September, 2023
During the month, we took profits and reduced our holdings in Paladin and Carsales, following strong outperformance, and moved further underweight the REIT sector. Proceeds were used to increase our bank holdings and participate in the Orora capital raising. At month end, stock numbers were 58 and cash was 3.6%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0923_Wholesale_PVAST.pdfAugust, 2023
During the month, we exited our positions in United Malt and Newcrest, both of which had been subject to takeovers. We also exited our holding in Woolworths, and reduced holdings in defensives such as Telstra and Lottery Corporation. Proceeds were used to increase our holdings in a range of Resources stocks. At month end, stock numbers were 59 and cash was 3.5%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0823_Wholesale_PVAST.pdfJuly, 2023
During the month we reduced our holdings in CSL and Wesfarmers, freeing up funds to increase holdings in the major banks as well as adding new positions in Charter Hall and Dexus, to reduce our underweight to the REIT sector. At month end, stock numbers were 57 and cash was 2.4%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0723_Wholesale_PVAST.pdfJune, 2023
During the month, we took profits and trimmed our holdings in Treasury Wines, Telstra, BlueScope and Northern Star. Proceeds were used to increase our holding in Nufarm, which is advancing some of its innovative seed technologies towards commercialisation. At month end, stock numbers were 55 and cash was 3.4%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0623_Wholesale_PVAST-1.pdfMay, 2023
During the month we took profits and trimmed our holdings in Tabcorp, United Malt and Newcrest. Proceeds were used to increase our holdings in the Resources and Energy sectors following their being sold off. At month end, stock numbers were 53 and cash was 4.2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0523_Wholesale_PVAST.pdfMarch, 2023
During the month, we took profits and exited holdings in Transurban and Sims Metal and reduced our holding in Qantas. Proceeds were used to increase our Resources holdings and to reduce our bank underweight, following a period of underperformance by the sector. We also topped up our holding in Virgin Money UK. At month end, stock numbers were 62 and cash was 6.7%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0323_Wholesale_PVAST.pdfFebruary, 2023
During the month we took profits and reduced our holdings in Seven Group, Goodman Group and QBE. We also reduced our holdings in the banks, where we see the outlook becoming more challenging. Proceeds were used to increase our holdings in resources stocks, which had sold off over the month and where we see the outlook as being positive as the China reopening gathers pace. The Trust finished the month with 62 positions and cash of 8.2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0223_Wholesale_PVAST.pdfJanuary, 2023
During the month we took profits and reduced our iron ore exposure, trimming our holdings in Rio Tinto and Fortescue Metals. Proceeds were reinvested into lithium miner, Pilbara Minerals, which had been sold off sharply and was offering very good value. We also increased our holding in James Hardie. At month end, stock numbers were 63 and cash was 6.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0123_Wholesale_PVAST.pdfDecember, 2022
During the month, we reduced our exposure to cyclicals, trimming our holdings in housing and retail exposed stocks such as CSR, Wesfarmers and Kathmandu. We also locked in profits and reduced our holding in Tabcorp, which had performed strongly since its demerger from Lottery Corporation. Proceeds were used to increase holdings in Woolworths and Fortescue Metals. At month end, stock numbers were 60 and cash was 7.7%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1222_Wholesale_PVAST.pdfNovember, 2022
During the month, we took profits and trimmed our holdings in a number of the resources names. Proceeds were used to top up holdings which had lagged, including Orora, Newcrest, Ramsay Healthcare, Treasury Wines and CSL. At month end, stock numbers were 59 and cash was 7.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1122_Wholesale_PVAST.pdfOctober, 2022
During the month we took profits and trimmed our holdings in Qantas, Santos and QBE Insurance. Proceeds were used to top up holdings in Macquarie Group, James Hardie and a number of resources names. At month end, stock numbers were 59 and cash was 5.1%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/1022_Wholesale_PVAST.pdfSeptember, 2022
