June, 2023
The Australian share market posted relatively flat returns over the June 2023 quarter. MLC Wholesale IncomeBuilder provided a relative degree of resilience. The portfolio’s return of 1.8% (before deducting fees and taxes) outperformed the broader Australian share market (ASX300) by 0.8%.
The ASX 300 lagged global markets over the quarter as the strong lead from overseas was tempered by somewhat unexpected Reserve Bank of Australia interest rate hikes which made investors more cautious. The drivers in the June quarter were similar to those which have played out for most of this year, with Technology and Consumer stocks doing much of the heavy lifting as investors attempt to put a value on Artificial Intelligence (AI) and assess any productivity gains this technology might produce. Materials were weaker in line with lower commodity prices and consumer facing sectors also struggled as interest rates continue to bite.
Both of the fund’s underlying managers, Antares Equities and Maple Brown Abbott, outperformed the ASX300 but underperformed the ASX 200 All Industrials over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/Fund-Profile-Tool-Fund-Commentary-MLC-gib.pdfSeptember, 2022
In what was a weak quarter for Australian shares following moves globally, the MLC Wholesale IncomeBuilder portfolio whilst not immune, provided a relative degree of resilience. The portfolio’s return of -7.3% (before deducting fees and taxes) outperformed the broader Australian share market.
Australian shares joined the sharp sell-off in global share markets over the course of the second quarter of 2022. Many central banks engaged in monetary tightening, raising interest rates to combat high inflation. This in turn heightened investor fears of a global economic recession. The concerns over a slowing global economy and a reduction in demand saw oil prices pull back as the quarter progressed. Iron ore prices also fell sharply as China's zero-COVID policy continued to weigh negatively on economic activity and therefore demand for iron ore.
There continued to be a rotation out of growth and higher multiple companies into value stocks, particularly in defensive areas of the market. The heavy fall of the ASX over the June quarter saw all sectors finish lower except for the Utilities and Energy sectors which both eked out small gains. Particularly hard hit were the Information Technology, Materials and Consumer Discretionary sectors as investors repositioned their portfolios more defensively for the expected softer economic times ahead.
Both of the fund’s managers, Antares Equities and Maple Brown Abbott, strongly outperformed the market over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MLC-Income-Builder-1.jpgJune, 2022
The fund benefited from the market’s continued sell-off of growth companies and shift to favour value companies which tend to have higher earnings.
The February earnings reporting season came and went without too many surprises. In general, Australian companies reported strong operating performance over the December half. Around half of all companies reporting beating earnings expectations, while a quarter were in-line. Notably, retail sales remained resilient and confidence in a post-COVID economic recovery was high.
The major banks performed well on expectations of interest rate rises and the positive flow on effect this could have on their net interest margins.
Both of the fund’s managers, Antares Equities and Maple Brown Abbott, strongly outperformed the market over the quarter and outperformed by 6% over the year.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MLC-Income-Builder.jpgMarch, 2022
The fund benefited from the market’s continued sell-off of growth companies and shift to favour value companies which tend to have higher earnings.
The February earnings reporting season came and went without too many surprises. In general, Australian companies reported strong operating performance over the December half. Around half of all companies reporting beating earnings expectations, while a quarter were in-line. Notably, retail sales remained resilient and confidence in a post-COVID economic recovery was high.
The major banks performed well on expectations of interest rate rises and the positive flow on effect this could have on their net interest margins.
Both of the fund’s managers, Antares Equities and Maple Brown Abbott, strongly outperformed the market over the quarter and outperformed by 6% over the year.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/MLCMasterKeyInvestmentServiceFundamentals-MLCWholesaleIncomeBuilder-FSP.pdfJune, 2021
The fund delivered another very strong return in the June quarter, up 5.8% (before deducting fees and taxes). The “COVID crash” in March 2020 has dropped out of the one year returns so the fund returned an extraordinary 32.2% for the year to 30 June 2021.
The strong June quarter performance reflects positive returns by the market benchmark in April, May and June. Australia’s economic recovery and improved earnings growth contributed to the market’s positive return. Since the profit reporting period early in the year which exceeded expectations, the ongoing release of good economic data resulted in upgraded earnings forecasts for the financial year just concluded and 2022. However, these positive market developments occurred before the deterioration in COVID-19 infections with the outbreak of the Delta variant in Sydney requiring an extended lockdown.
In terms of industries, Information Technology (12.1%) recorded the highest return, due in part to the performance strength of AfterPay. The Consumer Discretionary index increased by 11.2% as consumer sentiment and retail spending returned to pre-pandemic levels. The favourable response to Telstra’s corporate restructure and intention to return approximately $1.4 billion to shareholders following the sale of 49% of its mobile tower infrastructure business contributed to the 10.6% return of the Communications Services index.
File:December, 2020
The fund’s return (before deducting fees and taxes) turned sharply upwards, delivering 16.3% in the December quarter. The one year return is still weak, largely due to the significant falls earlier in the year during the “COVID crash” in MarchThe exceptional December quarter performance was due largely to positive news that a number of COVID-19 vaccines had been developed. Expectations that the rollout of the vaccine in 2021 would lessen the economic impact of COVID-19 raised company earnings forecasts and led to improved performance by industries and companies closely exposed to the anticipated economic recovery. The more positive market tone was also helped by improved local economic data and a further loosening of monetary policy with the cash rate reduced to 0.1% by the Reserve Bank of Australia. Strength in commodity prices also helped the local share market, with the iron ore price pushing above US$150/t and the price of oil rising sharply.
Even the Financial sector joined in as confidence that Australia’s economic recovery would reduce loan repayment deferrals led to rises in the fund’s holdings in banks.
File:ticker: MLC0264AU
commentary_block: Array
factsheet_url:
https://www.mlc.com.au/fundprofile/flow/fundProfile?execution=e1s15
Fund Commentary
release_schedule: Quarterly
fund_features:
MLC Wholesale IncomeBuilder aims to provide an income stream (excluding capital gains) that grows each year, by actively investing primarily in Australian shares. It suitable for investors wanting to invest in shares in Australian companies that are expected to deliver a growing dividend stream over time.
- MLC operates with a clearly defined investment style, centred on a Multi-Manager approach.
- Focuses on investing in listed Australian companies that have the potential to provide future sustainable or growing dividends.
- May have a small exposure to companies listed outside of Australia from time to time.
manager_contact_details: Array
asset_class: Domestic Equity
asset_category: Australia Large Value
peer_benchmark: Domestic Equity - Large Value Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund