September, 2023
The Fund returned -2.52% (post-fees) for the month, outperforming the benchmark which returned -2.84%.
The key contributors to relative performance included overweight positions in QBE Insurance (QBE), Seven Group (SVW) and Beach Energy (BPT). QBE outperformed as insurers benefitted from higher running yields on their asset base which improves near-term investment results. Insurance is also seen as less discretionary than other forms of spending and should be more durable in a slowing economy.
The key detractors from relative performance included overweight positions in Qantas (QAN), Perseus Mining (PRU) and Northern Star (NST). Qantas underperformed for the period after announcing that CEO Alan Joyce would retire earlier than planned with Vanessa Hudson to replace him. Qantas also remained under pressure with rising oil prices likely to impact profitability given a reluctance to directly pass higher costs onto customers.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/205574188.pdfAugust, 2023
The Fund returned -0.84% (post-fees) for the month, underperforming the benchmark by -0.10%.
The key contributors to relative performance included overweight positions in Altium (ALU), Premier Investments (PMV) and AMP (AMP). Financial services company AMP outperformed after it beat analyst expectations during reporting season. Its business simplification continues to deliver; underlying earnings expanded, and cost ratios declined.
The key detractors from relative performance included overweight positions in WiseTech Global (WTC) and Perpetual (PPT), and an underweight position in Wesfarmers (WES). Wesfarmers benefited from the ongoing strength and resilience of its Bunnings hardware business and K Mart. Kmart is benefiting from customers seeking value in household goods in a tightening macro environment.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/204180118.pdfJuly, 2023
The Fund returned 3.61% (post-fees) for the month, outperforming the benchmark by 0.73%.
The key contributors to relative performance included overweight positions in Webjet (WEB), Lendlease (LLC) and WiseTech (WTC). WiseTech continued to benefit from the boom in IT stocks globally with the stock up more than 70% for 2023.
The key detractors from relative performance included an overweight position in Northern Star Resources (NSR) and underweight positions in National Australia Bank (NAB) and Woodside Energy (WDS). Major banks, including NAB, outperformed in July, playing catchup to the broader market, after lagging for the first half of the year. Competition in the mortgage refinancing segment eased with the major players easing back on incentives such as customer cashbacks to protect margins. From the perspective of deposits, banks continue to benefit from customer inertia in terms of locking-in better savings rates.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/203569939.pdfJune, 2023
The Fund returned 1.79% (post-fees) for the month, outperforming the benchmark by 0.03%.
The key contributors to relative performance included overweight positions in AUB Group (AUB), AGL Energy (AGL) and NRW Holdings (NWH). AGL Energy outperformed following significant updates after announcing improved energy plant availability. AUB Group saw a reversal after last month’s trading update.
The key detractors from relative performance included overweight positions in Qantas (QAN) and Premier Investments (PM) and an underweight position in Fortescue Metals (FMG). Qantas underperformed despite providing an update that Group domestic capacity was now back to pre-COVID levels and that data showed that consumers continued to prioritise travel over other spending categories.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/202389081.pdfMay, 2023
The Fund returned -3.00% (post-fees) for the month, underperforming the benchmark by -0.47%.
The key contributors to relative performance included an underweight position in Wesfarmers (WES), overweight position in AGL Energy (AGL), and an underweight position in NAB (NAB). National Australia Bank underperformed after the company reported weaker-thanexpected net interest margin in their 1H FY 2023 results and expectations for further margin expansion decreased.
The key detractors from relative performance included an overweight position in Premier Investments (PMV), overweight position in Super Retail (SUL), and an overweight position in Perseus Mining (PRU). Super Retail saw share price weakness following a disappointing trading update, while Perseus Mining underperformed as the gold price fell during the period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/200889222.pdfApril, 2023
The Fund returned 1.54% (post-fees) for the month, underperforming the benchmark by -0.31%.
The key contributors to relative performance included an underweight position in Fortescue Metals (FMG) and overweight positions in Corporate Travel (CTD) and AUB Group (AUB).
Steel producer Fortescue underperformed for the period as iron ore prices fell, directly impacting the company’s bottom line.
Corporate Travel saw its share price jump after winning a significant contract with the UK Home Office to provide bridging and accommodation services for asylum seekers.
The key detractors from relative performance included underweight positions in Allkem (AKE) and Mirvac (MGR) and an overweight position in Grange Resources (GRR).
Lithium producer Allkem outperformed amid speculation it was a potential takeover target given the fall in lithium prices in recent months.
Property manager Mirvac outperformed as the pause in monetary policy in early April triggered a rebound in the REIT sector.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/199694948.pdfFebruary, 2023
The Fund returned -2.67% (post-fees) for the month, underperforming the benchmark by 0.22%.
The key contributors to relative performance included overweight positions in AUB Group (AUB), QBE Insurance (QBE) and Medibank Private (MPL).
Insurer AUB outperformed following a positive earnings update. The company reported revenue growth and margin expansion in its Australian broking division driven by ongoing network optimisation, disciplined acquisitions, and enhanced broker propositions.
Health insurer Medibank Private also saw strong share price movement after releasing its half year results for the six months ending 31 December 2022. Despite the controversy due to the cybersecurity breach in October, Medibank reported growth in revenue, profit and earnings per share as the company benefited from a higher interest rate environment and lower claims.
The key detractors from relative performance included overweight positions in Clinuvel Pharmaceuticals (CUV), Northern Star Resources (NST) and NRW Holdings (NWH).
Biotech company Clinuvel Pharmaceuticals saw share price weakness after reporting lower than expected sales of its key product SCENESSE.
Despite reporting strong results in its earnings update, gold mining company Northern Star underperformed for the period as the share price was weighed down by higher costs impacting the broader mining sector and a falling gold price.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/197622239.pdfDecember, 2022
In December, the Fund finished down -3.08% (post-fees), outperforming the benchmark by 0.14%.
The key contributors to relative performance included overweight positions in QBE Insurance (QBE), Clinuvel Pharmaceutical (CUV) and Perenti (PRN).
Insurance business QBE Insurance outperformed as it continues to benefit from rising interest rates.
Mining services company Perenti outperformed following a positive earnings update, upgrading its earnings guidance. The company had managed to arrange rate adjustments with customers, including for work already completed. Perenti had also managed to secure additional contracts with Evolution Mining and Regis Resources.
The key detractors from relative performance included overweight positions in Aristocrat Leisure (ALL) and Nine Entertainment (NEC) and an underweight position in Fortescue Metals (FMG).
Aristocrat Leisure continued to underperform as investors digested commentary from its November full year result. Of particular concern was the lower-than-expected growth forecast from its mobile-games unit.
Media giant Nine Entertainment saw share price weakness after digital property company Domain (ASX: DHG) underperformed following a poor trading update, highlighting a decline in listings threatening near term earnings. Nine holds 55% of DHG shares.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/194875676.pdfNovember, 2022
In November, the Fund finished up 5.94% (post-fees), underperforming the benchmark by -0.64%.
The key contributors to relative performance included an underweight position in National Australia Bank (NAB) and overweight positions in Northern Star Resources (NSR) and Perseus Mining (PRU).
National Australia Bank underperformed for the period, in line with other banks, amid concerns over rising costs outweighing expected gains from higher net interest margins. Gold miner Norther Star Resources performed strongly for the period as gold prices rebounded.
The key detractors from relative performance included underweight positions in Fortescue Metals (FMG) and BHP Group (BHP) and an overweight position in Lendlease (LLC).
Miners BHP and Fortescue Metals outperformed for the period as iron ore prices rose more than +25% during November, directly impacting their bottom lines.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/193262522.pdfOctober, 2022
In October, the Fund finished up 5.79% (post-fees), underperforming the benchmark by -0.25%. The key contributors to relative performance included overweight positions in Qantas (QAN) and IGO Limited (IGO) and an underweight position in Fortescue Metals (FMG).
Australia’s national carrier Qantas outperformed for the period following a very positive trading update, noting leisure travel was at 130% of pre-COVID levels and business travel had also recovered.
Lithium name IGO outperformed despite a mixed quarterly production report and the sad passing of its chief executive. The report noted that expected capital expenditure at its Cosmos project was expected to be considerably higher than earlier estimates.
The key detractors from relative performance included overweight positions in ASX Limited (ASX) and Medibank Private (MPL) and an underweight position in Westpac Banking Group (WBC).
Private health insurer Medibank Private underperformed for the period after being the subject of a well-publicised cyber-security breach.
After spending a period in trading halt, the company announced that initial cost estimates were around $25-$35m covering incremental IT improvement, customer service initiatives and remediation costs for impacted policyholders.
Big 4 bank Westpac outperformed for the period in the run-up to their full-year results with investors expecting higher net interest margins to lift profits.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/192274546.pdfSeptember, 2022
In September, the Fund finished down -4.43% (post-fees), outperforming the benchmark by 1.74%.
The key contributors to relative performance included overweight positions in New Hope Corporation (NHC) and IGO Limited (IGO) and an underweight position in Macquarie Group (MQG).
Thermal coal miner New Hope outperformed as coal prices held up during the period.
Lithium company IGO Limited performed strongly in September as the lithium sector continued to surge off the back of strong global demand and high lithium prices.
The key detractors from relative performance included overweight positions in Centuria Capital (CNI) and Nine Entertainment (NEC) and an underweight position in ResMed (RMD).
