September, 2023
The Fund returned -3.47% (post-fees) for the month, outperforming the benchmark which returned -4.04%.
The key contributors to relative performance included an overweight position in Karoon Energy (KAR) and underweight positions in Leo Lithium (LLL) and Chalice Mining (CHN). KAR outperformed as the energy producer benefitted from rising oil prices during the period.
The key detractors from relative performance included underweight positions in Boss Energy (BOE) and New Hope Corporation (NHC) and an overweight position in Helloworld Travel (HLO). Travel company HLO saw reversals in September as the travel sector faced headwinds including higher bond yields and fuel prices.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/205859142.pdfAugust, 2023
The Fund returned 0.48% (post-fees) for the month, outperforming the benchmark which returned -1.31%.
The key contributors to relative performance included an overweight position in News Corporation (NWS) and underweight positions in Chalice Mining (CHN) and Iress (IRE). Chalice Mining underperformed after the eagerly anticipated scoping study for its Gonneville project proved to be predicated on questionable production grade and commodity price assumptions.
The key detractors from relative performance included overweight positions in Webjet (WEB), Insignia Financial (IFL) and Centuria Capital (CNI). Webjet underperformed for the period after releasing an update that showed a slight slowdown in the company’s projected growth in FY 2024 and revealing it has no plans to reinstate its dividend.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/204181272.pdfJuly, 2023
The Fund returned 3.54% (post-fees) for the month, performing in line with the benchmark which also returned 3.54%.
The key contributors to relative performance included an underweight position in Core Lithium (CXO) and overweight positions in Webjet (WEB) and Corporate Travel (CTD). Core Lithium underperformed amid ongoing volatility in the lithium sector driven by fluctuating EV demand, impairment announcements, quarterly production updates and M&A.
The key detractors from relative performance included overweight positions in Resolute Mining (RSG), Flight Centre (FLT) and Regis Resources (RRL). Strength in travel stocks continued in July. Flight Centre provided a positive update flagging expectation of higher earnings. Demand for leisure travel remains high, seemingly unaffected by a broad-based slowing of consumer demand. Older, wealthier travellers benefitting from higher income from savings are boosting demand. Corporate travel remains below pre-COVID levels.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/203569714.pdfJune, 2023
The Fund returned -0.41% (post-fees) for the month, underperforming the benchmark by -0.44%.
The key contributors to relative performance included overweight positions in McMillan Shakespeare (MMS), AUB Group (AUB) and NRW Holdings (NWH). AUB Group saw a reversal after last month’s trading update.
The key detractors from relative performance included overweight positions in Johns Lyng Group (JLG), Gold Road (GOR) and Resolute Mining (RSG). Johns Lyng Group fell markedly despite an upgrade earnings via a mid-month trading update.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/202389078.pdfMay, 2023
The Fund returned -5.42% (post-fees) for the month, underperforming the benchmark by -2.16%.
The key contributors to relative performance included an overweight position in News Corp. (NWS), underweight position in De Grey Mining (DEG), and an underweight position in Premier Investments (PMV).
The key detractors from relative performance included an overweight position in Perseus Mining (PRU), overweight position in Lovisa (LOV), and an overweight position in Super Retail (SUL). Retailers Super Retail and Lovisa saw share price weakness following disappointing trading updates, while Perseus Mining underperformed as the gold price fell during the period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/200889305.pdfApril, 2023
The Fund returned 3.09% (post-fees) for the month, outperforming the benchmark by 0.31%.
The key contributors to relative performance included overweight positions in Helloworld Travel (HLO), Centuria Capital (CNI) and Resolute Mining (RSG).
Helloworld Travel underperformed for the period after reporting a strong update with the company benefiting from a continued rebound in travel post COVID-19.
Gold miner Resolute Mining outperformed following the release of a strong quarterly update and ongoing strength in the gold price.
The key detractors from relative performance included an underweight position in Telix Pharmaceutical (TLX) and overweight positions in Champion Iron (CIA) and Syrah Resources (SYR).
Cancer imaging company Telix Pharmaceutical saw its share price surge following the release of significantly better-than-expected March quarter sales.
Iron ore producer Champion Iron underperformed on continued weakness in the iron ore price.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/199931832.pdfFebruary, 2023
The Fund returned -3.38% (post-fees) for the month, outperforming the benchmark by 0.32%.
