lower.
− The A$ depreciated -5.4% against the USD, while it fell -0.8% on a trade-weighted basis. − In fixed income, the Bloomberg AusBond Composite 0-5Yr TR Index finished -0.8% lower while the Barclays Global Aggregate TR Hedged Index finished down -2.9%.
− The best performing sectors domestically were Utilities (+9.3%), Industrials (+3.9%) and Consumer Staples (+2.8%), while the worst performers were Consumer Discretionary (-4.0%), Materials (-4.3%) and Information Technology (-8.8%).
− The best-performing stocks in the S&P/ASX 100 were Ramsay Health Care (+24.5%), AMP (+20.2%) and AGL Energy (+12.4%). The worst performers were Block Inc (-21.7%), IDP Education (-14.9%) and Lynas Rare Earths (-14.9%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/186770903.pdfMarch, 2022
− Portfolio changes were limited to increasing the weighting to BHP by 0.25% and increasing listed property by 1.0% via an increased allocation to the VanEck Australian Property ETF.
− The model portfolio (+3.8%) underperformed its benchmark (+7.1%) as both stock selection and sector allocation detracted from relative performance.
− In terms of stock selection, positions within the Materials and Financial sectors were the primary detractors, while the overweights to Cash and Consumer Staples were the primary sector detractors.
− The top three positive contributors were from positions in Wisetech Global (+0.2%) and Woodside Petroleum (+0.2%) and from not owning CSL (+0.2%). The largest detractors were from not owning Commonwealth Bank (-0.5%), and the positions in Virgin Money (-0.4%) and Amcor (-0.4%).
− The largest average overweight positions compared to the benchmark were Amcor (+4.0%), Brambles (+3.9%) and Ramsay Health Care (+3.8%), while the largest underweights were due to not owning Commonwealth Bank (-8.8%) or CSL (-6.5%) and from being underweight BHP (-8.0%).
February, 2022
− The S&P/ASX 300 Accum. Index finished up +2.1%, while the MSCI ACWI Ex Australia NR Index (A$) ended -5.6% lower. − The A$ appreciated +3.0% against the USD, while it lifted +2.2% on a trade-weighted basis. − In fixed income, the Bloomberg AusBond Composite 0-5Yr TR Index finished -0.5% lower while the Barclays Global Aggregate TR Hedged Index finished down -1.3%. − The best performing sectors domestically were Energy (+8.6%), Consumer Staples (+5.6%) and Materials (+5.2%), while the worst performers were Information Technology (-6.6%) Consumer Discretionary (-5.0%) and Communication Services (-2.2%). − The best-performing stocks in the S&P/ASX 100 were South32 (+24.9%), Northern Star Resources (+24.3%) and Evolution Mining (+22.9%). The worst performers were Domino's Pizza (-23.6%), Mineral Resources (-18.3%) and Xero Limited (-17.0%). − Russia's invasion of Ukraine caused global markets to struggle as investors repositioned portfolios for an increasing uncertain outlook.
Both developed (MSCI World DM Index -2.6%) and developing (MSCI World EM Index -2.4%) markets lost ground in local currency terms, with commodity exposed sectors amongst the few bright spots, particularly energy on the back of supply fears given Russia's importance as a major exporter of oil & gas. The pan-European STOXX Europe 600 Index fell -3.2% while in the US the S&P500 Index fell -3.0% and the tech-heavy Nasdaq 100 Index lost -3.3% to be down around -12.5% over the last two months.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/184437223.pdfJanuary, 2022
− The S&P/ASX 300 Accum. Index finished down -6.5%, while the MSCI ACWI Ex Australia NR Index (A$) ended -1.8% lower.
− The A$ depreciated -3.1% against the USD, while on a trade-weighted basis it dropped by -3.0%. − In fixed income, the Bloomberg AusBond Composite 0-5Yr TR Index finished -0.4% lower while the Barclays Global Aggregate TR Hedged Index finished down -1.6%.
