September, 2023
The Australian market was not exempt from the decline in global shares. The Real Estate and Information Technology sectors led the market declines given concerns about the impact of higher interest rates for longer. Healthcare and Consumer Discretionary sectors were sold down on worry about the consumer’s ability to tolerate higher inflation and interest rates. The Resources sector proved more resilient given the surprising rise in iron ore prices to US$120 per ton despite a weak Chinese property sector. The only positive sector was Energy on the back of higher oil prices.
The annual distribution return to 30 September 2023 for the Antares Dividend Builder Fund was 5.3%. The fund delivered a total return of -2.2% (net of fees) for the month of September which compared to a decline of 2.8% for the S&P/ASX200 Total Return Index. Dividends were received from APA Group, Aurizon, BHP, CBA, IAG, Suncorp, Telstra, The Lottery Corporation, Viva Energy and Woodside during the month.
Contributing to the Fund’s outperformance were overweight holdings in Suncorp (SUN), Ventia Services (VNT) and Nine Entertainment (NEC). SUN’s share price enjoyed a good September as the market favoured insurance companies and their favourable pricing environment in which they have been able to put through substantial premium increases. SUN’s AGM was also held during the month and was generally upbeat about the company’s prospects, and optimistic about the sale of its banking business to ANZ. VNT delivered a good half year result and is expected to produce a FY result at the top end of the company’s guidance range. Also positive for VNT’s share price was the further sell down of stock by former majority owners CIMIC and Apollo which have reduced their combined holding to less than 12%. NEC shares performed relatively well as the company continued with its share buyback program.
Detracting from performance were overweight positions in Orora (ORA) and The Lottery Corporation (TLC) together with not owning Fortescue Metals (FMG). Early in September, ORA announced the acquisition of global high end wine and spirits glass bottles producer Saverglass for A$2.1bn. Simultaneously it announced it would partially fund this via proposed A$1.3bn institutional and retail equity raisings. TLC’s share price has continued to slip on no particular news. Despite widespread concern about the Chinese property market, the iron ore price rose during September and was reflected in the FMG share price.
Australia’s economy continues to display significant signs of slowing down with inflation concerns. Retail spending is subdued as consumers struggle with the squeeze from higher prices, rising mortgage interest rates and rents. Consumer annual inflation rose from 4.9% in July to 5.2% in August largely on the back of higher fuel prices according to the ABS monthly indicator. Employment has been a positive surprise with strong job gains in August despite lower vacancies. The Reserve Bank again held the cash interest rate steady at 4.1% but maintained guidance that further interest rate rises may be required to get inflation back to their target range of 2% to 3%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-26.pdfAugust, 2023
Australian shares disappointed in August with a mild decline given concerns over China’s prospects as well as the Australian consumer. The Utilities and Consumer Staples sectors led the market declines given concerns about the consumer’s ability to absorb higher electricity & gas prices as well as rising mortgage interest rates and rents. Information Technology declined in line with a more cautious view after their recent strong gains. Despite a rebound in the iron ore price to above US$110 per ton, the Resources sector posted a -1.8% negative return with concerns over China’s prospects. There were some positives with surprisingly strong gains for Consumer Discretionary and Real Estate on hopes that the Reserve Bank has ceased raising interest rates.
August is also reporting season for most Australian companies and while results were largely in line with expectations, the prospect of rising costs and a slowing economy saw reasonably soft guidance for the FY24 year which flowed through to earnings downgrades.
The annual distribution return to 31 August 2023 for the Antares Dividend Builder Fund was 5.4%. The fund delivered a total return of -1.6% (net of fees) for the month of August which compared to a return of -0.7% for the S&P/ASX200 Total Return Index. Dividends were received from Metcash, Region and Transurban during the month.
Contributing to the Fund’s performance was an overweight Medibank Private (MPL) holding and decisions not to own Resmed (RES) or Wisetech (WTC). MPL delivered a strong profit result for FY23 and a higher dividend. As well as a boost to investment income, the company reported an increase in net policy holders which it attributed to its customer focus. RES’ 4Q result was below market expectations, driven by lower margins and higher costs. There is also some concern that the increased use of Ozempic for weight loss could reduce the prospect of sleep apnoea and subsequent demand for RES’ machines.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-25.pdfJuly, 2023
Australian shares made strong gains on lower inflation and hopes that China will pursue more stimulatory policy settings. The energy sector led the market gains as oil prices surged. Financial shares also rebounded with optimism that the Reserve Bank interest rate hiking cycle was coming to an end. Information Technology continued to perform well, fuelled by the mania for AI related shares. Resources shares gained on China stimulus hopes. But there was some weakness in the Consumer Staples and Health Care sectors given concerns that the Australian consumer is struggling.
