September, 2023
The Trust returned -2.2% in September, outperforming its benchmark by 0.5%.
The Trust’s Australian equities holdings returned -0.5%, outperforming the market index. Our overweight position in Seven Group Holdings (+12%) was a key positive contributor to performance. Following an excellent full year result in August showing strong momentum in key business and a much improved balance sheet, the stock continued to outperform in September as the market reappraised the discounted multiple on which it traded. Our overweight position in Incitec Pivot (+7%) also performed well. The key driver was a sharp increase in ammonia prices, with the Tampa price rising 47% over the month, supported by elevated supply outages. The company also provided a trading update during the month, at which it detailed better than expected performance from its key explosives division. Our overweight holding in Healius (-18%) detracted from performance. Following a soft full year result in August, the market has focused on near-term headwinds and balance sheet risks. While we acknowledge these risks, we expect a recovery in pathology volumes to support earnings over the medium term, underpinning the current valuation.
The Trust’s international equities holdings returned -4.0%, modestly below the international market index in AUD terms.
The Trust’s A-REIT holdings returned -9.5%, below the A-REIT index. Office-exposed REITs were among the hardest hit, including our holdings in Mirvac Group (-12%) and GDI Property Group (-16%).
The Trust’s fixed interest holdings returned -1.4%, modestly above the bond market index.
The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned -4.6%. Soft performance reflected sector wide headwinds associated with rising bond yields.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-1-1.pdfAugust, 2023
The Trust returned -0.8% in August, underperforming its benchmark by 0.6%.
The Trust’s Australian equities holdings returned -2.2%, underperforming the market index. Company earnings results were the key drivers of stock performance over the month. Our overweight holding in Ampol Ltd (+8%) performed well, following the release of a solid half-year result. While earnings were in line with expectations, having pre-announced in July, the market was impressed with the result
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-12.pdfJuly, 2023
The Trust returned 1.8% in July, underperforming its benchmark by 0.1%. The Trust’s Australian equities holdings returned 3.6%, exceeding the market index. Energy holdings were among our top positive contributors to performance, including an overweight position in Woodside Energy Group (+10%). The key driver was the oil price, with Brent crude rising 13% to close at US$85/barrel. Strength in oil reflected improved sentiment towards the US economy and oil demand outlook, coupled with expectations that OPEC restraint will see continued tightness in market supply. Our overweight exposure to the banks was another positive, including positions in ANZ Group Holdings (+9%) and National Australia Bank (+8%). The sector performed well globally, supported by hopes that central bank tightening was nearing an end and inflation will moderate without a severe bad debt cycle. Our overweight holding in Ansell (-10%) detracted from performance. The company delivered disappointing FY24 earnings guidance during the month. Sales remain soft as customers continue to run down excess inventories of medical gloves and other protective equipment built during the pandemic. Underlying margins are also softer, with FY23 having been supported temporarily by the write back of an accounting accrual. While this is disappointing, ANN has implemented an efficiency program aimed at offsetting these headwinds.
The Trust’s international equities holdings returned 1.3%, below the international market index in AUD terms, reflecting manager underperformance within regions.
The Trust’s A-REIT holdings returned 3.8%, modestly below the A-REIT index. Retail REITs tended to outperform, including our overweight holding in Scentre Group (+6%).
The Trust’s fixed interest holdings returned 0.6%, modestly above the bond market index.
The Trust’s exposure to alternative assets, through its holding in the MapleBrown Abbott Global Listed Infrastructure Fund (GLIF), returned 0.8%. Brazilian toll road holding Ecorodovias was our strongest performer over July (up 26%), following a solid half-year result. Like-for-like traffic in the first half was 8%above pre-COVID levels and tolls saw strong inflation driven increases.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-11.pdfJune, 2023
The Trust returned 1.0% in June, underperforming its benchmark by 0.3%.
The Trust’s Australian equities holdings returned 1.8%, in line with the market index. Our holdingsin the general insurers, including overweight positions in Insurance Australia Group (+10%) and QBE Insurance Group (+7%), were among the top positive contributors to performance. Strong performance was driven by the rise in bond yields, which supports investment income, as well as high rates of price growth across the industry. Our overweight position in Rio Tinto (+7%) also performed well. The stock benefited from stronger pricing for key commodities including iron ore, which rallied on expectations of increased Chinese stimulus. Our overweight position in Link Administration Holdings (-13%) detracted from performance.