− The best performing sectors domestically were Energy (+7.9%), Utilities (+2.6%) and Materials (+0.8%), while the worst performers were Consumer Staples (-9.6%), Health Care (-12.1%) and Information Technology (-18.4%).
− The best-performing stocks in the S&P/ASX 100 were AGL Energy (+14.6%), Rio Tinto (+14.3%) and Beach Energy (+14.0%). The worst performers were Reece Group (-22.8%), Xero (-23.8%) and Wisetech Global (-28.0%).
− After a solid start to the year, both equity and bond markets sold off as further hawkish comments by multiple central banks in response to persistently high inflation saw yields rise as investors priced in rate hikes. Global equities posted their worst month since the height of the initial wave of the pandemic. Sentiment was also dampened by rising tensions between Russia and the West over Ukraine. Across developed markets, the S&P 500 (-5.3%) suffered its worst monthly performance since March 2020, whilst Europe’s STOXX 600 (-3.9%) fared little better. The NASDAQ (-9.0%) was one of the hardest hit major indices as rising interest rates brought into question the sustainability of richly valued technology stocks. Commodities were however a standout performer, managing to buck the negative trend - this led to commodity heavy equity markets like the UK (FTSE100: +1.1%) and Latin America (MSCI EM LatAm: +7.4%) outperform significantly. Strong commodity prices also contributed to emerging market equities (MSCI EM: -1.8%) outperforming their developed counterparts (MSCI DM: -4.9%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/183154898.pdfDecember, 2021
− There were no outright model switches or weighting changes during the month.
− The model portfolio (+2.6%) underperformed its benchmark (+2.8%), driven entirely by sector positioning.
− A positive contribution to relative performance from stock selection was primarily from positions within the Health Care and Information Technology sectors. In terms of sector positioning, the underweight to Materials and overweight to Consumer Staples were the primary detractors.
− The top three positive contributors were from not owning positions in CSL (+0.6%), Afterpay (+0.4%), and Woolworths (+0.3%). The largest detractors were the position in a2 Milk (-0.4%) and from not owning either Commonwealth Bank (-0.5%) or Fortescue Metals (-0.2%).
− The largest overweight positions on average compared to the benchmark were Amcor (+4.0%), Brambles (+3.9%) and Ramsay Health Care (+3.8%), while the largest underweights were due to not owning Commonwealth Bank (-8.9%), CSL (-7.2%) or National Australia Bank (-5.0%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/182169166.pdfNovember, 2021
− The S&P/ASX 300 Accum. Index finished the month down -0.5%, while the MSCI ACWI Ex Australia NR Index (A$) ended +3.5% higher.
− The A$ depreciated -5.6%% against the USD while on a trade-weighted basis, it fell by -4.6%.
− In fixed income, both the Bloomberg AusBond Composite 0-5Yr TR Index and the Barclays Global Aggregate TR Hedged Index finished 0.70% higher.
− The best performing sectors domestically were Materials (+6.3%), Communication Services (+5.2%) and REITs (+4.5%), while the worst performers were Information Technology (-2.9%), Financials (-6.9%) and Energy (-8.3%).
− The best-performing stocks in the S&P/ASX 100 were Fortescue Metals (+22.1%), Reece Group (+17.7%) and Mineral Resources (+17.3%). The worst performers were Westpac Bank (-17.9%), Bank of Queensland (-13.2%) and Worley (-11.8%).
− The emergence of the Omicron variant rattled markets - the VIX volatility index surged more than 50% and oil prices dropped dramatically as investors shifted into safe-haven currencies and bonds. Adding to the volatility was talk of accelerating the removal of QE in the US with Fed chair Jerome Powell stating the risks of higher inflation have risen, and that it would be appropriate to consider wrapping up its tapering of asset purchases more quickly. In local currency terms, the MSCI World Developed Market index declined -1.4%, outperforming the MSCI World Emerging Markets Index which fell -3.2%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/181329170.pdfNovember, 2021
− The S&P/ASX 300 Accum. Index finished the month down -0.5%, while the MSCI ACWI Ex Australia NR Index (A$) ended +3.5% higher.