The annual distribution return to 31 July 2023 for the Antares Dividend Builder Fund was 5.6%. The fund delivered a total return of 3.5% (net of fees) for the month of July which compared to a return of 2.9% for the S&P/ASX200 Total Return Index. Dividends were received from ANZ, CSR and NAB during the month.
Sector allocation Contributing to the Fund’s performance were overweight holdings in CSR and Nine Entertainment (NEC) as well as an underweight holding in CSL. CSR shares benefitted as sentiment towards building product manufacturers has become more positive on expectations that the housing market appears to have bottomed.
Despite weaker ad market data, NEC shares rallied in July in line with the broader consumer discretionary sector ahead of August reporting season as investors are increasingly pricing in a soft landing. CSL’s share price has continued to languish since issuing disappointing FY24 guidance in June following news that margin recovery in its Behring plasma collection division would take longer than the market expected.
Detracting from performance were overweight holdings in Ventia Services (VNT), Aurizon (AZJ) and Telstra (TLS). VNT shares were relatively weaker in July, having performed strongly over the past months. This was despite being included in the S&P/ASX200 from 24 July. AZJ shares finished the month weaker. Late in the month the company held an investor day where it provided FY23 EBITDA guidance towards the bottom end of its previous target range of $1.42-1.47bn due to the impact of wet weather, production issues and labour shortages. In addition, the company provided FY24 EBITDA guidance of $1.59-1.68bn. At the investor day, Aurizon announced bullish FY30 targets for its Bulk business and containerised freight strategy, which the market is not yet giving the company credit for as it is early days on execution. Having earlier enjoyed investor support on news of its post-paid mobile price increases, TLS shares lagged the broader market in July. During the month, its rival Optus announced it had struck a deal with Elon Musk’s Starlink for Mobile to Satellite services. This increases Optus’ coverage which has always been one of TLS’ competitive advantages. This followed the previous month’s decision by the Australian Competition Tribunal to disallow TLS’ proposed network sharing agreement with TPG.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-24.pdfJune, 2023
Australian shares made mild gains in June given signs that inflation pressures were abating and hopes that China will pursue more stimulatory policy settings.
The Resources sector surged on China growth hopes with strong gains in iron ore prices. The Information Technology sector also made strong gains on the back of investors’ enthusiasm for anything remotely connected with AI. Financials rebounded, reversing May’s weakness with signs of resilience in the Australian economy mitigating credit risks. Healthcare was weak as investors became more cautious about the sector’s prospects.
The annual distribution return to 30 June 2023 for the Antares Dividend Builder Fund was 5.6%. The fund delivered a total return of 2.3% (net of fees) for the month of June which compared to a return of 1.8% for the S&P/ASX200 Total Return Index. Dividends were received from Aurizon, CBA, Region, Westpac and Woodside Energy during the month.
Contributing to the Fund’s performance was an underweight CSL holding and overweight positions in Ventia Services (VNT) and Aurizon (AZJ). CSL provided a trading update indicating currency headwinds would impact its FY23 result. More significantly it noted margin recovery in its Behring plasma collection division would take longer than the market expected, as both donor fees and labour cost inflation remain higher than anticipated. This meant that CSL’s FY24 guidance was below consensus and the stock was sold down. In June, VNT continued to win new business and extend its existing contracts. We have liked VNT for its contract risk management processes and its exposure to contracts in relatively economically insensitive areas, such as defence. AZJ benefitted from a realisation in the market that its Central Queensland Coal Network asset is a beneficiary of the higher inflationary environment. This led to several broker upgrades which took the stock higher as investors sought inflation havens.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-23.pdfMay, 2023
Australian shares fell in May as lower commodity prices, higher interest rates and weak consumer spending cautioned investors. The sharpest falls were in the consumer discretionary and staples sectors given signs of a retail recession for consumer spending. The combination of higher mortgage interest rates, rising rents and stubborn inflation pressures is squeezing purchasing power. There was also notable weakness in the resource sector given lower coal and iron ore prices on China concerns. Financials also disappointed given the prospect of lower profit margins with higher deposit interest rates and more sedate credit demand. Echoing the US market and the surge of investment interest in anything remotely related to artificial intelligence (AI), the Australian Information Technology sector posted a double-digit gain for May.
The annual distribution return to 31 May 2023 for the Antares Dividend Builder Fund was 5.6%. The fund delivered a total return of -2.2% (net of fees) for the month of May which compared to a return of -2.5% for the S&P/ASX200 Total Return Index. Dividends were received from BHP, Medibank Private, Transurban and Ventia Services during the month.