Media company Nine Entertainment’s share price fell during the period on concerns of a slowing advertising market and the impact of rising mortgage rates on its majority holding in online real estate platform Domain Holdings (DHG).
Rising bond yields in September saw the property sector underperform the benchmark. Losses in C
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/191324882.pdfAugust, 2022
In August, the Fund finished up 2.18% (post-fees), outperforming the benchmark by 1.01%.
The key contributors to relative performance included overweight positions in IGO Limited (IGO), South32 (S32) and Monadelphous Group Limited (MND).
Lithium prices continue to remain strong with most stocks in the sector up strongly during the month, including IGO Ltd (IGO). IGO is wellpositioned to benefit from the transition to future-facing minerals with significant exposure to both nickel and lithium.
Mining company South32 (S32) outperformed during the period after announcing strong FY22 results, increasing its fully franked ordinary dividend and declaring a special dividend. S32 benefited from high commodity prices and increased production which helped the bottom line.
The key detractors from relative performance included overweight positions in Centuria Capital (CNI), ASX Limited (ASX) and Abacus Property Group (ABP).
Specialist listed property fund (REIT) manager Centuria Capital (CNI) underperformed as the impact of higher interest costs was felt across the property sector with many companies flagging distributions to be flat or to fall in FY23. Abacus Property (ABP) has exposure to storage and office property. The short-to-medium term prospects for office property remains uncertain as the sector grapples with the working-fromhome thematic.
ASX Limited (ASX), the dominant securities exchange in Australia, underperformed in the month after releasing full year results that disappointed the market with higher-than-expected capital expenditure and expenses in FY23. The company also flagged less IPOs given challenging market conditions and elevated volatility.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/190386091.pdfJuly, 2022
In July, the Fund finished up 5.34% (post-fees), underperforming the benchmark by -0.41%. Key contributors to relative performance included overweight positions in New Hope Corporation (NHC), WiseTech Global (WTC) and Johns Lyng Group (JLG).
Cloud-based software provider WiseTech Global (WTC) outperformed for the period after providing a positive update during the month and benefiting from falling bond yields.
Construction services company Johns Lyng Group (JLG) rebounded strongly in July after being impacted by the rotation out of growth names. The company has seen earnings growth as it continues to benefit from an increase in business from insurance companies due to the heavy rain along much of Australia’s east coast.
The key detractors from relative performance included overweight positions in QBE Insurance (QBE) and Champion Iron (CIA) and an underweight position in National Australia Bank (NAB). General insurer QBE Insurance (QBE) benefits from falling bond yields so it underperformed for the period as yields fell throughout July. After share price weakness in June, this month saw a strong recovery across the big banks, with NAB no exception seeing a share price gain of 11.7% for the month as investor fears over growing inflation and interest rate hikes moderated.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/189606044.pdfJune, 2022
In June, the Fund finished down 8.13% (post-fees), outperforming the benchmark by 0.64%. Key contributors to relative performance included overweight positions in Computershare (CPU) and Aristocrat (ALL), and an underweight position in Westpac (WBC).
Corporate administration company Computershare Ltd (CPU) outperformed as it continued to benefit from higher bond yields. CPU holds assets on behalf of clients and earns interest on that capital, which goes straight to the bottom line. Investors were selling off Westpac (WBC) shares last month in response to market volatility and the Reserve Bank’s cash rate hike. While rate hikes are generally good news for the banks as it boosts their net interest margins, there are risks that credit growth slows and that bad debts increase.
The greatest detractors from relative performance included overweight positions in IGO Ltd (IGO), Champion Iron (CIA), and Northern Star Resources (NST). Lithium miner IGO Ltd (IGO) underperformed in line with other lithium stocks as recent strong gains were reversed. This comes as investors digest reports that an abundance of investment in exploration and production facilities could see the lithium price slide in the medium term
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/fund-commentary-mc-emerging-markets-au-7.pdfMay, 2022
In May, the Fund finished down 3.45% (post-fees), underperforming the benchmark by 0.85%. Key contributors to relative performance included overweight positions in Whitehaven (WHC) and Santos (STO), and an underweight position in Woolworths (WOW).
Oil and gas producer Santos (STO) outperformed off the back of rising oil prices due to global supply concerns as the conflict in Ukraine continued.Woolworths Group (WOW) underperformed for the period despite releasing a solid quarterly sales update with its supermarkets division reporting strong sales growth. It also announced that it had taken an 80% stake in online retailer MyDeal (MYD). However, concerns on the ability to maintain margins via higher prices amid ongoing inflation concerns saw weakness in the share price. The greatest detractors from relative performance included overweight positions in CSR Limited (CSR), Johns Lyng Group (JLG) and BlueScope Steel (BSL).