The company disclosed the loss of a major client for its fund administration services business, which also raised concerns around intensified competition in the sector. Our decision not to hold Fortescue Metals Group (+15%) also contributed negatively, with Fortescue particularly leveraged to the stronger iron ore price.
The Trust’s international equities holdings returned 3.8%, exceeding the international market index in AUD terms, reflecting manager outperformance and benefits from currency hedging.
The Trust’s A-REIT holdings returned -0.3%, underperforming the A-REIT index. Our decision not to hold premium-rated industrial REIT Goodman Group (+3%) was the largest detractor from performance.
The Trust’s fixed interest holdings returned -2.0%, in line with the bond market index.
The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned -0.9%. There was weakness in the UK utility sector during the month, following financial difficulties at Thames Water (not held). Despite our view that the issues are company specific, this impacted our fund holdings in Severn Trent and United Utilities.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-10.pdfMay, 2023
The Trust returned -2.0% in May, underperforming its benchmark by 1.1%. The Trust’s Australian equities holdings returned -3.0%, underperforming the market index. Our overweight holdings in Suncorp Group (+7%) and Insurance Australia Group (+4%) were key positive contributors to performance.
The general insurers are positively leveraged to interest rates and hence benefited from rising rate expectations. The release of APRA industry data late in the month showed strong growth in premiums over the March quarter, which was also supportive. Our overweight position in Ampol (+5%) contributed positively.
The key driver was Singapore refining margins which strengthened over the month and are highly correlated to domestic refiner profitability. Value-style headwinds were a drag on performance during the month. This included the outperformance of a number of highly rated growth stocks not held by our portfolio. Tech stocks such as Xero Limited (+18%) and Wisetech Global (+9%) performed strongly, supported by an above-consensus full year result from Xero and sector tailwinds emanating from the US.
Similarly, our decision not to hold CSL (+2%) also detracted, with the stock benefiting from a rotation towards defensives and in particular those considered to offer some growth in a weakening economic environment. The Trust’s international equities holdings returned -1.5%, underperforming the international market index in AUD terms. Performance was impacted by an underweight exposure to the USA and currency hedging. The Trust’s A-REIT holdings returned -3.1%, underperforming the A-REIT index. Our decision not to hold premium-rated industrial REIT Goodman Group (+2%) was the largest detractor from performance. The Trust’s fixed interest holdings returned -1.0%, exceeding the bond market index.
The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned -4.5%. There was broad weakness across the global listed infrastructure sector over the month. Regulated US utilities were relative underperformers and fund holdings in Ameren and American Electric Power were among our key detractors.
File:April, 2023
The Trust returned 2.0% in April, outperforming its benchmark by 0.4%. The Trust’s Australian equities holdings returned +1.5%, underperforming the market index. Exposure to the major banks was a key positive contributor to performance.
We were modestly overweight the banking sector and our holdings were focused in the better performing banks, including Australia and New Zealand Banking Group (+6%) and Westpac Banking Corporation (+4%). Our overweight holding in Brambles (+6%) also performed well. The company released a trading update during the month, at which it upgraded full year earnings guidance.
The upgrade was underpinned by strong, price-driven sales growth. Pricing for CHEP Americas increased 19% in the first nine months of FY23, supported by higher lumber prices which improve CHEP’s competitive position relative to single use pallets.
File:March, 2023
The Trust returned 1.3% in March, outperforming its benchmark by 0.2%.
The Trust’s Australian equities holdings returned -0.5%, underperforming the market index. Our overweight position in Healius (+15%) was a key positive contributor to performance. The company received a takeover offer during the month, from its smaller competitor Australian Clinical Labs. The offer was a nil-premium all-scrip offer which, in our view, is unlikely to proceed. However, it highlighted the value in Healius and potential synergies that might be available for any future transactions and is likely to further pressure management to improve performance. Our overweight holding in Brambles (+6%) performed well. Market expectations for earnings continue to increase following its strong half year result in February, supported by a constructive pallet pricing environment. Our holdings in the major banks were among the key detractors from performance, including overweight positions in Australia & New Zealand Banking Group (-7%) and Westpac Banking Corporation (-4%). The banking sector underperformed globally, reflecting heightened risks following the collapse of several banks during the month. While risks to the sector clearly exist, we observe that the Australian banks are very well capitalized and have been more tightly regulated than their US peers. In most cases, bank valuations are also attractive relative to historical metrics.