− The A$ depreciated -5.6%% against the USD while on a trade-weighted basis, it fell by -4.6%.
− In fixed income, both the Bloomberg AusBond Composite 0-5Yr TR Index and the Barclays Global Aggregate TR Hedged Index finished 0.70% higher.
− The best performing sectors domestically were Materials (+6.3%), Communication Services (+5.2%) and REITs (+4.5%), while the worst performers were Information Technology (-2.9%), Financials (-6.9%) and Energy (-8.3%).
− The best-performing stocks in the S&P/ASX 100 were Fortescue Metals (+22.1%), Reece Group (+17.7%) and Mineral Resources (+17.3%). The worst performers were Westpac Bank (-17.9%), Bank of Queensland (-13.2%) and Worley (-11.8%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/181329170-1.pdfOctober, 2021
− Portfolio changes for the month included reducing the weighting to several holdings as well as two outright sales. The allocations to ANZ, AMP, Flight Centre, Westpac, Sydney Airport and Virgin Money were all reduced while both Ampol and Beach Energy were sold completely. The proceeds were used to buy Santos, Worley and Cochlear Limited.
− The model portfolio (-0.9%) underperformed its benchmark (~0.0%), with both stock selection and sector allocations detracting from relative performance.
− An underweight to Financials and overweight to Consumer Staples were the main detractors from a sector perspective. In terms of stock selection, positions within the Consumer Discretionary and Information Technology sectors were the primary contributors to the underperformance.
− The top three positive contributors were AMP (+0.3%), Origin Energy (+0.2%) and Worley (+0.2%). The largest detractors were Virgin Money (-0.3%), Brambles (-0.3%) and Treasury Wines (-0.2%).
− The largest overweight positions on average compared to the benchmark were Amcor (+4.1%), Brambles (+4.0%) and Ramsay Health Care (+3.9%), while the largest underweights were due to not owning Commonwealth Bank (-9.6%), CSL (-7.2%) or National Australia Bank (-5.0%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/180947524-1.pdfAugust, 2021
Portfolio changes for the month were limited to re-weightings, with the allocation to Westpac, Woodside and Lendlease all reduced while Amcor, Endeavour Group, Telstra, and WiseTech were all increased.
− The model portfolio (+4.5%) outperformed its benchmark (+2.3%), primarily due to stock selection.
− An underweight to Materials and overweight Consumer Staples added to relative performance while being overweight Energy and underweight Health Care detracted. In terms of stock selection, positions within the Information Technology and Material sectors were the primary contributors to the outperformance.
− The top three contributors were the position in WiseTech Global (+1.0%), being underweight BHP (+0.6%) and from not owning Fortescue Metals (+0.4%). The largest detractors were from not owning Afterpay (-0.5%) or CSL (-0.4%) and the position in Woodside (-0.3%).
− The largest overweight positions on average compared to the benchmark were Ramsay Health Care (+3.9%), Amcor (+3.8%) and Brambles (+3.8%), while the largest underweights were due to not owning Commonwealth Bank (-9.5%), CSL (-7.1%) or National Australia Bank (-4.7%).
− The S&P/ASX 300 Accum. Index increased +2.6% while the MSCI ACWI Ex Australia NR Index (A$) finished +3.1% higher.
− The A$ depreciated -0.6% against the USD while on a trade-weighted basis, it declined by -0.6%.
− The Bloomberg AusBond Composite 0-5Yr TR Index finished flat ~0.0%, while the Barclays Global Aggregate TR Hedged Index finished -0.2% lower.
− The best performing sectors domestically were Information Technology (+17.0%), Consumer Staples (+6.9%) and Health Care (+6.8%), while the worst performers were Utilities (+1.0%), Energy (-3.9%) and Materials (-7.3%).