During the month we took profits and trimmed our holdings in Treasury Wines and ANZ, both of which have outperformed recently. Proceeds were used to increase our holding in engineering firm, Worley, which stands to benefit in the near-term from catch-up capex in the energy sector and longer-term from the investment in the energy transition. We also topped up our holdings in Reliance Worldwide and Smartgroup, both of which had been sold off in recent times and are offering good long-term value. At month end, stock numbers were 59 and cash was 5.1%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0922_Wholesale_PVAST.pdfAugust, 2022
During the month we exited our position in Alumina Limited, given a negative view on the outlook for the alumina price versus other commodities. We also locked in some profits and reduced our holding in Oz Minerals post receipt of the takeover offer. Proceeds were used to increase holdings in Treasury Wine Estates, Reliance Worldwide, MA Financial and City Chic Collective. At month end, stock numbers were 59 and cash was 5.6%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0822_Wholesale_PVAST.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 as steep and prolonged as had been feared. This saw a fall in long-term bond yields, which was supportive of equities markets. Most major indices were strong, with the S&P500 +9.1%, the NASDAQ +12.3%, the FTSE100 +3.5% and the Nikkei 225 +5.3%. The exception was the Chinese market, which saw the Shanghai Composite -4.3% on rising COVID numbers and weak economic data due to lockdowns. The easing of bond yields saw a rotation in markets, with growth and interest rates sensitive sectors outperforming. By contrast, concerns over the impact of coordinated central bank cash rate increases on global economic growth saw the more cyclical parts of the market underperform.
The Australian market also rallied in July, with the ASX300 Accumulation Index rising by +6.0%. The best performing sector was IT (+15.4%), as falling bond yields provided some reprieve to many of the tech stocks which had been aggressively sold down in recent months. Similarly, REITs (+11.8%) outperformed over the month. The Financials (+9.4%) were also stronger, with the banks recovering some of last month’s losses, as the prospect of a less aggressive tightening cycle reduced fears over bad debts.
Metals & Mining (-1.3%) was the only sector to deliver a negative return, as investors worried about the combined impacts of ongoing COVID lockdowns and weak activity levels in China, as well as slowing growth more generally. Energy (+2.2%) also underperformed the market, having performed very strongly over the last 12 months.
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The Trust returned -9.3%, after-fees in June, underperforming the index by -0.3%. Over the past 12 months, the Trust has outperformed the index by +3.9%, after-fees, as the market has rotated towards value. 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 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 oo e’ business. Engineering firm, Worley (-3.4%), which services the global energy sector, also outperformed as the realisation grows as to the extent of investment that will be needed in the sector – be it related to oil and gas in the near-term or renewables in the long-term.
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%), Telstra (-0.8%) and CSL (-1.0%) all holding up well. Each of these stocks is experiencing positive drivers, with Woolworths 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 IAG (-0.2%) 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.
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The Trust returned -3.1% after-fees in May, underperforming the Index by -0.4%. For the last 12 months, the Trust has delivered a return of +8.0%, outperforming the Index by +3.3% after-fees. This demonstrates the ’ leverage to the value rotation which has been taking place as economies have reopened 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 will still have 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 South 32 (+4.8%), BHP (+4.4%) and Rio Tinto (+1.4%) all 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_Wholesale_PVAST.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 S&P500 fell -8.8%, while the NASDAQ fell -13.3% as loss-making tech stocks were punished on the prospect of rising funding costs. The Nikkei 225 was down -3.5% and the Shanghai Composite fell -6.3% as Chinese activity was impacted by the lockdowns in major cities. The FTSE100 fared better, returning +0.4%.
The Trust returned -0.4% after-fees in April, outperforming the Index by +0.4%. For the last 12 months, the Trust has delivered a return of +14.4%, outperforming the Index by +4.2% after-fees. 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 will 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.
