September, 2023
During the month, we exited our holdings Wesfarmers, Kathmandu and Perpetual, all of which are facing a more challenging environment. Proceeds were used to increase holdings in the banks and miners. At month end, stock numbers were 29 and cash was 5.4%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0923_PVSFIT.pdfAugust, 2023
During the month, we exited our holding in United Malt, selling it into the takeover bid. Proceeds were used to establish a new position in Computershare, which is benefitting from ongoing higher interest rates and from the expected pick up in corporate activity. At month end, stock numbers were 32 and cash was 2.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0823_PVSFIT.pdfJuly, 2023
During the month, we increased our holdings in CBA, reducing our underweight following a period of underperformance by the banks. The sector is likely to perform better on the back of improved sentiment to the macroeconomic outlook. At month end, stock numbers were 32 and cash was 4.8%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0723_PVSFIT.pdfJune, 2023
During the month, we trimmed our bank holdings and added to our REIT exposure, establishing positions in Dexus and GPT. These are now offering reasonable value following a period of significant underperformance. At month end, stock numbers were 32 and cash was 4.5%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0623_PVSFIT.pdfMay, 2023
During the month, we took profits and exited our holding in Qantas. Proceeds were used to increase our holdings in the major banks ahead of their dividend paying period. At month end, stock numbers were 30 and cash was 2.6%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0523_PVSFIT.pdfApril, 2023
During the month, we reduced our holdings in the bulk miners and increased our holdings in the major banks ahead of their dividend paying period. At month end, stock numbers were 31 and cash was 10.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0423_PVSFIT.pdfMarch, 2023
During the month, we added to our major bank holdings, following their recent underperformance and exited our holdings in Transurban and Incitec Pivot. At month end, stock numbers were 31 and cash was 5.2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0323_PVSFIT.pdfFebruary, 2023
During the month, we reduced our holdings in the major banks and reinvested the proceeds into defensive names such as Woolworths, Coles and Telstra. At month end, stock numbers were 33 and cash was 2.6%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0223_PVSFIT.pdfJanuary, 2023
During the month, we took profits and reduced our holdings in BHP, Rio Tinto and Fortescue Metals, following their strong outperformance in recent months. At month end, stock numbers were 33 and cash was 4.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0123_PVSFIT.pdfDecember, 2022
During the month, we reduced our holding in NAB, bringing our bank exposure back to index levels. Proceeds were used to add Transurban to the portfolio. At month end, stock numbers were 33 and cash was 2.5%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1222_PVSFIT.pdfNovember, 2022
During the month we exited holdings in Dexus and Lotteries Corporation and increased our holdings in the iron ore miners as well as reduced our underweight position in CSL. At month end, stock numbers were 32 and cash was 2.1%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1122_PVSFIT.pdfOctober, 2022
During the month we took profits and trimmed our holdings in Qantas and Woodside, both of which had outperformed in recent times and replaced Charter Hall Long WALE REIT with Goodman Group. At month end, stock numbers were 34 and cash was 3.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1022_PVSFIT.pdfSeptember, 2022
During the month we took profits and trimmed our holdings in Treasury Wine Estates and Tabcorp, both of which had outperformed in recent times. At month end, stock numbers were 33 and cash was 6.1%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0922_PVSFIT.pdfAugust, 2022
During the month we sold out of our holding in Ampol, locking in profits with the share price now reflecting the benefit of high refining margins. Proceeds were used to increase our holdings in Treasury Wine Estates, where we see significant upside. At month end, stock numbers were 33 and cash was 3.4%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0822_PVSFIT.pdfJuly, 2022
Markets rallied in July, partially reversing June’s sharp sell-off, as investors took the view that we may be close to peak inflation and therefore that the rate hiking cycle may not be a steep and prolonged as had been feared.
The Australian market also rallied in July, with the ASX300 Accumulation Index rising by +6.0% over the month.
Looking to the current financial year, while the economic outlook is more uncertain, most companies are in good financial shape and we expect healthy dividends, albeit with less buy-back activity. The Trust is currently targeting a 5% increase in FY23 net monthly distributions to 4.9 CPU. Based on the unit price at the start of the financial year, this equates to an annualised cash distribution yield of around 6.7% and 9.6%, including franking credits.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0722_PVSFIT.pdfJune, 2022
The Trust returned –4.5%, including franking credits and after-fees in June, outperforming the market by +4.5%.