− The best-performing stocks in the S&P/ASX 100 were WiseTech Global (+57.0%), Afterpay (+39.2%) and Domino’s Pizza (+35.2%). The worst performers were Fortescue Metals Group (-15.7%), Boral (-15.0%) and BHP Group (-14.7%).
− Developed markets (MSCI DM +2.7%) advanced for a 7th consecutive month, outperforming their Emerging counterparts (MSCI EM +2.3%). Despite the continued spread of the Delta variant, the bellwether S&P 500 (+3.0%) and STOXX 600 (+2.2%) recorded solid gains with both indices now up ~20% YTD.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/178790208.pdfJuly, 2021
Portfolio changes for the month included a Tactical Asset Allocation adjustment to increase cash by 2%, funded by a 1% reduction of both the Australian equity and listed property allocations, and the sale of Woolworths with the proceeds used to buy Endeavor Group which was recently demerged from Woolworths.
− The fund (+1.6%) outperformed its benchmark (+1.2%), with the positive contribution from stock selection partly offset by sector allocations.
− The overweight to Energy and underweight to Materials were the primary detractors at a sector level. In terms of stock selection, positions within the Industrials and Energy sectors were the primary contributors.
− The top three contributors to performance were positions in Sydney Airport (+1.3%) and Lendlease (+0.2%) and from not owning Afterpay (+0.3%). The largest detractors were positions in AMP (-0.3%) and Origin Energy (-0.3%) and an underweight position in BHP (-0.3%).
− The largest overweight positions on average compared to the benchmark were Ramsay Health Care (+3.9%), Brambles (+3.8%) and Amcor (+3.8%), while the largest underweights were due to not owning Commonwealth Bank (-9.4%), CSL (-6.9%) or National Australia Bank (-4.6%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/175740862.pdfJune, 2021
− Portfolio changes for the month included both position re-weightings and an outright switch, the latter being the sale of Rio Tinto with the proceeds used to buy WiseTech Global. Regarding re-weightings, the allocations to Virgin Money and Flight Centre were reduced while Treasury Wines was increased.
− The fund (+1.7%) underperformed its benchmark (+2.1%), with the positive contribution from sector positioning offset by stock selection.
− The overweight to Consumer Staples and underweight to Financials were the primary contributors at a sector level. In terms of stock selection, positions within the Real Estate and Energy sectors were the primary detractors.
− The top three contributors to performance were positions in Origin Energy (+0.4%) and WiseTech Global (+0.2%) and from not owning CSL (+0.3%). The largest detractors were positions in Lendlease (-0.3%) and Virgin Money (-0.2%) and from not owning Afterpay (-0.2%).
− The largest overweight positions on average compared to the benchmark were Ramsay Health Care (+3.9%), Sydney Airports (+3.9%) and Brambles (+3.9%), while the largest underweights were due to not owning Commonwealth Bank (-9.6%), CSL (-7.2%) or National Australia Bank (-4.7%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/174706876.pdfMay, 2021
The S&P/ASX 300 Accum. Index increased +2.3% while the MSCI ACWI Ex Australia NR Index (A$) finished +1.3% higher.
− The A$ appreciated +0.2% against the USD while on a trade-weighted basis, it depreciated by -1.4%.
− The Bloomberg AusBond Composite 0-5Yr TR Index returned +0.1%, while the Barclays Global Aggregate TR Hedged Index finished +0.2% higher . − The best performing sectors domestically were Financials (+5.7%), Consumer Discretionary (+3.5%) and Health Care (+3.5%), while the worst performers were Information Technology (-9.9%), Utilities (-6.6%) and Energy (-1.8%).
− The best-performing stocks in the S&P/ASX 100 were ALS (+17.5%), Evolution Mining (+16.8%) and Treasury Wine Estates (+15.9%). The worst performers were a2 Milk Company (-23.5%), Afterpay (-21.1%) and Fisher & Paykel (-16.9%).