The Trust’s international equities holdings returned 3.2%, underperforming the international market index in AUD terms, with hedging proving a drag on performance. The Trust’s A-REIT holdings returned -6.7%, modestly above the A-REIT index. Our holding in residential focused Stockland (+4%) held up well, with housing undersupply and a potential central bank pivot supporting its outlook. The Trust’s fixed interest holdings returned 3.1%, modestly below the bond market index.
The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned 4.8%. The fund’s holding in telecommunication tower company Infrastrutture Wireless Italiane (+16%) was a key positive. Stock performance reflected reports that major shareholder Ardian was considering making a takeover offer.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-9.pdfFebruary, 2023
The Trust returned -0.6% in February, outperforming its benchmark by 0.3%. The Trust’s Australian equities holdings returned -0.6%, outperforming the market index. Our overweight holding in Origin Energy (+9%) was a key positive contributor to performance. The stock rallied after Brookfield and EIG reconfirmed their interest in a takeover, albeit at a modestly reduced offer price. The market had heavily discounted the prospect of a deal progressing, possibly due to recent changes to gas market regulation. Origin also released its half-year results during the month, upgrading full year guidance for its Energy Markets business. Our overweight holding in QBE Insurance (+10%) performed strongly.
The company delivered a great full-year result, with earnings and dividends ahead of expectations and guidance for continued strong premium growth. QBE’s earnings outlook was further supported by the increase in bond yields and decline in the AUD exchange rate. Our overweight holding in Healius (-14%) detracted from performance. The company preannounced a disappointing half-year result early in the month, leading to medium-term earnings downgrades. The pathology business is suffering from weak volumes, with a steep decline in COVID PCR testing and traditional pathology volumes yet to fully recover from pandemic-related weakness.
With significant fixed costs in the business, margins fell sharply. We remain attracted to the long-term fundamentals of the company and believe that earnings will recover, supported by a return to trend for pathology volumes and management’s cost reduction program. The Trust’s international equities holdings returned -0.9%, underperforming the international market index in AUD terms. Hedging was the key headwind on performance. The Trust’s A-REIT holdings returned 0.6%, exceeding the A-REIT index.
Our holding in diversified REIT GPT Group (+4%) performed well, delivering a sound full year result and 2023 guidance above expectations. The Trust’s fixed interest holdings returned -1.2%, modestly above the bond market index. The Trust’s exposure to alternative assets, through its holding in the MapleBrown Abbott Global Listed Infrastructure Fund (GLIF), returned 1.2%. Our European holdings performed well, including tank storage firm Vopak (+9%) which delivered a solid 2022 result and 2023 guidance above expectations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-8.pdfJanuary, 2023
The Trust returned 3.7% in January, underperforming the benchmark by 0.1%. The Trust’s Australian equities holdings returned 3.8%, underperforming the market index. Our overweight position in Nine Entertainment Co. (+10%) was a key positive contributor to performance. Nine benefited from strong performance from Domain Holdings Australia (+18%), in which it holds a 60 % stake. Domain’s performance reflected improved sentiment towards the housing market and outlook for sales volumes, given the moderation in interest rate expectations.
Nine was further supported by the improved economic sentiment and its implications for the advertising market. Our decision not to hold underperforming defensive CSL (+4%) and interest rate sensitive Computershare (-9%) also contributed positively. The shifting macroeconomic sentiment and fall in bond yields proved a broad headwind for the value style and our relative performance. Our overweight holding in Origin Energy (-3%) was a key detractor from performance. The stock is trading according to the prospects of Brookfield and EIG’s takeover offer succeeding. This was further drawn into question during the month, with the exclusive due diligence period ending without a binding offer emerging. While clearly there is significant uncertainty around the deal, the underlying performance of the business continues to improve, with Origin materially upgrading earnings guidance for its Energy Markets division and its LNG trading contracts. The Trust’s international equities holdings returned 6.3%, outperforming the international market index in AUD terms. Regional weightings were a tailwind, as was hedging. The Trust’s A-REIT holdings returned 6.4%, below the A-REIT index. Our decision not to hold Goodman Group (+15%) was the main detractor, with Goodman seen as a key beneficiary of lower interest rates. The Trust’s fixed interest holdings returned 2.8%, in line with the bond market index. The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned 1.3%. Our holding in Cellnex Telecom (+16%) performed very well, reflecting strength in the tower sector and also media reports about a potential takeover by American Tower and Brookfield.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-7.pdfDecember, 2022
The Trust returned -2.0% in December, outperforming the benchmark by 0.8%. The Trust’s Australian equities holdings returned -1.9%, outperforming the market index. Our overweight holding in Rio Tinto (+6%) was a key positive contributor to performance. The iron ore price rose during the month, reflecting growing momentum around China’s abandonment of its zero COVID policy. Similarly, improved sentiment to the mining sector supported our overweight holdings in Alumina (0%) and Orica (+2%). Our overweight position in QBE Insurance Group (+4%) also performed well, with QBE seen as a key beneficiary of higher rates. Our overweight holding in the Star Entertainment Group (-35%) was a key detractor from performance. The company continues to suffer fallout from investigations into money laundering at its casinos. In addition to fines and other disciplinary measures in NSW and Queensland, the NSW government has now announced an intention to raise the gaming tax rate for casinos. The Trust’s international equities holdings returned -3.0%, outperforming the international market index. Regional weightings were a tailwind, including an underweight exposure to the USA, as was hedging. The Trust’s A-REIT holdings returned -1.3%, exceeding the A-REIT index.