Better performing stocks during the month included energy stock, Woodside Energy Group (+7.0%), which rallied on the continued strength in the oil price and the completion of its merger with the BHP Petroleum business. In addition to delivering significant cost savings, the merger has significantly increased the scale and diversification of W ’ business.
While our portfolio is overall positioned to benefit from an ongoing cyclical recovery as COVID recedes, we balance this with a selection of high-quality defensive holdings. During the month, the flight to safety saw outperformance from our defensive holdings, with Woolworths (+2.7%), Coles (+1.6%), Telstra (-0.8%) and CSL (1.0%) all holding up well. Each of these stocks in experiencing positive drivers, with Woolworths and Coles likely to be benefitting from food inflation, Telstra seeing improved profitability in its mobile business and CSL recovering from the COVID disruption to its business. In selecting our defensive holdings, we are looking for stocks whose earnings will be relatively protected in a slower growth environment, but importantly will not be too impacted by rising interest rates. This means finding stocks which also have reasonable valuations and low levels of debt. Insurance holdings QBE (+1.0%) and Suncorp (-3.3%) also fit this bill, with earnings which are both relatively defensive and positively leveraged to rising interest rates, which boost the returns on their investment portfolios.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0622_PVSFIT.pdfMay, 2022
The Trust returned –2.3%, including franking credits and after-fees in May, outperforming the Index by +0.2%. For the last 12 months, the Trust has delivered a return of +9.5%, outperforming the Index by +3.3%. This demonstrates the ’ leverage to the value rotation which has been taking place as global growth has improved and interest rates have begun to rise from their historically low levels. While the current uncertainties may cause a short-term pause, we expect that this rotation still has a long way to run, given the macro backdrop and the high level of valuation dispersion which exists in the market. As such we continue to position the portfolio to benefit from this trend.
Better performing stocks during the month included our Resources holdings, with BHP (+4.4%) and Rio Tinto (+1.4%) both outperforming. At the beginning of the year, the Chinese government had adopted a number stimulus measures to achieve their growth target of around 5.5% for 2022. However, the impact of COVID means that far more aggressive measures will be needed if this target is to be met. As a result, many of these measures have been brought forward and it is likely that significant additional measures will be announced early in the second half of the year. As in the past, these measures will likely focus on the infrastructure and property sectors and be positive for resources and commodity prices.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0522_PVSFIT.pdfApril, 2022
Markets finally succumbed to combined concerns around the impact of rising interest rates, the war in Ukraine and spreading lockdowns in China, with most major indices posting losses in April. The Australian market again performed relatively better, with the ASX300 Accumulation Index declining by a modest -0.8% over the month. The risk-off move in markets saw the more defensive sectors of the market outperform
Looking to the current financial year, the Trust is currently targeting a 30% increase in FY22 net distribution to 5.5 CPU. Based on the unit price at the start of the year, this equates to a cash distribution yield of around 5.5% and 7.5%, including franking credits. Any surplus income will be distributed with the June distributio
The Trust returned +0.3%, including franking credits and after-fees in April, outperforming the Index by +1.1%. For the last 12 months, the Trust has delivered a return of +15.3%, outperforming the Index by +3.6%. This demonstrates the ’ leverage to the value rotation which has been taking place as global growth has improved and interest rates have begun to rise from their historically low levels. While the current uncertainties may cause a short-term pause, we expect that this rotation still has a long way to run, given the macro backdrop and the high level of valuation dispersion which exists in the market. As such we continue to position the portfolio to benefit from this trend.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0422_PVSCT-1.pdfMarch, 2022
The Trust returned +6.5%, including franking credits and after-fees in March, underperforming the Index by -0.6%. For the last 12 months, the Trust has delivered a return of +18.7%, outperforming the Index by +1.9%. This demonstrates the ’ leverage to the value rotation which has been taking place as global growth has improved and interest rates have begun to rise from their historically low levels. While the current uncertainties may cause a short-term pause, we expect that this rotation still has a long way to run, given the macro backdrop and the high level of valuation dispersion which exists in the market. As such we continue to position the portfolio to benefit from this trend.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0322_PVSFIT.pdfFebruary, 2022
Global markets were weaker again in February, as concerns around interest rate increases were superseded by worries about the Russian invasion of Ukraine, with the S&P500 -3.1%, the NASDAQ -3.4%, and the Nikkei 225 -1.8%.