Building products company CSR (CSR), underperformed on the back of weakened investor sentiment following concerns of rising costs and falling demand due to rising mortgage rates. Johns Lyng Group (JLG), a provider of integrated building services, underperformed as the company was impacted by a number of factors in May, despite favourable operating conditions. Valuation concerns, insider selling and crowded positioning were identified as drivers of share price weakness.
As of 31 May 2022, the largest overweight positions in the Fund were IGO Limited (IGO), BlueScope Steel (BSL) and Santos Ltd (STO)
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/187689530.pdfMarch, 2022
This month, the Fund finished the month up 7.71% (post-fees), outperforming the benchmark by 0.82%. The largest contributors to relative performance included overweight positions in Uniti Group (UWL), New Hope Corporation (NHC), and IGO Ltd (IGO).Lithium and nickel producer, IGO Limited (IGO), performed strongly due to rising lithium and nickel prices during the period. Investor demand for lithium remains positive, given the strong long-term demand outlook for electric vehicle (EV) batteries. Meanwhile, the spot nickel price rallied 32.3% during March, as investors grew concerned about ongoing supply disruptions stemming from the Russia/Ukraine conflict. Uniti Group (UWL) outperformed after the company received two takeover offers in the month. The initial bid was from infrastructure and property-focused asset manager, Morrison & Co. The bid valued the company at A$3.06bn, a 43% premium on UWL’s previous closing price. The largest detractors from relative performance included overweight positions in Aristocrat Leisure (ALL), Virgin Money UK (VUK), and Medibank Private (MPL).
United Kingdom-focused regional bank, Virgin Money UK (VUK), underperformed during the period, as the Russia/Ukraine conflict weighed on the European banking sector. Private health insurer Medibank Private (MPL) underperformed after facing calls from the Private Hospital Association chief executive to pass more COVID savings back to members. Investors are also positioned for higher expected claims, as elective surgery activity increases following COVID shutdowns. As of 31 March 2022, the largest overweight positions in the Fund were IGO Limited (IGO), BlueScope Steel (BSL) and Santos Ltd (STO).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/185781357.pdfFebruary, 2022
This month, the Fund finished the month up 1.47% (post-fees), underperforming the benchmark by 0.67%. The largest contributors to relative performance for February included overweight positions in Northern Star Resources (NST) and BlueScope Steel (BSL), and an underweight position in Mineral Resources (MIN). BlueScope outperformed after the business reported a rise in 1H22 net profit after tax and increased its dividend and share buyback program.
Iron ore and lithium producer, Mineral Resources Limited (MIN), underperformed this month due to weak half-year results where the company reported reduced revenues and increased haulage and shipping costs. The largest detractors from relative performance included overweight positions in Uniti Group (UWL) and Aristocrat Leisure (ALL), and an underweight position in Newcrest Mining (NCM).
Aristocrat Leisure (ALL) underperformed after the company’s bid for UK-based gaming and software company Playtech was terminated. Newcrest Mining Ltd (NCM) outperformed this month due to the increasing price of gold which has a current spot price of $US1927 per ounce. This upwards price trend is a result of the geopolitical tension between Russia and Ukraine which has caused investors to look toward safe-haven assets. NCM also received final approval to acquire the remaining stake in Pretivm Resources, a Canadian metals and mining company. As of 28 February 2022, the largest overweight positions in the Fund were IGO Limited (IGO), BlueScope Steel (BSL) and Santos Ltd (STO).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/185106249.pdfJanuary, 2022
This month, the Fund finished -6.27% (post-fees), outperforming the benchmark by 0.08%.
The largest contributors to relative performance for January included an overweight position in BHP Group Ltd (BHP), and overweight positions in Santos (STO) and IGO Ltd (IGO). BHP Group Ltd (BHP) outperformed this month due to an ongoing rebound in iron ore prices. The unification of its dual-listed corporate structure was also completed in January, which led to BHP becoming the largest ASX company in the share market. IGO Ltd (IGO) outperformed again this month, as lithium prices continue to rise off the back of sustained demand for electric vehicles and lithium supply concerns. IGO’s bid for Western Areas Ltd (WSA) also remains intact, despite pressure for IGO to increase the bid in line with the rising WSA share price.