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Markets staged a rally in March, despite the ongoing conflict in Ukraine, accelerating inflation prints and increasingly hawkish commentary from central banks. This saw the S&P500 +3.6%, the Nikkei 225 +4.9% and the FTSE 100 +0.8%. The exception was the Chinese market, where renewed COVID lockdowns saw the Shanghai Composite down -6.1%. The rally was led by the Tech and Resources sectors. The Tech sector found support, having previously been sold down very heavily as bond yields rose. By contrast, the ongoing strength in commodity prices saw the Resources sector continue its very strong performance. The Australian market was a standout, with the ASX300 Accumulation Index returning a very strong +6.9% in March, and all sectors delivering positive returns. While IT (+11.8%) was the best performing sector, its relatively small index weighting meant that the key drivers of the markets rise were the Resources and Financials sectors, which collectively account for slightly over 50% of the market. Ongoing commodity price strength saw the Metals and Mining (+11.8%) and Energy (+10.1%) sectors rally strongly, while Financials (+8.5%) rose on the prospect of interest rate rises.
Despite the ongoing uncertainties, particularly those stemming from the Russian invasion of Ukraine, the economic backdrop in most major economies is positive, with strong growth as they reopen postCOVID, and very good employment conditions. However, economies now face the challenges of ongoing supply chain issues, high inflation, and the associated turn in the interest rate cycle. After many years of increasing globalisation, low inflation and falling interest rates, these factors present very significant changes to the economic backdrop and warrant a degree of caution
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Just when you thought it was safe to go back into the water… Having largely recovered from the impacts of COVID and seemingly digested the prospects of the end of “free money” as the rate cycle turns, the market is now confronted with the Russian invasion of Ukraine. While geopolitical tensions generally have been escalating over recent years, the focus has principally been around China/Taiwan, with a medium-term time frame. By contrast, the implications of the sudden and largely unexpected outbreak of a major war in Europe, involving a nuclear power, are not something that the market has given much thought to, until now. The immediate effect of the month’s events was to see global markets weaker, 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%. On the positive, the economic backdrop in most major economies is good as they reopen post-COVID, with strong economic growth and very healthy employment conditions.
However, economies now face the challenge of high inflation and the associated turn in the interest rate cycle. This is being driven by lingering COVID-related global supply chain issues and exacerbated by the current conflict. Both COVID and conflict have highlighted the need for more resilient supply chains and greater self-sufficiency. In other words, we are likely to see a slowing or reversal of the long-term trend of increased integration in certain parts of the global economy. Add to this, factors such as the likelihood of increased government spending, plus the massive investments required to decarbonise, and we can see significant new factors at play in the global economy. We certainly live in interesting times.
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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 +3.2% 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 very strong performances from Woodside Petroleum (+14.3%), Santos (+13.2%) and engineering firm, Worley (+8.7%).
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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. Other resources holdings which performed strongly included copper miners 29metals (+17.6%) and Oz Minerals (+8.6%), mineral sands producer, Iluka Resources (+17.2%) and base metals producer South32 (+13.6%).
Apple was a solid performer for the month, adding +0.3 percentage points to return, on the back of growing certainty that the company will launch a fully autonomous car (without a steering wheel or pedals) most likely in 2025. Codenamed “Titan”, it has been on the drawing board since 2014. Apple has recently purchased a test site in Arizona for US$125m and briefed assembly partner Foxconn (among others, including Toyota and Hyundai, possibly to handle the manufacture). ON Semiconductor and Volkswagen together contributed +0.5 percentage points.
ON Semiconductor was added recently because of its role in providing the components for conversion of power from DC to AC/DC for use with wind and solar energy, as well as in electric cars. Volkswagen has been underperforming generally, which is not unexpected given the Tesla/Rivian hype, but we believe the company will ultimately emerge as the scale player in electric cars, meaning the production of around 10 million electric vehicles a year across its family of brands including Skoda, SEAT, Audi and Porsche, among others.
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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. In addition some of the more interest rate sensitive names suffered as bond yields rose sharply on the back of higher inflation readings.
The AGM season got underway during the month, with companies overall making positive comments regarding improving operating conditions as the NSW economy progressively reopened. The ongoing reopening of the economy and borders is set to see activity recover strongly and we expect to see the domestic economy bounce back quickly, as it did following previous lockdowns, with low interest rates supporting growth and the labour market remaining very strong.