Contributing to the Fund’s performance were overweight positions in Suncorp (SUN) and Ventia Services (VNT) together with not holding a position in Wesfarmers (WES). SUN shares moved counter to the broader financials in May on no particular news including on ANZ’s proposed acquisition of its banking business. At VNT’s AGM which was held in May, the company reaffirmed its guidance and confidence for 2023 and beyond, citing the strong and growing markets in which it operates and its diverse and resilient portfolio of businesses. The company also announced the extension of a facilities maintenance contract with the Auckland City Council late in the month. WES flagged uncertain market conditions at its May investor day. The company also noted there were challenges with wage inflation and labour productivity which is likely to put downward pressure on margins in the near term.
Detracting from performance were overweight holdings in Metcash (MTS), Nine Entertainment (NEC) and NAB. With consumers becoming very price sensitive and looking to house brands, the independent supermarkets are reported to be Top 10 share holdings (alphabetical order) losing share to rivals Coles and Woolworths. NEC presented at an investor conference early in the month where it noted TV markets remained challenging.
Notwithstanding this, the company indicated it would continue to grow market share and flagged further cost reductions. NAB shares were under pressure after the bank released its first half results for 2023. Despite some positives, including a lift in dividend, the market reacted to comments from the bank on the impact of lower house prices and volume growth amid increased competition. This was reflected in a $393m credit impairment charge.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-22.pdfApril, 2023
Australian Shares made solid gains in April given the global share rebound and signals from the Reserve Bank for a pause in raising interest rates. The strongest gains were from the AREITs which benefitted from the lower rates and the Information Technology sector which followed its global peers higher. The Resources sector was dragged down by the Materials stocks as iron ore prices corrected on weak steel demand, but this was partly mitigated by gains in Energy and Gold stocks.
The annual distribution return to 30 April 2023 for the Antares Dividend Builder Fund was 5.7%. The fund delivered a total return of 1.7% (net of fees) for the month of April which compared to a return of 1.8% for the S&P/ASX200 Total Return Index. Dividends were received from CSL, Nine Entertainment, Orora, South32 and Woodside Energy during the month.
Sector allocation Contributing to the Fund’s performance were overweight positions in CSR and Medibank Private (MPL) together with the decision not to own Rio Tinto (RIO). As a major supplier of building products, CSR has been seen as a beneficiary of the growing discussion that Australia has a housing shortage and a need to build more homes. The news that the Australian housing market has bottomed was also positive for sentiment. Investor interest in Medibank (MPL) shares has returned post the huge sell-off when the company announced it had been subject to a cyber security attack. Contrary to concerns that the attack on MPL would lead to a significant deterioration in policyholder numbers and earnings, MPL has been able to increase policy holder numbers and delivered a much stronger than expected 1H23 result. Despite some positive economic signals from China, steel demand was weak which saw iron ore and metals prices drop in April – as did RIO’s share price.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-1-2.pdfMarch, 2023
Australian shares slipped into negative territory in March. The sharpest falls were in the real estate and financial sectors given the turmoil in the global banking system and lower bond yields. However, strength in the resource sector on hopes of a Chinese economic recovery helped limit the downside in Australian share markets. There were also gains for communications, consumer discretionary and consumer staples sectors on hopes that the Reserve Bank would pause on further interest rate increases.
The annual distribution return to 31 March 2023 for the Antares Dividend Builder Fund was 5.5%. The fund delivered a total return of -0.2% (net of fees) for the month of March which compared to a return of -0.2% for the S&P/ASX200 Total Return Index. Dividends were received from Ansell, APA Group, Aurizon, BHP, IAG, Medibank Private, Suncorp, The Lottery Corporation, Telstra and Viva Energy during the month.
Contributing to the Fund’s performance were overweight positions in Ventia (VNT) and BHP together with not owning Macquarie Group (MQG). VNT shares were stronger after delivering a CY22 result in late February that beat consensus expectations and prospectus guidance and a major share sell-down by its majority shareholders. The result highlighted the predictability of its contracted revenue stream and a business that has managed costs well in an inflationary environment. VNT also provided guidance for CY23 NPATA growth of 7-10%, underpinned by strong pipeline visibility and record work-in-hand. VNT’s share price rallied after Apollo and CIMIC sold down 93 million shares in March, representing 22% of the company’s issued capital which has improved liquidity in the stock and reduced the stock overhang concerns that had affected the share price. BHP shares performed well on hopes of Chinese economy recovery following the release of a larger than expected increase in the China Manufacturing PMI Index. The global banking turmoil impacted the sector in Australia and MQG shares were not exempt.