The key contributors to relative performance included an underweight position in Core Lithium (CXO), and overweight positions in Johns Lyng Group (JLG) and AUB Group (AUB).
Building services company Johns Lyng outperformed after reporting a bumper earnings update, benefiting from a long pipeline of restoration work from 2022 floods.
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.
The key detractors from relative performance included an underweight position in Flight Centre (FLT), and overweight positions in NRW Holdings (NWH) and Clinuvel Pharmaceuticals (CUV).
Travel company Flight Centre outperformed after raising equity to fund an acquisition in late January. The travel industry generally reported strong results in February.
Biotech company Clinuvel Pharmaceuticals saw share price weakness after reporting lower than expected sales of its key product SCENESSE.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/197628895.pdfDecember, 2022
In December, the Fund finished down -3.04% (post-fees), outperforming the benchmark by 0.69%.
The key contributors to relative performance included overweight positions Champion Iron (CIA) and Spark New Zealand (SPK), and an underweight position in Core Lithium (CXO).
Iron-ore producer Champion Iron outperformed for the period as iron ore prices continued to rise.
New Zealand telecommunications company Spark New Zealand, which was recently added to the ASX200, outperformed due to its defensive characteristics in weak market conditions.
The key detractors from relative performance included overweight positions in Liontown Resources (LTR) and Johns Lyng Group (JLG), and an underweight position in Chalice Mining (CHN).
Lithium producer Liontown Resources underperformed, giving back some of their strong 2022 gains, amid increased uncertainty of lithium demand from China.
Building services company Johns Lyng Group underperformed for the period after the market reacted to the Chief Operating Officer selling 31% of his shares in the company.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/194875748.pdfNovember, 2022
In November, the Fund finished up 5.77% (post-fees), outperforming the benchmark by 0.85%.
The key contributors to relative performance included overweight positions in Champion Iron (CIA), Coronado Global Resources (CRN) and Perseus Mining (PRU).
Miner Champion Iron outperformed for the period as iron ore prices rose more than +25% during November.
Gold miner Perseus Mining performed strongly for the period as gold prices rebounded.
The key detractors from relative performance included overweight positions Elders (ELD) and IPH Ltd (IPH) and an underweight position in Sandfire Resources (SFR).
Agribusiness Elders underperformed after releasing a trading update which included downgrades to its 2023 guidance citing margin compression and uncertainty due to poor weather conditions.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/193261849.pdfOctober, 2022
In October, the Fund finished up 7.57% (post-fees), outperforming the benchmark by 1.11%. The key contributors to relative performance included overweight positions in Syrah Resources (SYR), Cettire Ltd (CTT) and Liontown Resources (LTR).
Graphite producer Syrah Resources performed strongly for the period after a busy month of market updates. The company released its quarterly activities report, revealed a US$250 million grant and an update on the restart of its Balama Graphite Operation.
Battery materials company Liontown Resources (LTR) outperformed in October off the back of a strong quarterly update and announcing approval from the Western Australian government to commence work at a major site in WA.
The key detractors from relative performance included overweight positions in NIB Holdings (NHF), Eclipx Group (ECX) and an underweight position in Telix Pharmaceutical (TLX).
Private health insurer NIB underperformed for the period after completing an institutional placement to raise capital to fund acquisitions in National Disability Insurance Scheme (NDIS) sector.
Biopharmaceutical company Telix outperformed for the period after releasing promising preliminary data from two separate studies that indicated potentially positive results for cancer treatment.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/192317359.pdfSeptember, 2022
In September, the Fund finished down -8.44% (post-fees), outperforming the benchmark by 2.76%.
The key contributors to relative performance included overweight positions in New Hope Corporation (NHC) and Elders (ELD) and an underweight position in Link Administration (LNK).
Thermal coal miner New Hope outperformed as coal prices held up during the period.
Financial services administration solutions provider Link Administration saw share price weakness after a $2.5 billion takeover bid from software company Dye & Durham collapsed.
The key detractors from relative performance included an overweight position in Betmakers Technology (BET) and underweight positions in Premier Investments (PMV) and Brickworks (BKW).
Retail fashion chain operator Premier Investments outperformed after releasing its full year results for FY 2022. The company delivered growth in online sales, revenue and profit after strong performance in its key Smiggle and Peter Alexander businesses.