Our holding in Hotel Property Investments (+9%) was a key positive, with activist property investor 360 Capital taking a 14% stake and spurring speculation around corporate activity. The Trust’s fixed interest holdings returned -1.9%, outperforming the bond market index. The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned -2.5%. In what was a weak month for the listed infrastructure sector, our holding in Portuguese listed utility and renewable energy developer EDP performed relatively well, up 3% in local currency. Other holdings with renewable portfolios including SSE PLC and Orsted also performed relatively well (flat and up 2% respectively).
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-6.pdfNovember, 2022
The Trust returned 4.4% in November, outperforming the benchmark by 0.9%. The Trust’s Australian equities holdings returned 6.1%, underperforming the market index. Our overweight holding in Origin Energy (+41%) was a key positive contributor to performance. The company received an indicative takeover offer during the month from Brookfield and EIG, at a 55% premium to the share price. While gaining the support of the Board, we note that significant risks to the deal exist.
Our overweight holdingsin mining stocks Rio Tinto (+24%) and Alumina (+12%) also performed very well. The main drivers were higher prices for key commodities and improved sentiment towards the miners. This followed moves by China to ease some of its COVID restrictions, creating hope that it abandons its zero COVID policy and pursues a broader reopening. Our overweight position in Healius (-15%) was a key negative contributor to performance. The company released a weak trading update at its Annual General Meeting (AGM). A sharp decline in COVIDtesting and a slower than expected normalisation in underlying pathology volumes have driven operating deleverage and material downgrades to earnings forecasts.
We do, however, expect pathology volumes to progressively recover, which together with the efficiency program currently underway should drive margin expansion over the medium term. Our overweight holding in The Star Entertainment Group (-8%) also detracted. The company gave a trading update at its AGM, revealing some competitive pressure from the new Sydney Crown casino and higher than expected cost guidance. Ongoing regulatory concerns also continue to weigh on the stock.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-5.pdfOctober, 2022
The Trust returned 4.7% in October, outperforming the benchmark by 0.7%. The Trust’s Australian Equities holdings returned 7.2%, exceeding the market index. Our energy holdings performed strongly, including our overweight position in Woodside Energy Group (+14%). The key driver was the oil price, which rose 8% to US$95/barrel, reflecting supply concerns due to OPEC cuts and the looming EU embargo on Russian crude. Our exposure to the major banks also contributed positively. We are overweight the sector, which outperformed as rising interest rates start to support bank interest margins. The RBA’s decision to slow its pace of tightening also likely helped, seen to reduce the prospect of recession and rising defaults. Our overweight position in Rio Tinto (-6%) was a key negative contributor to performance. The iron ore price fell sharply during the month to close at US$82/tonne. The main driver was concerns around Chinese demand, given further deterioration in the housing market and fallout from the 20th Party Conference, including the continued pursuit of a zero-COVID policy. Our overweight holding in Ampol (-5%) also detracted. The company released a quarterly trading update, showing a sharp decline in earnings from its Fuels and Infrastructure division.