Detracting from performance were overweight holdings in NAB and Suncorp (SUN) and not holding a position in Newcrest Mining (NCM). NAB and SUN reflected the general weakness in bank stocks. NCM shares were beneficiaries of the higher gold price and were underpinned by the scrip takeover offer of former owner and gold producer, Newmont
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-21.pdfFebruary, 2023
Australian shares slipped into negative territory in February. The sharpest falls were in the resource sector with some disappointments over the profit reports of BHP and Rio. Financial shares fell with the banks being squeezed by lower net interest margins and concerns over falling house prices. Real estate sector shares were also negatively impacted by rising bond yields. There were some positives with Insurers performing well on positive news from Medibank Private together with a general sector lift as higher bond yields drive high investment income given asset class restrictions for insurers. Utilities also delivered solid gains on a higher than expected (albeit lower) revised bid for Origin from Brookfield. Information technology recovered some ground after the sector was savaged in 2022.
The annual distribution return to 28 February 2023 for the Antares Dividend Builder Fund was 6.5%. The fund delivered a total return of -1.6% (net of fees) for the month of February which compared to a return of -2.4% for the S&P/ASX200 Total Return Index. Dividends were received from Transurban during the month.
Contributing to the Fund’s outperformance were overweight positions in Medibank (MPL) and Orora (ORA) together with not owning CBA. We have maintained our view that the market over-reacted to the potential impact on MPL’s customer retention after its cyber security incident. This was partially vindicated in its half year result as policy numbers stabilised and began to grow again in February, whilst claims inflation was lower than expected. These factors helped support the stock. ORA shares jumped after the company announced a boost to interim net profit and dividend and indicated it expects continued growth in its North American business in the second half. Banks have generally underperformed on concerns about net interest margins peaking amid fierce competition for home mortgages and the prospect of higher bad debts as interest rates increase.
Detracting from performance were overweight holdings in BHP, NAB, and Aurizon (AZJ). Disappointing profit reports from BHP and AZJ saw their share prices weaker. Of particular concern for AZJ was that the growth engine of the business, bulk haulage, struggled in the half, following a disappointing 2H FY 2022. On further investigation, we have concluded the market has made some incorrect assumptions about this business given the impact of weather down Australia’s east coast. We also believe the market has overlooked the substantial progress being made in its transition away from bulk coal haulage with its major new contract win with Toll.
Australia’s economy appears to be softening judging by more subdued retail spending and falling house prices. Consumers have become more cautious with high inflation and rising mortgage interest rates. Even the labour market is cooling after the strong jobs growth in 2022 with the unemployment rate edging up from 3.5% to 3.7% in January.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-20.pdfJanuary, 2023
Australian shares made strong gains in January. Most notable were the consumer discretionary and real estate sectors on hopes that the cycle of rising interest rates was nearing an end. The resource sector continued its recent strong performance given rising iron ore and metal prices on China recovery hopes.
Consumer staples, information technology and financial sector shares also performed well. The only negative sector was Utilities but this comes after robust gains in recent months.
The annual distribution return to 31 January 2023 for the Antares Dividend Builder Fund was 6.9%. The fund delivered a total return of 4.6% (net of fees) for the month of January which compared to a return of 6.2% for the S&P/ASX200 Total Return Index. Dividends were received from Metcash and Region Group (formerly Shopping Centres Australasia) during the month.
Sector allocation Contributing to the Fund’s performance were overweight positions in South32 (S32) and CSR and an underweight holding in CSL. S32 shares were stronger on a good quarterly report as well as being buoyed by increases in the prices of its key commodities including aluminium, copper and zinc. The prospect that inflation had peaked and the pace and size of rate increases would diminish was supportive for building materials companies, including CSR. There was no corporate news from CSL but the higher AUD vs USD may have detracted.
Detracting from performance were overweight holdings in Medibank Private (MPL), Aurizon (AZJ) and Telstra (TLS). MPL shares were weaker on press reports that suggested three law firms were merging their class action lawsuits against the company following the data breach last year. There was no corporate news from either Aurizon or Telstra but both lagged the market.
Australia’s economy appears to be softening judging by weaker retail spending, falling house prices and more sedate results for the labour market. Both employment and job ads fell in December while retail spending declined sharply as consumers became more cautious with the higher cost of living. Australia’s annual consumer inflation surged to 7.8% in December. Expected sharp increases in retail electricity and gas prices as well as higher rents and wages suggest that Top 10 share holdings (alphabetical order) inflation will remain in the spotlight in 2023.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-19.pdfDecember, 2022
The annual distribution return to 31 December 2022 for the Antares Dividend Builder Fund was 6.3%. The fund delivered a total return of -2.4% (net of fees) for the month of December which compared to a return of -3.2% for the S&P/ASX200 Total Return Index. Dividends were received from ANZ, CSR, NAB and Westpac during the month.