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The Australian market was also lower, with the ASX300 Accumulation experiencing its first negative monthly return in the last 12 months, finishing down -1.9%. Despite this, the index has delivered a total return of +30.9% for the last 12 months and remains above preCOVID levels. Pleasingly, the Trust outperformed during the month, declining only 0.2%. Since the market’s low in March 2020, the Trust has performed very well, outperforming the market by +8.1% p.a. after fees. This performance highlights the Trust’s leverage to the post-COVID economic recovery. Historically, value style investing has delivered significant outperformance during economic recoveries.
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 resulted in 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, while the latter languished. More recently, however, moves by the Chinese to reduce steel production and cool their property market have seen the iron ore price fall sharply, and with it, the prices of the iron ore miners. The Trust benefited in a relative sense, as it holds an underweight position in the sector, with BHP (-11.6%) being our preferred exposure given its strong operating performance and decision to exit fossil fuels and focus on future-facing commodities. While iron ore was weak, aluminium and alumina both rallied strongly, having lagged over the past 12 months. This was driven by tightening supply in China, due to factors such as power availability and environmental issues. This saw very strong performances from our holdings in Alumina Ltd (+18.0%) and South 32 (+14.5%).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0921_Wholesale_PVAST.pdfAugust, 2021
The Australian market rose again, with the ASX300 Accumulation Index making another record high, finishing the month up +2.6%, bringing the total return for the last 12 months to a very healthy +28.6%.
The resources sector was the standout in terms of results delivered, with high commodity prices driving record profits and massive dividends. Despite this, however, the share prices of the iron ore miners declined, down an average of -13.6% over the month. This was due to the iron ore price falling sharply from its recent very high levels following the announcement that the Chinese were aiming to reduce steel production in the coming year.
The Trust holds an underweight position in the iron ore stocks, preferring exposure to other commodities, given how hard the iron ore price had run over the last year. Resources holdings which performed well included Alumina Ltd (+9.4%) and South32 (+5.7%) as the alumina price began to rise, having previously lagged many other commodities.
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_Wholesale_PVAST.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 on expectations of delivering very strong profits and dividends during the upcoming reporting season. Financials were weaker, as the recent COVID lockdowns weighed on sentiment towards the banks, while the Tech sector was the was the worst performing sector over the month.
Since the market’s low in March 2020, the Trust has performed very well, outperforming the market by 12.8% after fees. This performance highlights the Trust’s leverage to the post-COVID economic recovery.
We expect economic growth to continue to be strong and this should benefit the Trust going forward. Historically, value style investing has delivered significant outperformance during economic recoveries.
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Stocks which contributed positively over the month included Telstra (+6.8%) and TPG Telecom (+20.2%). 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 ever-increasing 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.
Another factor that makes these companies appealing is that their operating businesses can be separated from their infrastructure assets. During the month, Telstra announced that it had sold a 49% stake in its mobile towers to a consortium of infrastructure investors. While Telstra effectively retained control of the assets, they were able to achieve a very high price for half the earnings, with the sale done at 28x EBITDA. This transaction highlights the prices that cashed-up infrastructure investors are prepared to pay for these sorts of assets and we expect further asset sales over time. Telstra will receive $2.8bn from the sale and will return around half of this to shareholders in FY22. This on top of its already attractive dividend yield. Given these improving sector dynamics, we regard telcos as one of our preferred defensive exposures.
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Markets continued their upward 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 delivered a return of +2.7%, outperforming the market by 0.4% after fees. Over the last 12 months, the Trust has returned +31.9%, outperforming the index by +3.2% after fees. This has been driven by strong performances from a large number of our holdings across a range of different sectors.
Since the market’s low in March 2020, the Trust has performed very well, outperforming the market by 14.4% after fees. This performance highlights the Trust’s leverage to the post-COVID economic recovery. Historically, value style investing has delivered significant outperformance during economic recoveries.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0521_Wholesale_PVAST.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 both cyclical sectors such as Resources, as well as growth sectors such as IT.