However, a strong rally in commodities saw the Australian market rally, with the ASX300 Accumulation Index +2.1%. The February reporting season was also well-received with many companies reporting strong earnings and dividend increases. Looking to the current financial year, the Trust is currently targeting a 30% increase in FY22 net distribution to 5.5 CPU. Based on the unit price at the start of the year, this equates to a cash distribution yield of around 5.5% and 7.5%, including franking credits. Any surplus income will be distributed with the June distribution.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0222_PVSFIT.pdfJanuary, 2022
The strong run global markets had been experiencing came to an abrupt end in January, as investors began to factor in the prospect of interest rate hikes and the end of bond buying by the Fed. This had been expected for some time, given the strength of the post-COVID economy and the high level of inflation, however, the tone of commentary from the Fed was more hawkish than some had hoped. The result was a sharp sell-off in those parts of the market most lacking in valuation support. In particular, expensive growth and lossmaking tech stocks were hit very hard. By contrast, the better value parts of the market tended to outperform. This saw the Trust outperform by +4.0% over the month.
Within the Australian market, commodities were again the standout in January, with the Energy (+7.5%) and Metals and Mining (+1.6%) sectors outperforming strongly. While over the long-term, the demand for oil and gas will decline as it is replaced by renewables, in the short-term, it is indispensable. The rebound in demand postCOVID, combined with a period of underinvestment has seen prices rising very strongly, with Brent crude finishing the month at over US$90 per barrel – the highest level since 2014. Gas prices have been similarly strong, exacerbated by the tensions in Ukraine. This saw a very strong performance from Woodside Petroleum (+14.3%).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0122_PVSFIT.pdfDecember, 2021
The Resources sector was again the standout in December, with broad-based commodity price strength driving rallies in many of our holdings. Having fallen sharply over the past 6 months, the iron ore price has now begun to recover, with the Chinese beginning to take steps to support their property market. This saw the prices of the iron ore miners rally, with Fortescue Metals (+12.9%), Rio Tinto (+7.1%) and BHP (5.4%) all outperforming over the month. The Trust currently holds a significant overweight position in the resources sector. Not only do we believe that that the current demand outlook for commodities is positive, but historically, commodities have performed strongly in more inflationary periods, such as we are currently experiencing.
Stocks exposed to the agricultural sector continued to enjoy strong conditions, with Graincorp (+21.5%), continuing to rally. The recent wet weather has not significantly impacted the volumes of grain entering their storage and handling system and, importantly, sets the scene for another good planting this year.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1221_PVSFIT.pdfNovember, 2021
Global markets were generally softer in November, with renewed uncertainty stemming from the emergence of the Omicron COVID variant seeing most major indices decline over the month. The Australian market was also slightly weaker in November, with the ASX300 Accumulation finishing the month down -0.5%.
Defensives tended to outperform cyclicals in the more cautious environment. However, the Resources sector was an exception, with the iron ore stocks rallying in anticipation of policy easing in China. Looking to the current financial year, the Trust is currently targeting a 30% increase in FY22 net distribution to 5.5 CPU. Based on the unit price at the start of the year, this equates to a cash distribution yield of around 5.5% and 7.5%, including franking credits.
Looking ahead to 2022, assuming that vaccines prove to be effective against the Omicron COVID variant, we see the outlook as positive, with ongoing economic recovery, underpinned by relatively low interest rates and continuing stimulus measures. Further, we look forward to the return to a more “ ” economic environment, as tapering and rate rises start to see the distortions caused by extremely low interest rates and unconventional monetary policy abate.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1121__PVSFIT.pdfOctober, 2021
Global markets were generally positive in October, led by the S&P500, which rallied +6.7%, on the back of a strong US earnings season. The US economy continues to recover well despite rising inflationary pressures and supply chain disruptions. Importantly, labour market conditions remain very robust. The Australian market inched higher in October, with the ASX300 Accumulation finishing up +0.1%. The market was weighted down by the miners, which lagged as the iron ore price declined.