Contributing to the Fund’s performance were overweight positions in Suncorp (SUN), Medibank (MPL) and Telstra (TLS). SUN’s share price has performed well following a confident trading update in November that reaffirmed its general insurance margin target for FY23 and confirmed its bank was trading well. The ACCC also announced it has commenced the investigation into the sale of SUNs banking business to ANZ – a positive outcome would be welcomed by SUN.
Having been heavily sold down following a cyber-attack in October, MPL shares regained a little ground during the month. TLS shares performed relatively well in Sector allocation December albeit the price was largely unchanged. This was despite the ACCC blocking the company’s proposed regional mobile network deal with competitor TPG.
Detracting from performance was an overweight holding in Nine Entertainment (NEC) and the decisions not to hold Rio Tinto (RIO) or Fortescue Metals (FMG). NEC shares have been weaker after Domain Holdings (60% owned by NEC) provided a disappointing trading update and 1H23 earnings guidance that was much weaker than expected, driven by a large decline in property listings. Iron ore prices continued to rise in December following a large spike in November after the Chinese government moved to rescue its ailing property sector and then radically softened its Covid-Zero policy. This was supportive for RIO and FMG shares.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-18.pdfNovember, 2022
Australian shares delivered strong gains in November. The sharpest gain was in the Utilities sector given signs that inflation and interest rate pressures were moderating. The Resources sector also surged given the strong rally in iron ore and base metal prices on hopes that China’s economic growth should revive with a less restrictive Covid strategy. There were also solid gains for healthcare, industrials and real estate given lower bond yields.
The annual distribution return to 30 November 2022 for the Antares Dividend Builder Fund was 6.2%. The fund delivered a total return of 4.4% (net of fees) for the month of November which compared to a return of 6.6% for the S&P/ASX200 Total Return Index. Dividends were received from ANZ, Insurance Australia Group, Metcash, South32, Suncorp, Telstra and Transurban during the month.
Contributing to the Fund’s performance was an overweight position in BHP and decisions not to own CBA or James Hardie Industries (JHX). Measures introduced by the Chinese government to rescue its ailing property sector as well as a Sector allocation softening of its COVID-Zero policy and an uptick in credit growth are constructive for Australia’s miners. Given property makes up around 25-35% of steel demand, it was not surprising to see iron ore prices rise by over 30% in November. As a producer of iron ore and copper, BHP shares performed well. CBA posted a solid first quarter update and expressed confidence in the medium to longer term while citing some near-term challenges such as cost of living. The company did not disclose its net interest margin (NIM) and some sell side analysts cautioned that any improvements in NIM could be offset by rising costs. The shares rose but underperformed the overall market. JHX shares slumped after the company lowered its FY23 guidance on concerns that the outlook for housing is deteriorating.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-17.pdfOctober, 2022
Australian shares made a strong recovery in October. The sharpest gains were in financial sector shares given solid credit demand and assurances from the Reserve Bank (RBA) that business and household balance sheets were in strong shape. The real estate and consumer discretionary sectors also made robust gains reflecting the comforting commentary from the RBA. There was also a favorable performance from the energy sector on continuing concerns about global supply. The resources sector was more subdued with a slight gain given worries about global economic activity prospects.
The annual distribution return to 31 October 2022 for the Antares Dividend Builder Fund was 5.9%. The fund delivered a total return of 5.9% (net of fees) for the month of October which compared to a return of 6.0% for the S&P/ASX200 Total Return Index. Dividends were received from CSL, Nine Entertainment, Orora and Woodside Energy during the month.
Contributing to the Fund’s performance was an underweight position in CSL as well as overweight holdings in Westpac (WBC) and NAB. CSL shares - like others in the healthcare sector - finished down in October. This was despite a positive update on its Vifor business and an AGM speech by its CEO expressing confidence in CSL’s fundamentals and diverse pipeline to build on its track record of sustainable growth for years to come. Attractive deposit pricing coupled with solid credit demand and some evidence that institutional investors were reducing their underweight to the sector saw double digit rises from the big 4 banks in October.
Detracting from performance were overweight holdings in Medibank (MPL) and BHP together with the decision not to own CBA. MPL shares finished the month down 19.0% after the company announced it was subject to a cyberattack. While the company expects a relatively small impact on its current half year earnings, costs relating to remediation and possible litigation are not included. Investors were also concerned about the potential for loss of customers and brand damage.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-16.pdfSeptember, 2022
Australian shares proved sensitive to the global market turmoil as well as the Reserve Bank (RBA) raising interest rates. The ASX’s sharp decline was spread across the board, with all industry sectors recording falls. The weakest performances came from the utilities and real estate sectors given their acute sensitivity to rising interest rates and bond yields. Other sectors hit hard included information technology where valuations are also rate sensitive, industrials and consumer discretionary. More resilient but still in the red was the Resources sector which benefitted from the lower Australian Dollar counteracting the slide in key commodity prices such as iron ore and metals.