The largest detractors from relative performance included underweight positions in Rio Tinto (RIO) and Woodside Petroleum (WPL), and an overweight position in Sonic Healthcare Ltd (SHL). Sonic Healthcare Ltd (SHL) underperformed as the shift to rapid antigen testing for COVID-19 negatively impacted the businesses, which had previously benefited from high levels of COVID-19 PCR testing. As of 31 January 2022, the largest overweight positions in the Fund were IGO Limited (IGO), Aristocrat Leisure (ALL) and Santos Ltd (STO).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/183937428.pdfDecember, 2021
This month, the Fund finished up 3.04% (post-fees), outperforming the benchmark by 0.29%. The largest contributors to relative performance for December included underweight positions in Woolworths Group Ltd (WOW) and CSL Ltd (CSL), and overweight positions in Champion Iron Ltd (CIA) and IGO Ltd (IGO). Retail and supermarket provider, Woolworths Group Ltd (WOW) underperformed following a disappointing trading update. The company noted increased costs due to COVID affecting distribution centres and stores. Lower tobacco sales and a moderation in grocery sales also contributed to the earnings downgrade. The company also lodged a competing bid for Australian Pharmaceuticals Industries (API) at $1.75 that was subsequently withdrawn in early January. The largest detractors from relative performance included an overweight position in Seek Ltd (SEK) and underweight positions in Mineral Resources Ltd (MIN) and Rio Tinto Ltd (RIO).
The outperformance of both Mineral Resources Ltd (MIN) and Rio Tinto Ltd (RIO) can be attributed to a rebound in the price of iron ore, bolstered by plans in China for credit easing and more supportive policy. The fund holds overweight positions in BHP Group (BHP) and Champion Iron that made positive contributions to performance. Seek (SEK) underperformed in line with general weakness in the growth-focussed technology sector. As of 31 December 2021, the largest overweight positions in the Fund were IGO Limited (IGO), Aristocrat Leisure (ALL) and BHP Group Ltd (BHP)
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/182472454.pdfNovember, 2021
The Fund finished the month down 0.52% (post-fees), outperforming the benchmark by 0.02%. The largest contributors to relative performance for the month included overweight positions in IGO Ltd (IGO) and Charter Hall Group (CHC), and an underweight position in Westpac (WBC)
Diversified property group Charter Hall Group (CHC) outperformed after upgrading FY22 earnings guidance, reflecting a 36% growth rate of operational earnings per share compared to FY21. The upgrade was driven by strong transactional activity and positive revaluations across a number of industrial properties.
The largest detractors from relative performance included overweight positions in Santos (STO), Clinuvel Pharmaceuticals (CUV) and Aristocrat Leisure (ALL).
Oil producer Santos (STO) underperformed in November as the emergence of COVID-19 variant Omicron dampened hopes of a global reopening ahead of the holiday period. News of the potential impact on oil demand coincided with the US Government announcing a supply boost from its National Petroleum Reserve, leading to a sharp drop in the oil price
While lockdown restrictions across New South Wales and Victoria have eased in recent months, COVID risks remain, as evidenced by the recent emergence of the Omicron variant. The coming weeks will be critical in determining the risk of Omicron to global growth, and also the implications of the recent increase in Delta cases in Europe.
Domestically, the speed and strength of the economic recovery remains a key focus. Pent-up demand combined with high savings rates and the ‘wealth effect’ from record house prices should provide a firm footing for continued growth in corporate earnings. Globally, the outlook for inflation and the likely tapering of bond purchases by the US Federal Reserve will be key themes for investors to monitor over the coming months
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/181817216.pdfOctober, 2021
The Fund finished the month up 0.50% (post-fees), outperforming the benchmark by 0.60%. The largest contributors to relative performance for the month included overweight positions in Oz Minerals (OZL), IGO Ltd (IGO), and an underweight position in Rio Tinto (RIO).
Diversified miner IGO Ltd (IGO) outperformed after releasing its quarterly update. Management confirmed production from its Nova operation was within guidance whilst costs were lower than expected. They also provided a positive update on the progress of the company’s lithium joint venture with Tianqi Lithium Corporation.
With lockdown restrictions across New South Wales and Victoria now significantly eased, the focus will shift to the speed and strength of the economic recovery. Pent-up demand combined with high savings rates and the ‘wealth effect’ from record house prices should provide a firm footing for continued growth in corporate earnings. Globally, the commencement of tapering by the US Fed and the outcomes of the COP26 Climate Conference will be key themes for investors to monitor throughout November and December.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/181060683.pdfSeptember, 2021
The Fund finished the month down 1.69% (post-fees), outperforming the benchmark by 0.16%. The largest contributors to relative performance for the month included overweight positions in Santos (STO), Whitehaven Coal (WHC) and an underweight position in Rio Tinto (RIO).
Oil producer Santos (STO) was strong, as the re-opening of the global economy lifted energy demand whilst supply remains disrupted. The largest detractors from relative performance included overweight positions in BHP Group, and underweight positions in Macquarie Group (MQG) and Woodside Petroleum (WPL).
The Australian market fell during September, marking only the second negative month of the past 18. The S&P/ASX 200 Accumulation Index and the S&P/ASX 300 Accumulation Index finished down 1.85% and 1.89% respectively.