While this was disappointing, we believe that many of the factors that caused it are temporary and that Ampol is well placed to benefit from ongoing tightness in energy markets and a recovery in retail fuel demand. The Trust’s international equities holdings returned 5.5%, underperforming the AUD return of the international market index. Regional weightings were a headwind, including an underweight exposure to the USA and overweight exposure to Asia ex-Japan. The Trust’s A-REIT holdings returned 8.5%, below the A-REIT index. Our holdings in the office segment impacted performance, including GDI Property Group (-2%) and Dexus Property Group (+1%).
The Trust’s fixed interest holdings returned 1.3%, exceeding the bond market index. The Trust’s exposure to alternative assets, through its holding in the Maple-Brown Abbott Global Listed Infrastructure Fund (GLIF), returned 5.5%. Our holding in Mexican toll road company Aleatica (+96%) was a key positive contributor, after receiving a tender offer 118% higher than the previous close from majority shareholder IFM Investors.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-4.pdfSeptember, 2022
The Trust returned -4.7% in September, underperforming the benchmark by 0.1%. The Trust’s Australian Equities holdings returned -6.2%, modestly below the market index. Our resources holdings were amongst the top contributors to performance, including overweight positions in Woodside Energy Group (-3%) and Rio Tinto (-1%). This came despite commodity price headwinds and was largely due to the relatively lesser impact of rising bond yields on valuations as compared to industrial companies. Overweight positions in general insurers including Insurance Australia Group (-1%) and QBE Insurance Group (-4%) also outperformed. Again, interest rates was the key driver, with insurers positively leveraged to rising rates. Our overweight position in Link Administration Holdings (-32%) was a key negative contributor to performance. Link was impacted by the termination of Dye and Durham’s takeover proposal for the group, following an announcement from the UK Financial Conduct Authority that its UK subsidiary was likely to be liable for substantial compensation payments due to its role in the collapse of the Woodford Equity Income Fund. Our overweight position in Alumina (-16%) also detracted, with aluminium smelter curtailments in China further depressing sentiment. The Trust’s international equities holdings returned -5.8%, underperforming the AUD return of the international market index. Hedging proved a material drag on performance, given the depreciation of the AUD. The Trust’s A-REIT holdings returned -10.7%, exceeding the A-REIT index. An underweight exposure to industrial REITs, including the premium-rated Goodman Group (-20%), was a key contributor to our relative performance. Trust’s fixed interest holdings returned -1.2%, exceeding the bond market index. The Trust’s exposure to alternative assets, through its holding in the MapleBrown Abbott Global Listed Infrastructure Fund (GLIF), returned -6.7%. Holdings in UK regulated utilities fell sharply during the month and were amongst our worst performing positions. This largely reflected macro factors, including the UK’s expansionary ‘mini-budget’ and energy price caps that will be expensive for the government.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-3.pdfAugust, 2022
The Trust returned -0.7% in August, outperforming the benchmark by 0.1%. The Trust’s Australian Equities holdings returned 1.7%, exceeding the market index. Stock performance over the month was heavily influenced by earnings releases. Our overweight holding in Brambles (+8%) performed very well. The company’s full year result was well received, with both 2022 earnings and 2023 guidance above market expectations. The Americas business was the highlight, with pallet shortages and high inflation leading to positive pricing dynamics. Our overweight holdings in energy companies Woodside Energy Group (+7%) and Origin Energy (+6%) alsocontributed positively. Sentiment
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-2.pdfJuly, 2022
Market commentary
The Australian equity market had a strong month, with the S&P/ASX 300 Index (Total Return) excluding property rising 5.6%. Australia modestly underperformed robust global markets, which were spurred by a retreat in bond yields. Whilst inflationary pressures continued to build both here and abroad, weak economic data from the US curtailed expectations about the likely trajectory of interest rates. This saw the US Government 10-year yield fall 0.3% to close at 2.6% and the Australian Government 10-year fall 0.6% to close at 3.1%. This was despite a 0.75% increase to the funds rate by the US Federal Reserve and a 0.5% increase to the cash rate by the RBA. Local economic data was mixed, with strength in the labour market contrasting further softening in housing. Q2 CPI reported an increase of 6.1% year on year. The Australian dollar also edged higher against the US dollar. Commodity markets were generally weaker, including falls in prices for oil and iron ore. Looking at performance by sector, Information Technology (+15%) performed best, followed by Financials (+9%) and Consumer Discretionary (+9%). Materials (0%) was weakest, followed by Energy (+2%) and Utilities (+3%).