The annual distribution return to 30 September 2022 for the Antares Dividend Builder Fund was 5.5%. The fund delivered a total return of -5.5% (net of fees) for the month of September which compared to a return of -6.2% for the S&P/ASX200 Total Return Index. Dividends were received from Alumina, Ansell, Aurizon, APA Sector allocation Group, BHP, IAG, Iress, Medibank Private, Suncorp, Telstra and Viva Energy during the month.
Contributing to the Fund’s outperformance were decisions not to own Macquarie Group (MQG) or Goodman Group (GMG) and an overweight position in ANZ. MQG’s heavy capital markets exposure combined with the adverse impact on investment banking/advisory activity as mergers & acquisition and new listings activity slows has seen the stock out of favour in September. GMG like the rest of the AREIT sector was impacted by higher bond yields and broader uncertainty in global markets. Concerns that demand could be softening in the US and beyond were fuelled after FedEx issued a profit warning and said it would be shutting offices as a result of weaker volumes globally. ANZ’s share price has lagged the other majors in calendar 2022 but did considerably better in September. The company described its 3Q result as pleasing with improved margins across all businesses and tight cost management.
Detracting from performance were overweight positions in Iress (IRE) and Alumina (AWC) and an underweight position in CSL. IRE struggled in September after issuing disappointing near-term profit guidance. This announcement was coupled Top 10 share holdings (alphabetical order) with confirmation that IRE had been appointed as Administrator of the Commonwealth Superannuation Scheme. While the guidance downgrade was disappointing albeit short term in nature, the concurrent announcement of IREs admin win is supportive of its longer-term strategy (and profit targets) of the company. AWC’s share price weakness during September was likely due to ongoing concerns about the cost performance of its Spanish asset (due to its exposure to high European natural gas prices) and the weakening of aluminium prices during the month (albeit alumina futures prices actually increased). Large cuts in alumina price forecasts also saw some broker downgrades. CSL shares performed relatively well as investors looked to more defensive sectors such as healthcare.
Australia’s economy continues to appear resilient judging by the solid results for business surveys, the labour market and retail spending. August recorded solid job gains, healthy business surveys and robust retail spending. However, the dramatic acceleration in inflation is concerning with the CPI showing 6.8% annual inflation in August. Strong annual price rises were recorded for new housing construction (20.7%), fruit and vegetables (18.6%) and automotive fuels (15.0%). The Reserve Bank raised the cash interest rate by a further 0.5% to 2.35% in September and also signaled the expectation to increase interest rates further over the months ahead.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-15.pdfAugust, 2022
Australian shares outperformed most global markets with the S&P/ASX 200 delivering a small gain. Energy shares and Resources led the market given continued strong demand for gas and coal in the wake of Russian supply concerns and the ongoing push for decarbonisation. There were modest gains also for communication shares and industrials. However, the AREITs were weaker given the sensitivity to rising interest rates and bond yields.
August is also reporting season for most Australian companies and this year it was better than feared. Pressures from labor shortages, wage inflation and fuel costs were in line with expectations, however some companies showed resilient revenue growth. Outlook statements were generally not as gloomy with some companies demonstrating effective pricing power.
The annual distribution return to 31 August 2022 for the Antares Dividend Builder Fund was 5.3%. The fund delivered a total return of 1.4% (net of fees) for the month of August which compared to a return of 1.2% for the S&P/ASX200 Total Return Index. Dividends were received from ANZ, GPT, Medibank Private, Metcash, Orora, Shopping Centres Australasia and Transurban during the month.
Contributing to the Fund’s outperformance were overweight positions in Medibank Private (MPL) and Viva Energy (VEA) together with the decision not to own CBA. MPL’s profit result pleased the market. The company has flagged possible M&A opportunities as well as flagging organic growth targets in the order of 15% pa over the next three years. VEA shares performed well after delivering record EBITDA and strong refining margins with a positive outlook as a covid recovery beneficiary with higher fuel sales. CBA delivered a slightly underwhelming 2H22 result with softer revenue and margins under pressure.
Detracting from performance were overweight positions in Orora (ORA), Shopping Centres Australasia (SCP) and Transurban (TCL). ORA delivered improved results from its North American operations and strong sales of cans in Australia, but sentiment was tempered by higher costs. SCP was weaker as the company guided to higher than expected interest costs for FY23. However, underlying conditions remain broadly positive with solid rent growth in both anchor and specialty tenants. TCL’s FY22 result disappointed with network traffic largely flat (although revenue increased due to CPI linked escalation). Lower FY23 dividend guidance was not well received.