Manufacturing company Brickworks also performed strongly for the period after releasing impressive full year FY 2022 results in September.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/191324860.pdfAugust, 2022
In August, the Fund finished up 3.26% (post-fees), outperforming the benchmark by 2.68%.
The largest contributors to relative performance included overweight positions in Syrah Resources (SYR), Liontown Resources (LTR) and Karoon Energy (KAR).
Lithium prices continue to remain strong with further positive outlook for the sector as supply is expected to remain tight, benefiting Liontown Resources (LTR) which outperformed for the period.
Oil and gas company Karoon Energy (KAR) outperformed for the period after reporting solid FY22 results including growth in both its top and bottom lines. The company also announced it will consider returning excess capital to shareholders in the form of dividends and share buybacks.
The key detractors from relative performance included an overweight position in Centuria Capital (CNI) and underweight positions in lithium companies Lake Resources (LKE) and Sayona Mining (SYA).
Specialist listed property fund (REIT) manager Centuria Capital (CNI) underperformed for the period as the impact of higher interest costs was felt across the REIT sector with many companies flagging distributions to be flat or to fall in FY23.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/190386089.pdfJuly, 2022
In July, the Fund finished up 9.34% (post-fees), underperforming the benchmark by -2.09%. The largest contributors to relative performance included overweight positions in Johns Lyng Group (JLG), Betmakers Technology Group (BTG) and New Hope Corporation (NHC).
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.
Mining company New Hope Corporation (NHC) outperformed for the period as coal prices bucked the trend of other commodities and increased in July.The greatest detractors from relative performance included overweight positions in Elders (ELD), Champion Iron (CIA) and Viva Energy Group (VEA).Agriculture business Elders was weak on concerns that an outbreak of ‘Foot and Mouth’ disease in Australia could cripple Australia’s agricultural sector and reduce demand for Elders’ products and services.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/189606065.pdfJune, 2022
In June, the Fund finished down 11.69% (post-fees), outperforming the benchmark by 1.40%. The largest contributors to relative performance included an overweight position in Ardent Leisure Group (ALG), and underweight positions in Lake Resources (LKE) and Chalice Mining (CHN).
Ardent Leisure Group (ALG) outperformed after the company announced an update on the divestment of its United States business. The completion of the sale paves the way for ALG to receive US$835m in an all-cash transaction, the majority being passed to shareholders in the form of a special dividend and capital return.
Lithium miner Lake Resources (LKE) underperformed on the resignation of its CEO as well as general weakness in 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. The greatest detractors from relative performance included overweight positions in Syrah Resources (SYR) and Champion Iron (CIA), and an underweight position in Iress (IRE).
Graphite producer Syrah Resources (SYR) underperformed amid concerns of an insurgent attack on a mine close to Syrah’s Balama graphite resource. The sell down of a large shareholder also contributed to the stock’s underperformance.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/188592964.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/2020/12/187689025.pdfApril, 2022
The Fund finished the month down -0.40% (post-fees), outperforming the benchmark by 1.10%. The largest contributors to relative performance included overweight positions in Whitehaven (WHC) and Viva Energy (VEA), and an the underweight position in Megaport (MP1).
Coal miner, Whitehaven (WHC), outperformed during April as the company was befitted by record coal prices spurred on by the Russia-Ukraine conflict and strong investor sentiment following its Q1 2022 quarterly production report. Tech company, Megaport (MP1), underperformed in April following weaker than expected quarterly results. This was further exacerbated by a broad selloff in technology and growth stocks during the period.
Key detractors from relative performance included an overweight position in IGO (IGO) and underweight positions in Flight Centre Travel (FLT) and Sayona Mining (SYA).After performing strongly in Q1 2022 amid a global resources boom, lithium and nickel producer IGO (IGO) underperformed in April, in line with the broader metals and mining sector. An underwhelming quarterly production report released late in the month also contributed to share price weakness.