International equities were very strong, with the MSCI AC World Index rising 7.0% in USD-terms. Of the major regions, the USA (+9%) was best, followed by Japan (+6%) and Europe (+5%). Asia ex-Japan (-1%) materially underperformed. The stronger AUD reduced the AUD return of the MSCI AC World Index to +5.4%. A-REITs rebounded sharply, with the S&P/ASX300 A-REIT Index (Total Return) rising 11.8%. Fixed interest also performed well, with the Bloomberg Australian Composite Bond Index rising 3.4%.
P
ortfolio commentary
The Trust returned 3.3% in July, underperforming the benchmark by 0.5%.
TheTrust’sAustralianEquitiesholdingsreturned3.4%. Afterstrong outperformance in recent months, July saw a modest reversion in our relative performance. The main driver was value-style headwinds, associated in particular with the decline in bond yields. Our overweight holding in QBE Insurance Group (-5%) was a key detractor. QBE is particularly leveraged to interest rates, with a softening of rate expectations the main driver of its nderperformance. Concerns around the global growth outlook also impacted commodity markets and saw several of our energy holdings underperform, including Woodside Energy Group (0%), Viva Energy (-8%) andAmpol(-2%). OuroverweightholdinginLinkAdministrationHoldings (+16%) was a key positive contributor to performance. Having been under takeover offer from Dye and Durham since December last year, share price performance flagged in recent months due to a downward revision to the bid price and market concerns around Dye and Durham’s commitment to the deal. Prospects for a transaction improved materially during the month, with Dye and Durham re-raising their bid to $4.81 and gaining the support of the Link board. Our overweight holding in Nine Entertainment Co. (+13%) also contributed positively. There was improved sentiment towards media and consumer stocks during the month, likely reflecting the moderation in interest rate expectations and its potential impact on discretionary consumption. Nine further benefited from outperformance of Domain Holdings Australia, in which it holds a 59% stake.
The Trust’s international equities holdings returned 3.8%, underperforming the AUD return of the international market index. Underperformance largely reflected regional weightings, including an overweight exposure to Asia ex- Japan and underweight exposure to the USA. The Trust’s A-REIT holdings returned 9.0%, underperforming the A-REIT index. While the whole sector benefited from a moderation in bond yields, growth-oriented REITs on premium multiples tended to benefit more and our underweight exposure to these stocks impacted our relative performance. The Trust’s fixed interest holdings returned 2.7%.
The Trust’s exposure to alternative assets, through its holding in the Maple- Brown Abbott Global Listed Infrastructure Fund (GLIF), returned 4.4%. Getlink, operator of the channel tunnel and one of the fund’s largest holdings, wasup16%inlocalcurrencyterms. Getlinkreportedasolidfirsthalfresult during the month, benefiting from a recovery in travel volumes. Its new Eleclink electricity interconnector linking the UK and France is also performing strongly and well placed given high and volatile electricity prices.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary-1.pdfJanuary, 2022
The Trust returned -1.3% in January, outperforming the benchmark by 1.8%. The Trust’s Australian equities holdings returned -2.1%, materially outperforming the benchmark. There was a global rotation from ‘growth’ towards ‘value’ stocks during the month, providing a tailwind to our performance. This shift was consistent with the increase in bond yields, which tends to favour the value style. Energy stocks were among our best performing positions, reflecting strength in the oil price and the value rotation. This included holdings in Woodside Petroleum (+14%) and Origin Energy (+7%). The Brent Oil price rose US$13 to close at US$91 per barrel, largely due to concerns around the global supply outlook. Our decision not to hold several poorly performing growth stocks also supported our relative performance. The key names were CSL (-10%) and Afterpay Touch Group (-20%), which were impacted by the rotation noted above. The key negative contributors to relative performance included strongly performing resources stocks not held, such as Santos (+13%) and Fortescue Metals Group (+3%). Our overweight position in Metcash (-12%) also detracted. Underperformance was consistent with its supermarket peers, with concerns around the impact of Omicron and associated staff absenteeism on supply chain and other costs. While Omicron clearly poses risks, we observe that Metcash is well placed relative to the major supermarkets to benefit from a cautious consumer preferring to shop in neighbourhood stores rather than large shopping centres.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/Diversified-Investment-Trust-Commentary.pdfOctober, 2021
The Maple-Brown Abbott Diversified Investment Trust (the “Fund”) is an actively managed fund that invests in a diversified portfolio of growth and defensive assets that have the potential to provide long-term capital growth and income. The Fund provides exposure to growth assets including Australian equities, international equities and real estate investment trusts (REITs), and defensive assets including fixed interest, alternative assets and cash. We draw on the expertise of our investment teams in asset classes in which we have a long track record and complements this with specialist external managers. The strategic asset allocation and ongoing tactical asset allocation is reviewed and monitored by the Asset Allocation Committee which is made up of our senior investment team members with macroeconomic input. The portfolio is constructed within a disciplined risk management framework, which is overseen by the portfolio manager
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/180946837.pdfSeptember, 2021
The Trust returned -0.5% in September, outperforming the benchmark by 1.2%.