Australia’s economy appears resilient judging by solid results for business surveys, the labour market and retail spending. Australia’s unemployment rate in July fell to 3.4% which is the lowest since 1974 and retail spending surged. However, the dramatic inflation acceleration is concerning. The Reserve Bank updated their annual CPI inflation forecasts to 7.75% by the end of 2022. Given this inflation threat, the Reserve Bank raised the cash interest rate by 0.5% to 1.85% in August.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-14.pdfJuly, 2022
Australian shares recorded strong gains in July with the S&P/ASX 200 delivering a 5.7% return. Leading the market was the robust surge in the Information Technology and Real Estate sectors given a recovery in risk appetite and fall in long term bond yields. Financial shares also benefitted from bond yields. Consumer discretionary posted a strong performance in July with signs of solid retail spending against the tide of higher interest rates and soft consumer confidence. By contrast, there was a weak performance from the Resource sector, weighed down by concerns over global growth prospects.
The annual distribution return to 31 July 2022 for the Antares Dividend Builder Fund was 5.5%. The fund delivered a total return of 3.1% (net of fees) for the month of July which compared to a return of 5.7% for the S&P/ASX 200 Total Return Index. Dividends were received from ANZ, CSR and NAB during the month. Sector allocation Contributing to performance were overweight positions in NAB and Nine Entertainment (NEC) together with not owning Rio Tinto (RIO). Like other banks, NAB responded positively to the lower long-term bond yields. NEC shares were higher on no particular news during the month. Resource stocks were generally lower on the potential for a US recession and in response to concerns about the Chinese property market. RIO’s first half result also underwhelmed investors with the declared dividend below expectations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-13.pdfJune, 2022
Australian shares were weak in June with similar falls to their American and European counterparts. The ASX 200 recorded a sharp price fall of 8.8%. The financial and real estate sectors led the market declines given their sensitivity to rising interest rates. The resource sector also disappointed with a large fall given the slide in iron ore and metal prices. The only island in a sea of red ink was a small gain for the consumer staples sector given its perception as a ‘safe haven’.
The annual distribution return to 30 June 2022 for the Antares Dividend Builder Fund was 5.4%. The fund delivered a total return of -6.0% (net of fees) for the month of June which compared to a return of -8.8% for the S&P/ASX200 Total Return Index. Dividends were received from Westpac during the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-12.pdfMay, 2022
Australian shares underperformed other developed markets in May. However, this comes after a more resilient performance compared to global share markets this year. For May, there were notable sharp falls in the real estate and information technology sectors in response to higher bond yields. Consumer staples and consumer discretionary shares were also weak given concerns that rising inflation and interest rates are squeezing household budgets. The resources sector was more encouraging with a modest gain given the persistent strength in commodity prices. The election of the new Labor Government on May 21st seems to have had minimal immediate impact on Australian share markets.
The annual distribution return to 31 May 2022 for the Antares Dividend Builder Fund was 4.1%. The fund delivered a total return of -2.3% (net of fees) for the month of May which compared to a return of -2.6% for the S&P/ASX200 Total Return Index. No dividends were received during the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-11.pdfMarch, 2022
Australian shares made strong gains in March. The resources sector surged 9.9% with the benefit of the sharp gains in iron ore and base metal prices. The energy sector made similar gains as oil prices climbed above US$100 per barrel given the Russia – Ukraine conflict. Financial shares also delivered a strong return with continued reassurances from the Reserve Bank that interest rates are likely to remain stable this year.
The annual distribution return to 31 March 2022 for the Antares Dividend Builder Fund was 4.4%. The fund delivered a total return of 5.8% (net of fees) for the month of March 2022 which compared to a return of 6.9% for the S&P/ASX200 Total Return Index. During the month dividends were paid by Alumina, Amcor, Ansell, APA Group, Aurizon, BHP, Coles, Downer, IAG, Iress, Medibank Private, Orora, Tabcorp and Woodside Petroleum
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-10.pdfFebruary, 2022
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of 4.0% (net of fees) for the month of February 2022.1 During the month dividends were paid by GPT and Transurban. Australian shares proved more resilient to the global share correction with a 2.1% return for the ASX 200 largely as a result of a generally positive reporting season where more companies beat earnings estimates then missed. The energy sector surged as oil prices spiked to over US$100 per barrel with concerns over the Russia – Ukraine conflict. Grain prices also rocketed given both Russia and Ukraine are major producers. The resource sector also benefitted from the sharp gains in most prices in February. Consumer staples rebounded after a disappointing January given reassurances from the Reserve Bank that interest rates are likely to remain stable this year. However, there were some disappointments with the Information Technology sector continuing to weaken on concerns about rate rises in the US.