Flight Centre (FLT) outperformed following improving conditions in the travel industry and a winding back of global pandemic restrictions, including the recent reopening of Australian borders for international travel. As of 30 April 2022, the largest overweight positions in the Fund were Centuria Capital (CNI), Johns Lyng Group (JLG) and Uniti Group (UWL).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/186801489.pdfMarch, 2022
This month, the Fund finished the month up 5.91% (post-fees), outperforming the benchmark by 0.65%. 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 Virgin Money UK (VUK) and Ardent Leisure Group (ALG). United Kingdom focused regional bank, Virgin Money UK (VUK), underperformed during the period, as the Russia/Ukraine conflict weighed on the European banking sector.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/185781526.pdfFebruary, 2022
This month, the Fund finished the month up 2.38% (post-fees), outperforming the benchmark by 2.33%. The largest contributors to relative performance for February included overweight positions in Ardent Leisure Group (ALG) and Sims Ltd (SGM), and an underweight position in zipping Co Limited (Z1P).
Ardent Leisure Group (ALG) outperformed after the company reported positive half-year results as lockdowns eased in its key markets. The strong result was driven by solid performance in the Main Event business. Theme Parks and Attractions revenue also soared by 41% due to higher pass sales and turnout.
Zip (Z1P) underperformed as bond yields continued to rise and negatively impact the generally high valuations of technology stocks. The largest detractors from relative performance included overweight positions in Uniti Group (UWL), Life360 (360), and IGO Ltd (IGO). Uniti Group (UWL) underperformed despite reporting generally solid results. However, the company’s earnings growth from construction revenue was around $5 million lower than the second half of the financial year 2021.
The drop was due to delays caused by lockdowns in Eastern Australia and will see revenue from construction deferred to later periods. Miner IGO Ltd (IGO) underperformed after the company confirmed it was in discussions to acquire one of the world’s richest copper mines. The mine, at Cobar in regional New South Wales, is reportedly worth upwards of $1 billion. As of 28 February 2022, the largest overweight positions in the Fund were IGO Ltd (IGO), Johns Lyng Group (JLG), and Steadfast Group Ltd (SDF).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/185052740.pdfJanuary, 2022
This month, the Fund finished -8.40% (post-fees), outperforming the benchmark by 0.60%. The largest contributors to relative performance for December included overweight positions in IGO Ltd (IGO), Champion Iron Ltd (CIA), and Virgin Money UK (VUK).
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.
Champion Iron (CIA) outperformed as iron ore prices rose, driven by expectations of eased restrictions on Chinese steelmakers and future stimulus measures from the Chinese government. The largest detractors from relative performance included an underweight position in Beach Energy (BPT), and overweight positions in Charter Hall Group (CHC) and Technology One Ltd (TNE).
Beach Energy (BPT) outperformed as oil prices rose as demand remained strong and geopolitical tensions between Russia and Ukraine increased the possibility of significant supply disruption. Technology One Ltd (TNE) underperformed as bond yields rose and negatively impacted growth-focussed companies. As at 31 January 2022, the largest overweight positions in the Fund were IGO Ltd (IGO), Johns Lyng Group (JLG) and Steadfast Group Ltd (SDF).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/183936962.pdfDecember, 2021
This month, the Fund finished up 3.37% (post-fees), outperforming the benchmark by 1.96%. The largest contributors to relative performance for December included an overweight position in Johns Lyng Group (JLG), and underweight positions in Novonix Ltd (NVX) and Imugene Limited (IMU). John Lyng Group announced the acquisition of US-based group Reconstruction Experts. Reconstruction Experts is a provider of insurancefocussed repair services to insurance clients in the US. This business is similar to Johns Lyng domestic operations. An equity raising was held to partially fund the $200m acquisition.
Battery technology company Novonix (NVX) saw a sharp fall mid-December following a media story highlighting that Chinese supplies of graphite may be granted waivers from US tariffs, potentially affecting demand for Novonix’s products. After very strong gains in recent months, this was enough to prompt nervous retail investors to take profits in the name. The largest detractors from relative performance include underweight positions in Iluka Resources Limited (ILU) and Link Administration Holdings Ltd (LNK) and an overweight position in Ardent Leisure Group Limited (ALG). The IT service management company Link Administration Holdings (LNK) saw a 15% share price gain after announcing a takeover approach from Dye & Durham. Under the scheme, shareholders will receive $5.50 cash per share and an interim dividend of 3 cents, representing a significant premium to Link Group’s closing price prior to the announcement. As at 31 December 2021, the largest overweight positions in the Fund were IGO Limited (IGO), Johns Lyng Group (JLG) and Steadfast Group Ltd (SDF).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/182469043.pdfNovember, 2021
The Fund finished the month up 0.05% (post-fees), outperforming the benchmark by 0.36%. The largest contributors to relative performance for the month included overweight positions in Johns Lyng Group (JLG), IGO Ltd (IGO) and Charter Hall Group (CHC).