Despite the fall, the Australian market outperformed most other global equity markets, particularly the US (-4.7%) and China (-4.9%). The pullback was driven by a number of factors. Markets were focussed on China as property giant Evergrande faced debt woes with payment deadlines looming. Staying in China, regulatory tightening and a decarbonisation push softened crude steel demand and triggered further falls in the price of iron ore and other industrial metals. In the US, more hawkish tones from the Federal Reserve lifted global bond yields and another brush with the US debt ceiling caused some mild uncertainty. More broadly, an energy demand rebound off COVID-19 lows combined with transport disruptions caused a number of regional markets to see steep rises in prices, with natural gas up 34%, thermal coal +21%, and Brent oil up 7%
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/179543476.pdfAugust, 2021
The Fund finished the month up 2.64% (post-fees), outperforming the benchmark by 0.14%.
The largest contributors to relative performance for the month included overweight positions in Uniti Group (UWL), James Hardie (JHX), andAristocrat Leisure (ALL), and underweights in Rio Tinto Limited (RIO) and Woodside Petroleum Ltd (WPL). Global building materials company James Hardie (JHX) outperformed on the back of an impressive earnings result that saw material increases in profits. In particular, JHX’s North American and Asia Pacific divisions drove earnings higher with the North American division benefitting from the general ‘re-opening’ trend observed in much of the northern hemisphere in recent months. Telecommunications company Uniti Group (UWL) outperformed following the release of full-year results for FY21. UWL achieved revenue of $160m for FY21, representing an increase of 175% from the previous year. This jump in revenue was largely the result of the company’s various acquisitions and increased number of premises connected to UWL’s network. The largest detractors from relative performance included overweight positions in BHP Group and Seven Group Holdings (SVW), and an underweight position in WiseTech Global (WTC).
WiseTech Global (WTC) performed strongly following the release of a stellar full year result. The logistics solutions platform provider delivered revenue and EBITDA that significantly beat expectations. Company management cited that market penetration has gained pace with six new global rollouts secured in FY21 and the signing of FedEx post 30 June 2021.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/178519444.pdfJuly, 2021
The Fund finished the month up 1.39% (post-fees), outperforming the benchmark by 0.29%. The largest contributors to relative performance for the month included overweight positions in IGO Limited (IGO), Seven Group (SVW) and BHP Group (BHP).
Lithium and metals miner IGO Limited outperformed throughout July. Many of IGO’s key production assets are benefitting from strong price growth due to the shift to clean energy, such as lithium, cobalt and nickel. On 30 June 2021 IGO finalised its joint venture deal with Chinese Lithium giant Tianqi Lithium Corporation, which will see IGO take 25% ownership of Tianqi’s Greenbushes lithium mine in WA and 49% of the nearby Kwinana processing plant.
The greatest detractors from relative performance included an underweight position in Sydney Airport (SYD), and overweight positions in Santos (STO) and Seek (SEK). Sydney Airport (SYD) outperformed in July after announcing that it had received a takeover offer from a consortium of infrastructure investors. Whilst the $22b offer inferred a 40% premium to the current price, the board rejected the offer noting that they believe the proposal undervalues the company’s post-COVID growth prospects.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/175531151.pdfJune, 2021
The Fund finished the month up 1.70% (post-fees), underperforming the benchmark by 0.56%. The largest contributors to relative performance for the month included overweight positions in ResMed (RMD) and Charter Hall Group (CHC), and an underweight position in Newcrest Mining (NCM).
Respiratory device maker ResMed (RMD) outperformed following a device recall from key competitor, Philips. The announcement by Phillips was sparked by concerns of potential health risks from device components, leading to a surge in demand for ResMed products. In ResMed’s trading update for the quarter ending 31 March 2021, management announced that revenue was only slightly down compared to the March 2020 quarter, which was significantly boosted by the COVID-driven spike in ventilator demand. The greatest detractors from relative performance included overweight positions in Evolution Mining (EVN), Northern Star Resources (NST) and OZ Minerals (OZL).
Gold producer Evolution Mining (EVN) underperformed as fading inflationary expectations drove the price of gold down 7.2%. Regardless, Evolution’s most recent quarterly update showed positive production levels and, as one of the lowest cost gold producers in the world, the firm is well placed to weather commodity price fluctuations. As 30 June 2021, the largest overweight positions in the Fund were Aristocrat Leisure (ALL), BHP Group (BHP) and IGO Limited (IGO).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/174031154.pdfMay, 2021
The Australian market rose during May, with the S&P/ASX 200 Accumulation Index and the S&P/ASX 300 Accumulation Index up 2.34% and 2.31% respectively.