Looking to the current financial year, the Trust is currently targeting a 30% increase in FY22 net distribution to 5.5 CPU. Based on the unit price at the start of the year, this equates to a cash distribution yield of around 5.5% and 7.5%, including franking credits.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1021__PVSFIT.pdfSeptember, 2021
Markets were weak in September, with the S&P500 down -4.8%, as investors became concerned with a number of issues including, the prospect of central bank tightening and rising bond yields, increasing inflationary pressures and supply chain disruptions, as well as slowing growth and issues in the Chinese property market. The Australian market was also lower, with the ASX300 Accumulation Index, including franking, finishing down -1.6%. Despite this, the index has delivered a total return of +32.5% for the last 12 months.
The Trust delivered at total return after-fees and including franking of –1.3%, outperforming the index by +0.3% Resources was the key area of interest in September, with Energy (+15.0%) being the best performing sector, while Metals and Mining (- 10.5%) was the worst performer over the month. This divergence highlights the differing fortunes of energy prices and that of iron ore. Throughout the COVID period, strong demand for iron ore, principally from Chinese steelmakers, combined with supply disruptions, saw very strong iron ore prices, which recently peaked at over US$200 per tonne. By contrast, declining activity levels, combined with ample supply, saw a sharp fall in demand for oil, causing prices to fall significantly. This was reflected in the share prices of mining and energy stocks, with the former performing very strong over the last 18 months, with the latter languished.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0921_PVSFIT.pdfAugust, 2021
The Australian market rose again in August, with the ASX300 Accumulation Index making another record high, finishing the month up +2.6% and bringing the total return for the last 12 months to a very healthy +28.6%.Company reporting season was the key event during the month, with market earnings rising strongly as the economy bounced back from the first round of COVID disruptions. Earnings growth was broadbased and dividends were up sharply.
During the month we took profits and reduced holdings in a number of outperformers, including MA Financial Group, Orora and Graincorp. Proceeds were used to increase our holdings in stocks which will benefit from the reopening of the global economy including Star Entertainment, Virgin Money UK, Ramsay Healthcare and Qantas. At month end, stock numbers were 55 and cash was 5.0%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0821_PVSFIT.pdfJuly, 2021
The Australian market rose again in July, with the ASX300 Accumulation Index making another record high, finishing the month up +1.1% and bringing the total return for the last 12 months to a very healthy +29.1%.
Resources were the standout over the month, with the sector rising strongly in anticipation of reporting strong profit results and large dividends, while Financials were weaker, as the recent COVID lockdowns weighed on sentiment towards the banks.
Looking to the current financial year, market dividends are expected to increase significantly as corporate earnings recover post-COVID. The Trust is currently targeting a 30% increase in FY22 net distribution to 5.5 CPU. Based on the unit price at the start of the year, this equates to a cash distribution yield of around 5.5% and 7.5%, including franking credits.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0721_PVSFIT.pdfJune, 2021
The Trust delivered a return, including franking credits and after fees of 2.3% in June, in line with the index return. Over the last 12 months, the Trust has performed strongly, delivering a return of +30.0%, outperforming the index by 0.2%. This performance highlights the Trust’s leverage to the improving, post-COVID economy. Historically, value style investing has delivered significant outperformance during economic recoveries.
Stocks which contributed positively over the month included Telstra (+6.8%). The Telecommunications companies have struggled in recent years, as the NBN roll-out has impacted earnings from their fixed line businesses. However, as this nears completion, these headwinds are abating and their mobile businesses will be able to drive overall earnings growth, assisted by the take up of 5G technology and everincreasing data needs. Further, the recent merger of TPG with Vodafone has improved the industry structure, effectively locking in a three-player market. This is likely to lead to a rational competitive environment and recent pricing increases suggest this is occurring.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0621_PVSFIT.pdfMay, 2021
Markets continued their upwards march in May, driven by strong economic data, expectations of further stimulus measures and the accelerating vaccine rollouts. This saw most major indices post positive returns. The market was also helped by a slight pull-back in bond yields.
The Australian market also performed strongly, with the ASX300 Accumulation Index finishing the month up 2.3%. Sector performance was mixed, with strong performances from both cyclical sectors such as Financials, as well as growth sectors such as Healthcare.
• The Trust is targeting an FY21 pre-tax distribution yield of around 7%. While market dividends will be lower, the Trust will seek out the best dividend opportunities and may seek to supplement income generation by undertaking limited call-writing.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0521_PVSFIT.pdfApril, 2021
Global markets generally performed strongly in April, driven by strong economic data, expectations of further stimulus measures and the accelerating vaccine rollout in the US and UK. The market was also helped by a slight pull-back in bond yields.