The Trust’s Australian equities holdings returned 0.8%, exceeding the benchmark. Our energy holdings were among the key positive contributors to performance, including overweight positions in Woodside Petroleum (+23%) and Origin Energy (+8%). The Brent oil price increased 10% over the month and closed at levels not seen since 2018. The recent price moves reflect strong demand from reopening economies against a backdrop of constrained investment in production, in part due to decarbonisation trends. Our overweight position in Alumina (+18%) also contributed positively, reflecting a material increase in the alumina commodity price during the month. The price spike has been driven by a range of factors, including a fire at a major alumina plant in Jamaica and the military coup in Guinea, which is a key bauxite producer. Our overweight holding in BHP Group (-12%) was a negative contributor to performance. The weakness in the stock reflected a continued deterioration in the iron ore price during the month. The key driver of price decline was falling Chinese steel demand, due to a combination of factors including emissions reduction policies, power shortages and fears around the residential construction outlook relating to the troubled China Evergrande Group. While well off its highs, the current iron ore price of around US$120 per tonne is robust by historical standards and remains highly profitable for Australian miners. For the portfolio as a whole, the move in iron ore was positive due to our underweight exposure to other key producers.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/117-commentary-4.pdfAugust, 2021
The Trust returned 2.0% in August, performing in line with the benchmark. The Trust’s Australian equities holdings returned 2.1%. Our overweight holding in The Star Entertainment Group (+19%) was a key positive contributor to performance.
The company released a sound full year result in difficult operating conditions, with particular strength from its Queensland assets. The stock also benefited from management disclosing plans to release capital through sale and leaseback of property assets, discussions with the NSW Government to increase gaming machine numbers at the Sydney casino and speculation around potential options with Crown Resorts Limited assets. Our overweight holding in Suncorp Group (+12%) outperformed.
The company released a full year result well ahead of expectations, with improving underlying performance from both the insurance and banking businesses and some provision releases. The market also reacted favourably to a sharp increase in the dividend, an 8c special dividend and a $250m buyback. Our overweight holding in BHP Group (-15%) was a negative contributor to performance. The company delivered a strong full year result, with cash generation a highlight, but stock performance was largely driven by the weaker iron ore price. The company also announced some strategic changes, including the unification of its dual listed company structure and the sale of its petroleum division to Woodside Petroleum under a scrip deal, both of which were received with some apprehension.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/117-commentary-3.pdfJuly, 2021
The Trust returned 0.9% in July, underperforming the benchmark. The Trust’s Australian equities holdings returned 0.9%.
Our overweight holding in Incitec Pivot (+13%) contributed positively. Having experienced a series of issues at its Waggaman ammonia plant in recent months, the stock was buoyed by news that the plant was back in operation and well placed to benefit from the cyclical recovery we have seen in fertiliser prices.
Our overweight position in BHP Billiton (+10%) also outperformed. Prices for key commodities including iron ore and oil remained elevated during the month and the announcement of a record dividend from Rio Tinto highlighted the level of cash generation in the sector and scope for capital management at BHP’s August full-year result. Our overweight holding in Origin Energy (-9%) detracted from performance. While benefiting from elevated oil prices and strong performance from its LNG business, the company provided financial year 2022 earnings guidance for its electricity and gas retail business that disappointed the market. The guidance reflects a cyclical low in profitability for Origin’s electricity generation assets which have been squeezed by low wholesale prices and higher fuel costs. While we were surprised by the extent of earnings pressure, electricity futures markets point to a material recovery in 2023 and valuations remain compelling.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/117-commentary-2.pdfJune, 2021
The Trust returned 1.3% in June, underperforming the benchmark. The Trust’s Australian equities holdings returned 1.1%, below the benchmark. June saw a broad rotation towards ‘growth’ and ‘yield’ stocks, providing a headwind to our performance.