Insurance and remediation builder Johns Lyng Group (JLG) outperformed after reaffirming guidance at its AGM. The Bureau of Meteorology’s declaration of a La Nina alert suggests upside risk to earnings as adverse weather events create incremental work for the company. The greatest detractors from relative performance included an overweight position in Virgin Money UK (VUK), and underweight positions in Novonix (NVX) and Chalice Mining (CHN).
Battery technology company Novonix (NVX) experienced an investor frenzy throughout November, surging higher as buyers piled into the electric vehicle thematic. After ruling off a very strong November, NVX fell 32% on 3rd December on no material news. As at 30 November 2021, the largest overweight positions in the Fund were IGO Limited (IGO), Uniti Group (UWL) and Charter Hall Group (CHC).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/181812405.pdfOctober, 2021
The Fund finished the month up 0.24% (post-fees), underperforming the benchmark by 0.68%. 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/LazardGlobalListedInfrastructureFund_FactSheet_2021-11.pdfSeptember, 2021
The Fund finished the month down 0.98% (post-fees), outperforming the benchmark by 1.16%. The largest contributors to relative performance for the month included overweight positions in Karoon Energy (KAR), Whitehaven Coal (WHC), and Paladin Energy (PDN).
Oil producer Karoon Energy (KAR) was strong, as the reopening of the global economy lifted energy demand whilst supply remains disrupted. Uranium producer Paladin Energy (PDN) is benefitting from the aggressive purchase of physical uranium by an investment fund in a less liquid market relative to other metals.
The greatest detractors from relative performance included an overweight position in Mineral Resources (MIN) and underweight positions in Beach Energy and Flight Centre (FLT).
Mining services company Mineral Resources Limited (MIN -18.4%) underperformed due to uncertainty and reduced steel output in China, with fears looming that discounts on lower grade iron ore may widen
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/179543470.pdfAugust, 2021
The Fund finished the month up 3.98% (post-fees), underperforming the benchmark by 1.00%. The largest contributors to relative performance for the month included overweight positions in Uniti Group (UWL) and Ardent Leisure (ALG), and an underweight position in Champion Iron Ltd (CIA).
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.
Leisure and entertainment group Ardent Leisure (ALG) enjoyed a strong full-year result for FY21. A strong result for Main Event, the group’s chain of US family entertainment centres, underpinned the full-year result. Main Event benefitted from the general ‘re-opening’ trend observed in much of the northern hemisphere over the past few months. The greatest detractors from relative performance included overweight positions in Mineral Resources (MIN), Seven Group Holdings (SVW), and Accent Group (AX1).
Shoe retailer Accent Group (AX1) underperformed for the month despite the company posting record financial results for FY21. The drop in AX1’s share price is linked to the current COVID-19 outbreaks and subsequent lockdowns in Sydney and Melbourne. AX1 warned FY22 earnings may be impacted by around $15m due to the continued lockdown of Australia’s two largest cities.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/178519425.pdfJuly, 2021
The Fund finished the month up 1.78% (post-fees), outperforming the benchmark by 1.10%. The largest contributors to relative performance for the month included overweight positions in IGO Limited (IGO), Mineral Resources (MIN) and Seven Group (SVW).
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 underweight positions in Pilbara Minerals (PLS), Galaxy Resources (GXY) and Champion Iron (CIA).WA based lithium producer Pilbara Minerals (PLS) outperformed in July after announcing strong results in its quarterly activity report for Q22021. In the update, management announced record sales and shipments for the quarter, citing continued strength in global lithium demand.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/175531145.pdfJune, 2021
The Fund finished the month up 2.97% (post-fees), underperforming the benchmark by 0.11%. The largest contributors to relative performance for the month included overweight positions in ResMed (RMD), Johns Lyng Group (JLG) and Mineral Resources (MIN).
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 an overweight position in Evolution Mining (EVN) and underweight positions in Whitehaven Coal (WHC) and Pro Medicus (PME).
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 at 30 June 2021, the largest overweight positions in the Fund were IGO Limited (IGO), ResMed (RMD) and Charter Hall Group (CHC).
The Australian market outperformed the Developed Markets (+2.1%) throughout June. The ASX 200 returned 27.8% for FY21, which was the strongest financial year return since 2006, while the S&P Small Ordinaries index returned 33.2%. In the global context, Australia underperformed the tech-heavy US index (S&P 500) by 14.0%, however outperformed UK stocks by 10.8% which were impacted by Brexit. Interestingly, the best performing subsector in the Australian market for the financial year was Automotives (+86%), as COVID-19 drove consumers from public transport to private vehicles. During June, a fall in bond yields in the domestic market drove strong returns across the technology sector. Conversely, the movement in yields compressed bank margins, resulting in the major banks retracing some gains made in May following their earnings upgrades. In COVID-19 news, case numbers declined as global vaccination programs continued to progress, with 50% of the population vaccinated in the UK, 47% in the US and Australia trailing somewhat at 7.4%.
The pattern of snap lockdowns across Australia’s capital cities continued, with a multi-city lockdown including Sydney and Brisbane being triggered in late June. Community backlash to the on-and-off lockdown process resulted in the Federal Government announcing its fourphase “Pathway out of COVID-19”, which outlines Australia’s plan to transition from its suppression-focussed policy toward a more managed approach once vaccinations reach certain levels.
The Energy sector (+7.6%) was the best performer for the month in the Small Ordinaries index, driven by Whitehaven Coal (WHC, 23.2%), Coronado Global Resources (CRN, 22.6%) and New Hope Corp (NHC, 13.1%). Materials (-0.5%) was the worst performing sector, driven by falls in De Grey Mining (DEG, -20.6%), Gold Road Resources (GOR, -18.4%) and Westgold Resources (WGX, -17.5%). Commodity prices rose again in June, with Brent oil prices up 7.9% to US$75.13/bbl and Iron ore up 6.9%. Inflation expectations eased throughout the month, driving gold prices down 7.2%.
Global bond yields drifted lower throughout the month, with the US 10 year government bond yield falling 0.13% to 1.45% and the Australian 10 year government bond yield down 0.12% to 1.51%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/174031738.pdfMay, 2021
The Fund finished the month down 1.26% (post-fees), underperforming the benchmark by 1.53%.
The S&P/ASX Small Ordinaries Accumulation Index rose during April, returning 4.98% for the month. Small caps outperformed the broadbased S&P/ASX 300 Accumulation Index which returned 3.70%.
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-heavy Federal Budget announcement and 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.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/172515207.pdfApril, 2021
The Fund finished the month up 4.42% (post-fees), underperforming the benchmark by 0.56%. The largest contributors to relative performance for the month included overweight positions in Mineral Resources (MIN), Uniti Group (UWL) and American Pacific Borates (ABR).
Mineral Resources (MIN) outperformed after releasing its activities report for the quarter to 31 March 2021. In the report, management noted that iron ore shipments were up over 51% on the previous corresponding period. The increase in iron ore prices were also a tailwind for the company, recording an average realised iron ore price 5% higher than the December 2020 quarter. The greatest detractors from relative performance included an overweight position in Beach Energy (BPT) and underweight positions in Galaxy Resources (GXY) and De Grey Mining (DEG).
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 reserves by approximately 5%. As a result, the company withdrew its five-year outlook and revised down its FY21 production guidance. As at 30 April 2021, the largest overweight positions in the Fund were Spark New Zealand (SPK), Uniti Group (UWL) and Evolution Mining (EVN).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/171116203.pdfMarch, 2021
The Fund finished the month up 1.74% (post fees), outperforming the benchmark by 0.95%. The largest contributors to relative performance for the month included overweight positions in BlueScope Steel (BSL), Elders (ELD) and Charter Hall Group (CHC). 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 Cashrewards (CWM) and IGO Limited (IGO), and an underweight position in Premier Investments (PMV). Nickel producer IGO Limited (IGO) underperformed in March after news of additional supply of lower grade nickel out of China tempered the price of nickel. Nickel is a key component in Electric Vehicle (EV) battery manufacturing, which is expected to see a boost in demand after Joe Biden proposed a US $174b allocation towards increasing EV usage as part of the US Government’s proposed pandemic relief package. As at 31 March 2021, the largest overweight positions in the Fund were Spark New Zealand (SPK), Charter Hall Group (CHC) and ResMed (RMD).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/169633365.pdfFebruary, 2021
The Fund finished the month 2.72% (post fees), outperforming the benchmark by 1.17%. The largest contributors to relative performance for the month included overweight positions in Zip Co (Z1P), Uniti Group (UWL) and Lovisa (LOV).
Telecom business Uniti Group (UWL) outperformed during February after reporting strong revenue growth for 1H FY21. Uniti’s revenue was up 148% on the previous corresponding period, and the update also showed that the integration of Uniti’s three recent accretive acquisitions during the period were progressing on or ahead of schedule. The greatest detractors from relative performance included overweight positions in Charter Hall Group (CHC), Nuix (NXL) and Northern Star Resources (NST).
Diversified Real Estate business Charter Hall Group (CHC) underperformed after reporting earnings for 1H FY21 which 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 at 28 February 2021, the largest overweight positions in the Fund were IGO Limited (IGO), Uniti Group (UWL) and Mineral Resources (MIN).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/167187296.pdfDecember, 2020
The Fund finished the month up 3.61% (post fees), outperforming the benchmark by 0.86%. The largest contributors to relative performance for the month included overweight positions in Nuix (NXL), American Pacific Borates (ABR) and an underweight position in IDP Education (IEL). 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 Appen (APX), Reece Limited (REH), and an underweight position in Pilbara Minerals (PLS).
Lithium miner Pilbara Minerals (PLS) outperformed after announcing that it had entered into an agreement to acquire Altura Lithium Operations (ALO) for US$175m. ALO’s operation directly neighbours PLS’ flagship Pilgangoora Project, and PLS management noted that the close proximity and similar open-pit mining methods provides an opportunity to realise tangible synergies over time. As at 31 December 2020, the largest overweight positions in the Fund were Beach Energy (BPT), Saracen Minerals (SAR), and Mineral Resources (MIN).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/163178647.pdfNovember, 2020
The Fund finished the month up 8.80% (post fees), underperforming the benchmark by 1.47%.
The largest contributors to relative performance for the month included overweight positions in Beach Energy (BPT), Flight Centre (FLT) and Lynas Corporation (LYC).
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 Saracen Minerals (SAR), Bapcor (BAP) and NEXTDC (NXT).
Auto parts business Bapcor (BAP) retraced some of its recent gains during November, following the positive news on vaccine development. Throughout the pandemic, Bapcor has been a beneficiary of increased domestic tourism, used car sales and aversion to public transport. In its trading update for the quarter ending 30th September, management noted that lockdown restrictions in Victoria and Auckland had hampered sales in those regions however total revenue had increased 27% compared to the previous corresponding quarter.
As at 30 November 2020, the largest overweight positions in the Fund were Beach Energy (BPT), Saracen Minerals (SAR), and Charter Hall Group (CHC).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/161414326.pdfticker: MAQ0454AU
commentary_block: Array
factsheet_url:
- Fund Highlights
release_schedule: Monthly
fund_features:
ACQ is a pre-IPO/unlisted, micro and small cap strategy designed to deliver capital growth (of course), dividend income and manage risk by diversification across securities, industries, and by different stages of development. With approximately 90 securities in the portfolio (circa 25 being unlisted) we would say it is highly diversified for this type of strategy. Notwithstanding the diversification, the manager has been selective by industry, with the current portfolio exhibiting a focus on healthcare (including med tech), IT, online retail/e-commerce and disruptions in financial services and battery minerals and clean energy are a number of the more notable thematics the manager is investing in. That is, in areas where the manager continues to see strong, ongoing, structural growth in companies that provide both innovation and a sustainable, competitive advantage. No surprise ACQ has performed well over the last 12-months given sector positioning – NTA +77% YoY. And, with the prior disc to NTA roaring back to a slight premium, share price returns have been +116%. Of course, we would point out the obvious – past performance is not an indication of future performance, but credit where credit is due regarding sector positioning. Always good to see the close-ended structure being used appropriately by asset class, in this case illiquid unlisted and limited liquidity longer term positioning in smaller listed companies.
manager_contact_details: Array
asset_class: Domestic Equity
asset_category: Australian Mid Cap
peer_benchmark: Domestic Equity - Mid Cap Index
broad_market_index: ASX Index MidCap 50 Index
structure: Managed Fund