The Trust delivered a return of +3.2%, underperforming the market by 0.5% after fees. However, over the last 12 months, the Trust has outperformed the index by 6.2% after-fees. This has been driven by strong performances from a large number of our holdings across a range of different sectors.
Since the market’s low in March 2020, the Trust has performed very well, returning +73.7% and outperforming the market by 13.3% after fees. This performance highlights the Trust’s leverage to the post-COVID economic recovery. Historically, value style investing has delivered significant outperformance during economic recoveries.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0421_Wholesale_PVAST.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 delivered a return of 2.9%, outperforming the market by 0.6% after fees, bringing the total outperformance after fees for the last 12 months to 10.8%. This has been driven by strong performances from a large number of our holdings across a range of different sectors.
Since the market’s low in March 2020, the Trust has performed very well, returning +68.3% and outperforming the market by 13.6% after fees. This performance highlights the Trust’s leverage to the post-COVID economic recovery. Historically, value style investing has delivered significant outperformance during economic recoveries.
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The Trust delivered a return of +3.2%, outperforming the market by 1.7% after-fees, as ongoing strong domestic economic data and positive results during the reporting season supported the outlook for many of our good value, cyclical holdings, which are leveraged to an improvement in the broader economy.
Since the market’s low in March 2020, the Trust has performed well, returning +63.5% and outperforming the market by 12.4%. This performance highlights the Trust’s leverage to the post-COVID economic recovery. Historically, value style investing has delivered significant outperformance during economic recoveries.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0121_Wholesale_PVAST.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, ratesensitive sectors lagged.
The Trust delivered a return of +0.8%, outperforming the market by +0.5%, as ongoing strong domestic economic data supported the outlook for many of our good value, cyclical holdings, which are leveraged to an improvement in the broader economy.
Since the market’s low in March, the Trust has performed well, returning +58.9% and outperforming the market by +9.9%. This performance highlights the Trust’s leverage to the post-COVID economic recovery. Historically, value style investing has delivered significant outperformance during economic recoveries.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/0121_Wholesale_PVAST.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%, as generally positive economic news and corporate trading updates offset 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 returned +1.6% in December, outperforming the market by 0.3%, as improving global growth prospects saw an ongoing rotation out of some of the more expensive growth stocks and towards the better value, more cyclical parts of the market.
Since the market’s low, the Trust has performed well, returning +57.4% and outperforming the market by 8.9%. Over this period, many holdings rallied strongly, as it is during recovery phases that value stocks often deliver significant outperformance.
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During the month, the Trust added a position in Healius, a leading Australian provider of pathology and diagnostic imaging services. These are high quality businesses and, while near-term earnings are being boosted by COVID testing, there is a medium-term opportunity for operating performance to be significantly improved.
Further, the company has an ungeared balance sheet and may well become a takeover target at some point. Holdings were also increased in Metcash and Telstra, both of which are trading on attractive valuations and offer significant potential upside. This was funded by taking profits and reducing or exiting a number of stocks which had performed strongly, including James Hardie, JB Hi-Fi and Qantas. At month end, stock numbers were 60 and cash was 3.4%.
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commentary_block: Array
factsheet_url:
https://perennial.net.au/our-trusts/australian-shares-wholesale/
Under Trust Activity
release_schedule: Monthly
fund_features:
Perennial Value Shares Wholesale Trust The provides an actively managed exposure to a portfolio of Australian shares (employing a value style investment process). Invests in a range of companies listed (or soon to be listed) on the ASX which Perennial Value believes have sustainable operations and whose share prices offer good value. The cornerstone of this approach is a strong emphasis on company research.
- The portfolio holds between 20 – 70 stocks.
- Aims to achieve outperformance of 3% p.a. above the S&P/ASX300 Accumulation Index, over rolling three year periods.
- Every potential investment opportunity is assessed on its key qualitative and quantitative criteria.
- May hold cash by no more than 10%.
- 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