− Most major equity markets finished higher with ongoing economic recovery and concerns around inflation the main narratives. Developed markets (MSCI World DM Index +1.3%) outperformed their emerging market counterparts (MSCI World EM Index +0.3%) in local currency terms, with the outperformance driven by the cyclically exposed Euro (DJ Euro Stoxx 50 Index +4.1%) and UK regions (FTSE 100 Index +3.8%). It was a choppy month of trading in the US that saw the S&P500 (+0.5%) rise for the fourth straight month but the tech-heavy Nasdaq (-1.5%) suffer its first negative month in seven as inflation concerns drove a rotation out of interest-rate-sensitive sectors.
In Asia markets were a mixed bag with the likes of Japan, Korea and Hong Kong advancing while Singapore and Taiwan lagged.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/173282759.pdfApril, 2021
− Portfolio changes saw the inclusion of the A2 Milk Company that disappointingly issued another downgrade post month-end - the action taken to reduce channel inventory was unfortunately necessary to avoid potential brand damage. To fund the purchase, Seek was sold and the weightings in both Origin Energy & AMP were decreased.
− The model portfolio (-0.8%) underperformed its benchmark (+3.5%), with both stock selection and sector positioning detracting.
− The overweight to Energy and underweight to IT were the primary detractors at a sector level. In terms of stock selection, positions within the Energy and Financials sectors were the primary detractors.
− The top three contributors to relative performance were positions in Aristocrat Leisure (+0.1%), Seek (+0.1%) and James Hardie (+0.1%). The largest detractors were positions in Beach Energy (-1.0%), AMP (-0.6%) and Origin Energy (-0.5%).
− The largest overweight positions on average compared to the benchmark were Flight Centre (+3.9%), Virgin Money UK (+3.9%) and Sydney Airports (+3.9%), while the largest underweights were due to not owning Commonwealth Bank (-8.8%), CSL (-6.9%) or National Australia Bank (-4.9%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/171344791-1.pdfDecember, 2020
Portfolio changes were limited to re-weightings with the allocations to BHP, Seek & Rio Tinto reduced while the allocations to Amcor, ANZ Bank & Ramsay Health Care were increased. The model portfolio (-0.4%) underperformed its benchmark (+1.1%) with both stock selection and sector positioning detracting. At a sector level, the underweight to Information technology and Materials were the primary detractors. In terms of stock selection, positions within the Consumer discretionary and Materials sectors were the primary detractors.
The top three contributors to relative performance were from not owning CSL (+0.5%) and positions in Treasury Wine Estates (+0.2%) and Seek (+0.2%). The largest detractors came from not owning Fortescue (-0.5%) and owned position in AMP (-0.4%) and Origin Energy (-0.4%). The largest overweight positions on average compared to the benchmark were AMP (+4.3%), Flight Centre (+4.0%) and Virgin Money UK (+3.9%), while the largest underweights were due to not owning Commonwealth Bank (-8.7%), CSL (-7.9%) or National Australia Bank (-4.5%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/163439839.pdfticker: ETL7541AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://investmentcentre.moneymanagement.com.au/factsheets/ah/pxra/elston-australian-large-companies
Right sidebar -> Links -> Provider’s own factsheet
https://investmentcentre.moneymanagement.com.au/factsheets/mi/pxra/elston-australian-large-companies-a
asset_class: Domestic Equity
asset_category: Australia Large Blend - Core / Style Neutral
peer_benchmark: Domestic Equity - Large Cap Neutral Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
Elston Australian Large Companies A aims to outperform the S&P/ASX 100 Accumulation Index by 2.0% p.a. (after fees) over rolling five-year periods. This is an actively managed portfolio of predominantly Australian equities. In general, the portfolio will have a long-term average exposure of around 97% in growth assets and 3% in defensive assets, however the allocations will be actively managed within the allowable asset allocation ranges depending on market conditions.