Contributing to performance were overweight positions in Woodside Petroleum (WPL) and Westpac (WBC) and not holding a position in Wesfarmers (WES). WPL’s share price reflected the surge in the oil price. Further, WPL’s CY21 result, delivered during the month, revealed that 25% of its CY22 LNG sales will be priced at spot prices rather than long-term contract prices. The spot LNG price has spiked just like the oil price, hence the market is excited by WPL’s exposure - its shares were keenly sought, rising by 19.8%. WBC shares were stronger as the company’s December quarter update, which also flagged lower costs, was well received by the market. The company also announced the successful completion of its off-market share buyback. WES shares were weaker after delivering a result in line with guidance, but with Bunnings earnings below expectations. Inventory was higher in light of ongoing disruption to global supply chains.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-9.pdfJanuary, 2022
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of -4.1% (net of fees) for the month of January 2022.
Australian shares had a disappointing start to 2022 with sharp falls in January. Leading the decline was the Information Technology sector which struggled in the wake of Wall Street reassessing growth prospects. Healthcare and consumer staples were also under selling pressure given that future higher interest rates would reduce their appeal to investors. The few rays of sunshine came from the Resources sector. The energy sector surged given the rapid rise in the oil price towards US$90 per barrel fueled by concerns over Russia – Ukraine political tensions. The big miners were also strongly supported as iron ore prices surged from US$107 to US$137 per tonne with reported shortages of Brazilian supply.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-8.pdfDecember, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of 2.9% (net of fees) for the month of December 2021.1 During the month dividends were paid by Amcor, ANZ, Incitec Pivot, NAB and Westpac. Australian shares made solid gains in December. The resources sector made a strong recovery with iron ore prices stabilising around US$100 per ton. Utilities also made a comeback after an otherwise lacklustre 2021. Financial sector shares benefitted from the Reserve Bank’s pledge to be patient on raising interest rates. However, the Information Technology sector fell sharply as the market re-assessed pricing for the Afterpay takeover. The Consumer Staples sector also disappointed given concerns that higher production and transport costs would adversely impact profit margins. Contributing to performance was an underweight position in CSL, an overweight holding in Metcash (MTS) and the decision not to own Afterpay (APT). CSL shares were weaker as the company announced its plans to acquire Vifor Pharma, a global leader in renal disease and iron deficiency, for A$16.4b. A $6.3b placement and $750m share purchase plan would be used together with debt and cash reserves. MTS released a strong result for the half year to October. While MTS’s grocery business did well, the star performer was the hardware business, in particular the recent addition of Total Tools, a retail business that is delivering great leverage to strong sales numbers. Midmonth the market took a very decisive “risk off” turn which saw a rotation away from higher valuation sectors, such as tech, to the more “value” part of the market. Another factor impacting APT shares is that their price is now firmly linked to the price of Block (SQ US) in the United States given the merger of the two businesses that looms early in 2022. SQ US has been one of the worst performers in the recent tech sell-off in the US, being classified with other higher risk tech businesses. These businesses tend to be early in their life cycles and so requiring a heavier level of re-investment to create their longer-term value. As discount rates move up with inflationary expectations these stocks can suffer from temporary valuation adjustments. SQ’s September quarterly missed revenue expectations and this also impacted its share price performance, thus dragging APT down with it.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-7.pdfNovember, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of -1.2% (net of fees) for the month of November 2021.
Australian shares recorded a slight fall in November with mixed performance across sectors. There were strong gains for the resources sector given the benefit of a lower Australian dollar and signs that iron ore prices were stabilising around US$100 per ton. Communication services and consumer staples also benefitted from investors taking a more defensive stance. However, these gains were offset by sharp falls in financials with some poor results and concerns that interest rate margins would be squeezed by future interest rate rises. The energy sector also disappointed with the slump in oil prices.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-6.pdfOctober, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of -1.6% (net of fees) for the month of October 2021.1 During the month, dividends were received from Viva Energy.
Australian shares disappointed in October with a near flat return. There were mixed performances across sectors. The Information Technology sector followed Wall Street’s robust performance. Health care and financial sector shares also made solid gains. But the resources sector generally disappointed given concerns about prospects for China’s property sector and its impact on iron ore prices. The industrial sector and consumer staples sectors fell given the sensitivity to the sharp rise in Australian bond yields experienced in late October.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-listed-property-fund-7.pdfSeptember, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of 0.5% (net of fees) for the month of September 2021.1 During the month, dividends were received from Alumina, Amcor, APA, Aurizon, CBA, Coles, Downer, IAG, Iress, Medibank, Suncorp, Tabcorp, Telstra and Viva Energy.
Australian shares declined in September. The resources sector recorded a sharp fall with concern that Chinese property developer Evergrande’s financial woes would weaken future demand for Australian iron ore. (The iron ore price fell by at least 25% for the second consecutive month.) