June, 2023
The fund outperformed by 2.2% over the quarter, driven by an underweight to Materials and positive stock selection within the sector. This was complemented with strong stock selection in IT, Real Estate, Financials and Communication Services names. Further outperformance was limited by negative stock selection in Energy, Consumer Discretionary and Health Care names. From a stock perspective, high conviction positions in News Corp, Domain Holdings and CSR Limited were among top contributors to outperformance while an underweight to Telix Pharmaceuticals was the top detractor over the period. On the manager level, high conviction manager, Firetrail, was the strongest performer over the quarter with relative performance in excess of 7%. Portfolio positions including Estia Health and Silk Laser advanced on acquisition approaches, driving alpha over the period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Mercer-Funds-Q2-JUN-2023-1-2.pdfMarch, 2023
Australian Small Companies performance was positive over the January quarter with the asset class returning 0.7% for the period. Australian Small Companies underperformed the broad capitalisation index over the quarter.
The fund underperformed the benchmark by 1.2% over the quarter. Stock selection was the biggest negative contributor to performance whilst sector allocation provided positive performance. Underweight to materials and overweights to consumer discretionary and financials were the most significant underperformers over the quarter. While not enough to offset this, overweights to industrials and communication services as well as an underweight to real estate were the most significant underperformers over the quarter. At a stock level, overweights to Domain Holdings, Smart Group and Janus Henderson were positive. The negative stock contributors includedoverweights in Enero Group, Superloop Ltd and News Corp.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Mercer-Funds-Q1-MAR-2023.pdfDecember, 2022
The fourth quarter of 2022 began with two strong consecutive months in October and November followed by a selloff in December. Investor optimism seemed to return in October and November following better than expected inflation readings, however, in December sentiment deteriorated as Central Banks reiterated their commitment to monetary tightening, which clawed back some of the gains established earlier in the quarter.
Hedged Developed Market Overseas Shares returned 7.2% over the quarter as earnings proved to be resilient so far and some signs of declining inflation emerged. Unhedged Overseas shares gains were modest in comparison at 3.9% given the decline of the USD in Q4. Australian Shares also posted strong gains of 9.1% over Q4 given the defensive composition of the index, with large relative weights in materials and financials helping the index outperform its global counterparts. Emerging market equities gains were slightly more subdued at 4.0%, most of the gains coming from Chinese equities in November and December following an easing of COVID restrictions.
Hedged Overseas Government Bonds were relatively muted over the quarter, returning -0.7% as major developed bonds yields increased slightly. Fixed income investors positioned for continued monetary tightening following hawkish guidance from all major central banks. Over the quarter inflation expectations for the US rose, as measured by the 10-year inflation breakeven rate which grew from 2.15% to 2.30%.
Australian shares outperformed hedged overseas shares over the quarter with the ASX 300 gaining 9.1%. The S&P/ASX 50 was the best performing Australian index, gaining 9.7%. The strongest performing sector was Utilities (28.0%) followed by Materials (14.7%), whilst the worst performing sectors were Consumer Staples (1.7%) and IT (1.9%). BHP was the top contributor (21.7%), whilst CSL was the largest negative contributor (1.3%).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Mercer-Funds-Q4-DEC-2022-V2.pdfSeptember, 2022
The fund performance was negative over the September quarter with the asset class returning -0.5% for the period. The fund did outperform the broad capitalisation index over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Mercer-Funds-Q3-SEP-2022-1.pdfJune, 2022
Australian Small Companies performance was negative over the June quarter with the asset class returning -20.4% for the period. Australian Small Companies underperformed the broad capitalisation index over the quarter.
The Australian small caps struggled during the quarter with the small ords delivering a return of -20.4%. In addition to general market concerns over inflation and interest rates, unjustified valuations in the small cap space including speculative ‘new energy’ resource names are now facing an abrupt re-pricing of reality. There are also many small caps who are facing the normal travails of brutal competition, uncertainty in operating conditions and profit outcomes much worse than investors had expected. The Mercer Australian small cap fund outperformed its benchmark by 2.4% over the quarter. During this period, both sector allocation and stock selection had a positive impact on excess fund returns. The fund's overall underweight to resources helped reduce the difficulties faced by this sector and was a key positive for the fund. The underweight to real estate and overweight to consumer discretionary were key detractors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Mercer-Funds-Q2-Jun-2022-3.pdfMarch, 2022
Australian Small Companies performance was negative over the March quarter with the asset class returning -4.2% for the period. Australian Small Companies underperformed the broad capitalisation index over the quarter.
During the first quarter of 2022, both stock selection and asset allocation drove underperformance with stock selection being the most significant. At the sector level, overweights to financials and industrials provided positive returns. This was offset by underweights to materials and real estate sectors which detracted from performance. At the security level, an overweight to SRG Global and an underweight to Chalice Mining were significant contributors to performance while an underweight to Whitehaven Coal and Coronado Global Resources were detractors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Mercer-Funds-Q1-Mar-2022-3.pdfDecember, 2020
Performance has been strong over the fourth quarter as the small cap market segment continued its recovery. Individual stock selection has been positive over the quarter while sector allocation and the funds' cash exposure was a slight drag on performance. Despite a resurgence in COVID-19 cases across NSW and Victoria over the quarter, markets were buoyant on the mass vaccine rollout and the outcome of US elections. At the security level, underweight positions in Mesoblast, Regis Resources and Chorus whilst an overweight position in NRW Holdings were the largest positive contributors. Overweight exposures in Marley Spoon and Fineos Corporation were key detractors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MMF-quarterly-report_Q4-2020-2.pdfSeptember, 2020
Australian Small Companies performance was positive over the September quarter with the asset class returning 5.7% for the period. Australian Small Companies outperformed the broad capitalisation index over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MMF-quarterly-report_Q3-2020-1.pdfticker: MIN0007AU
commentary_block: Array
factsheet_url:
https://www.multimanager.mercer.com.au/fund-facts/single-sector-funds.html
Go to quarterly reports, then Manager Performance select Australian Shares section
release_schedule: Quarterly
fund_features:
Mercer Australian Small Companies Fund aims to exceed the benchmark, before management costs, over the medium to long term. The Fund provides exposure to Australian small companies shares utilising an actively managed, multi-manager approach.
- Diversification is achieved at the manager, sector and stock levels, with a focus on operational efficiency and sustainability.
- ESG considerations, including labour standards, climate change, and principles of sustainable investment are incorporated throughout the Fund’s investment decision making and ownership practices.
- Suitable for investor who plan to invest for 10 years or more.
manager_contact_details: Array
asset_class: Domestic Equity
asset_category: Australian Micro Cap
peer_benchmark: Domestic Equity - Micro Cap Index
broad_market_index: ASX Index Small Ordinaries Index
structure: Managed Fund