The Australian market outperformed the US (+0.7%) and Developed Markets (+1.3%) throughout May. In the domestic market, the banking sector surged 7.3% following positive trading updates and FY21 earnings upgrades from the four major banks. The broader market continued to rise following the stimulus-focussed Federal Budget delivered on 11th May and the sustained strength in commodity prices. Concerns regarding the possibility of rising inflation remained as a key theme throughout May, with Technology and Utilities delivering poor returns – two sectors which may be impacted if inflation rose materially. In COVID-19 news, global vaccination programs progressed with more than 50% of both the US and UK populations now having received at least one dose. The rate of vaccinations in the developing world is progressing at a slower rate, with significant numbers of new cases still being recorded across India and Brazil.
Snap lockdowns in Australia’s capital cities in response to small COVID-19 outbreaks continued, with Melbourne entering a 7-day lockdown in late May which has now been extended into June. Whilst cases are still rising and the situation in Melbourne continues to develop, the snap lockdowns in Brisbane (March) and Perth (April) seem to have been effective in stemming the outbreaks relatively quickly. The Financials sector (+5.7%) was the best performer for the month, driven by Commonwealth Bank (CBA, 12.0%), Westpac (WBC, 8.1%) and National Australia Bank (NAB, 3.3%). Technology (-9.9%) was the worst performing sector, driven by falls in EML Payments (EML, - 41.9%), Afterpay (APT, -21.1%) and Appen (APX, -14.4%). Utilities also performed poorly, returning -4.3% for the month
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/172515222.pdfApril, 2021
The Fund finished the month up 2.91% (post-fees), underperforming the benchmark by 0.56%. The largest contributors to relative performance for the month included overweight positions in Uniti Group (UWL) and Evolution Mining (EVN), and an underweight position in Woodside Petroleum. Gold producer Evolution Mining (EVN) outperformed after releasing its results for the quarter to 31 March 2021. Evolution also announced an agreement to acquire Battle North, a Canadian gold miner, which is now awaiting a vote from Battle North’s shareholders. The 4.5% rise in the gold price during April was also a tailwind for the company. The greatest detractors from relative performance included overweight positions in Beach Energy (BPT) and Scentre Group (SCG), and an underweight position in Rio Tinto (RIO).
Oil producer Beach Energy (BPT) plunged after releasing its results for the quarter ending 31 March 2021. The update noted a 15% drop in production compared to the previous corresponding quarter, driven by reduced reservoir performance. The update also included a net downgrade to its estimated oil and gas reserves, reducing Beach Energy’s estimated rese
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/171116218.pdfMarch, 2021
The Fund finished the month up 2.63% (post-fees), outperforming the benchmark by 0.19%. The largest contributors to relative performance for the month included overweight positions in BlueScope Steel (BSL), Aristocrat Leisure (ALL) and an underweight position in Rio Tinto (RIO). Global steel manufacturer BlueScope Steel (BSL) outperformed in March after announcing strong results in late February and continues to benefit from rising steel prices. The Biden Administration’s announcement of a US $2t infrastructure-based recovery program provides ongoing tailwinds for the company, which has a large presence in the US steel market. The greatest detractors from relative performance included overweight positions in BHP Group (BHP), Northern Star Resources (NST) and Nickel Mines (NIC). Iron ore giant BHP Group (BHP) retraced in March following a period of strong outperformance. During March, a pollution crackdown in China weighed on the iron ore price after local governments in key steel producing regions began limiting production during heavily polluted days. As 31 March 2021, the largest overweight positions in the Fund were Aristocrat Leisure (ALL), Scentre Group (SCG), and BHP Group (BHP)
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/169633380.pdfFebruary, 2021
The Fund finished the month up 1.38% (post-fees), underperforming the benchmark by 0.07%. The largest contributors to relative performance for the month included overweight positions in Oz Minerals (OZL), BHP Group (BHP) and an underweight position in Coles (COL).
Iron Ore giant BHP Group (BHP) outperformed throughout February, boosted by rising commodity prices. Prices of BHP’s two key outputs, iron ore and copper, were pushed to 8-year highs in February due to strong demand from China and an increased likelihood of additional infrastructure projects globally as part of the COVID recovery. Copper demand is also being fuelled by the structural shift to battery storage and electric vehicles.
The greatest detractors from relative performance included an underweight position in Rio Tinto (RIO) and overweight positions in Northern Star Resources (NST) and Charter Hall Group (CHC).
Diversified Real Estate business Charter Hall Group (CHC) underperformed after reporting earnings for 1H FY21 that were slightly below expectations. Regardless, the company reported a 14% increase in funds under management and a total property investment return of 10.9% for the period. A sharp rise in bond yields, generally used to price real estate assets, was also a performance headwind for the property group during February.