The Australian market also performed strongly, with the ASX300 Accumulation Index finishing the month up 3.7%. Sector performance was mixed, with strong performances from cyclical sectors such as Resources, as well as growth sectors such as IT.
The Trust is targeting an FY21 pre-tax distribution yield of around 7%. While market dividends will be lower, the Trust will seek out the best dividend opportunities and may seek to supplement income generation by undertaking limited call-writing.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0421_PVSFIT.pdfMarch, 2021
Global markets performed strongly in March, driven by continuing positive sentiment around vaccine rollouts and the prospect of large stimulus in the US, with all major indices delivering positive returns. This was despite the ongoing increase in bond yields.
The Australian market also performed strongly, with the ASX300 Accumulation Index finishing the month up 2.3%. While there was no strong theme in the market, the more defensive sectors tended to outperform, while the more cyclical sectors lagged.
The Trust is targeting an FY21 pre-tax distribution yield of around 7%. While market dividends will be lower, the Trust will seek out the best dividend opportunities and may seek to supplement income generation by undertaking limited call-writing.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0321_PVSFIT.pdfFebruary, 2021
The February reporting season was the main highlight of the month, with companies reporting their results for the half-year to December. In line with the improving economic backdrop, the majority of results were reasonably positive and, in many cases, better than market expectations. While many companies were adversely impacted by COVID, the trends were clearly improving.
Sectors such as retail, which have been clear beneficiaries of COVIDrelated stimulus delivered very strong results. Resources stocks also delivered bumper results and very large dividends, on the back of high commodity prices. The interim result from CBA and Q1 trading updates from the other banks highlighted that credit quality remains very good.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0221_PVSFIT.pdfJanuary, 2021
Global markets began the month strongly, driven by continuing positive sentiment around vaccine rollouts and the prospect of larger stimulus in the US, following the Democratic wins in the Senate. However, a sell-off later in the month saw most major global indices finish the month largely flat.
The Australian market followed a similar path, rallying early in the month before pulling back, with the ASX300 Accumulation Index finishing the month up +0.3%. The consumer-facing sectors, along with the financials, led the market, while defensive, rate-sensitive sectors lagged.
The Trust is targeting an FY21 pre-tax distribution yield of around 7%. While market dividends will be lower, the Trust will seek out the best dividend opportunities and may seek to supplement income generation by undertaking limited call-writing.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0121_PVSFIT.pdfDecember, 2020
Global markets rose in December, building on November’s strong gains, as markets continued to look optimistically towards a postTrump, post-COVID future, with all major global indices delivering positive returns.
The Australian market also rose, with the ASX300 Accumulation Index finishing the month up +1.3%, with generally positive economic news and corporate trading updates offsetting concerns over the COVID outbreak in NSW. Over what has been an extraordinary year, the market has delivered a total return of +1.7% and has recovered to be within -8% of its pre-COVID high.
The Trust is targeting an FY21 pre-tax distribution yield of around 7%. While market dividends will be lower, the Trust will seek out the best dividend opportunities and may seek to supplement income generation by undertaking limited call-writing.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1220_PVSFIT.pdfNovember, 2020
November was a quiet month in terms of portfolio activity, with the only changes being taking profits and reducing holdings in Amcor and Sonic Healthcare as well as reducing the holding in Suncorp, which faces some risk from business interruption insurance claims. Proceeds were used to increase the holding in Macquarie Group. At month end, stock numbers were 35 and cash was 4.0%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1120_PVSFIT.pdfticker: IOF0078AU
commentary_block: Array
factsheet_url:
https://perennial.net.au/our-trusts/shares-for-income/
Under Trust Activity
release_schedule: Monthly
fund_features:
Perennial Value Shares For Income Trust aims provide investors with an attractive level of tax effective income. The portfolio invests in a well-diversified range of publicly listed companies listed (or soon to be listed) on the ASX, which we believe have sustainable operations and collectively offer a superior dividend yield (when taking into account franking credits) to the overall market. It aims to provide a dividend yield, adjusted for applicable franking credits and before fees, above that provided by the S&P/ASX 300 Accumulation Index.
- Pay monthly income distribution.
- Typically hold in the range of 20 to 70 stocks.
- Considered as a high risk/return investment with minimum 5 years investment time frame suggestion.
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