This shift was apparent across global markets and consistent with the decline in bond yields, which tends to favour such stocks. Our decision not to hold a number of strongly performing growth stocks materially detracted from performance, including Afterpay Touch Group (+27%), Goodman Group (+10%) and Resmed (+21%). Of stocks held in our portfolio, our overweight position in The Star Entertainment Group (-9%) contributed negatively.
The stock was impacted by the announcement that AUSTRAC had launched an investigation into potential anti-money laundering breaches. Our overweight position in Metcash (+13%) performed well. The company released their full-year result during the month, with strong performance from their hardware division, cash generation and a better-than-expected net cash position among the highlights. They also surprised the market with a share buyback and gave a trading update for the first eight weeks of 2022 showing strong momentum across their grocery, liquor and hardware divisions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/117-commentary-1.pdfApril, 2021
The Maple-Brown Abbott Diversified Investment Trust (the “Fund”) is an actively managed fund that invests in a diversified portfolio of growth and defensive assets. The Fund offers investors diversification across a range of asset classes with the potential to provide long-term capital growth and income. The Fund invests in growth assets including Australian equities, International equities and REITs. Defensive assets compromise Australian fixed interest, alternative assets and cash. The strategic asset allocation and ongoing tactical asset allocation is reviewed and monitored by the Asset Allocation Committee. The Asset Allocation Committee is made up of senior investment team members with input from external macro-economic specialists. The Fund draws on the expertise of our investment team in asset classes in which we have a long track record.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/171807018.pdfFebruary, 2021
The Trust returned 1.4% in February, reflecting solid performance from its Australian and international equities exposure. The Trust’s Australian equity holdings returned 3.4%, outperforming the benchmark. Improving economic conditions and an associated increase in expectations for inflation and interest rates supported a further rotation into cyclicals and other ‘value’ stocks. This shift, often called the ‘reflation trade’, was a key driver of the market and provided a tailwind to our performance. Our exposure to the major banks was a significant positive contributor to performance. We were overweight the sector, which benefited from the improving outlook and value rotation. We also had our holdings focused in the more value-oriented names, which materially outperformed. Our overweight position in BHP Billiton (+13%) contributed positively.
The company released a solid half year result, with a dividend above expectations, and the stock further benefited from strength in iron ore and oil prices. Our decision not to hold CSL (-3%) and Wesfarmers (-8%) was also supportive, given the broader rotation away from growth stocks. Our overweight holding in Orica (-18%) was a significant detractor from performance. The company updated the market on half year profit expectations, warning of several headwinds including trade relations with China, COVID-19 demand disruptions, a stronger AUD and SAP software implementation costs. The company also announced a transition in CEO. We believe the reaction to the announcement was excessive, given the temporary nature of the issues. Significant value should be realised over the longer term as explosives supply-demand balance is restored, cost outs from SAP are delivered and synergies from the recent EXSA acquisition are realised.
The Trust’s international equities holdings returned 3.7%, exceeding the benchmark. The Trust’s A-REIT holdings returned -2.4%, slightly ahead of the benchmark. The Trust’s fixed interest holdings returned -2.3%, also outperforming the benchmark. The Trust’s exposure to alternative assets, through its holding in the MBA Global Listed Infrastructure Fund, returned -2.0% for the month. This underperformed the 0.0% return of its benchmark, the RBA cash rate.
File: https://commentary.quantreports.net/wp-content/uploads/2021/04/117-commentary.pdfasset_class:
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ticker: MPL0001AU
release_schedule: Monthly
structure: Managed Fund
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factsheet_url:
https://www.maple-brownabbott.com.au/diversified-investment-trust/
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fund_features:
The Maple-Brown Abbott Diversified Investment Trust is an actively managed fund that invests in a diversified portfolio of growth and defensive assets. The Fund offers investors diversification across a range of asset classes with the potential to provide long-term capital growth and income. The Fund invests in growth assets including Australian equities, International equities and REITs. Defensive assets compromise Australian fixed interest, alternative assets and cash. The strategic asset allocation and ongoing tactical asset allocation is reviewed and monitored by the Asset Allocation Committee. The Asset Allocation Committee is made up of senior investment team members with input from external macro-economic specialists. The Fund draws on the expertise of our investment team in asset classes in which we have a long track record.