As 28 February 2021, the largest overweight positions in the Fund were Aristocrat Leisure (ALL), Scentre Group (SCG), and Santos (STO).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/167304117.pdfJanuary, 2021
The Fund finished the month +0.06% (post-fees), underperforming the benchmark by 0.25%. The largest contributors to relative performance for the month included an overweight position in Breville Group (BRG), and underweight positions in Rio Tinto (RIO) and Xero (XRO).
Appliance manufacturer Breville Group (BRG) continues to perform strongly following an impressive run in 2020. BRG was a beneficiary of imposed lockdowns as more time was spent eating at home than in cafes and restaurants, driving increased demand for cooking appliances and coffee machines. This thematic underpinned a 25% increase in revenue and a 18% lift in gross profit. As a result, BRG expects its FY 2021 EBIT to be up more than 15% from FY 2020 EBIT of $113 million. The greatest detractors from relative performance included overweight positions in Beach Energy (BPT) and Charter Hall Group (CHC), and Perpetual (PPT).
Fund manager Perpetual (PPT) underperformed after a disappointing trading update. According to the release, Perpetual’s total assets under management came in at $89.2 billion at the end of the second quarter, however Perpetual Asset Management Australia’s asset management fell 2% to $22.7 billion due to outflows from its enhanced cash mandate. As 31 January 2021, the largest overweight positions in the Fund were Aristocrat Leisure (ALL), Scentre Group (SCG), and Charter Hall Group (CHC).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/164680559.pdfDecember, 2020
The Fund finished the month up 1.10% (post-fees), underperforming the benchmark by 0.11%. The largest contributors to relative performance for the month included overweight positions in Nuix (NXL), Oz Minerals (OZL) and Charter Hall Group (CHC).
Forensic software company Nuix (NXL) performed strongly following its IPO on 4th December at a price of $5.31 per share, raising approximately $950m. Nuix specialises in intelligence software for extracting information from unstructured data. The greatest detractors from relative performance included overweight positions in Worley (WOR) and QBE Insurance (QBE), and an underweight position in Rio Tinto (RIO).
Mining and energy engineering firm Worley (WOR) underperformed after providing an operating update on the financial year to date. Management noted ongoing site access restrictions and deferred activity due to COVID-19, as well as FX headwinds due to its substantial operations in the US. However, management also noted that cost synergies from its ECR acquisition were on track to be delivered by April 2021, and its operational savings project to deliver $275m of cost reductions was on track to be delivered by December 2021.
As 31 December 2020, the largest overweight positions in the Fund were Aristocrat Leisure Ltd (ALL), Scentre Group (SCG), and Charter Hall Group (CHC).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/163178635.pdfNovember, 2020
The Fund finished the month up 9.84% (post-fees), underperforming the benchmark by 0.37%.
The largest contributors to relative performance for the month included overweight positions in Beach Energy (BPT) and Worley (WOR), and an underweight position in Newcrest Mining (NCM).
Oil and gas producer Beach Energy (BPT) performed strongly during November, returning 49.2% after news of successful trial results from multiple COVID-19 vaccine candidates sparked a rally in oil prices. Energy companies such as BPT, which had been sold off throughout the pandemic, soared after the vaccine news which raised the possibility of a swifter economic recovery and an earlier-than-expected restart of international travel.
The greatest detractors from relative performance included overweight positions in Evolution Mining (EVN), Woolworths (WOW), and an underweight position in Woodside Petroleum (WPL).
Gold miner Evolution Mining (EVN) underperformed due to the 6.3% fall in the price of gold over November, driven by investors leaving the safe haven asset following the positive vaccine announcements. Despite this, Evolution’s performance for the year to date remains strong and it continues to be one of the lowest cost gold producers in the world.
As 30 November 2020, the largest overweight positions in the Fund were Aristocrat Leisure Ltd (ALL), Scentre Group (SCG), and Beach Energy (BPT).
File:ticker: MAQ0443AU
commentary_block: Array
factsheet_url:
Fund Highlights
https://investmentcentre.moneymanagement.com.au/factsheets/mi/lsu4/macquarie-australian-shares
release_schedule: Monthly
fund_features:
Macquarie Australian Shares Fund aims to outperform the S&P/ASX 200 Accumulation Index (Index) over the medium to long term (before fees).
- The Fund provides exposure to a concentrated portfolio of Australian equities through securities listed, or expected to be listed, on the Australian Securities Exchange (ASX).
- It may also provide exposure to equity issued by Australian entities on offshore exchanges, derivatives (including options, futures, warrants and forwards) and cash.
- Holds approximately 25 to 30 securities at any time.
- Derivatives may be used for hedging and to manage economic exposure.
manager_contact_details: Array
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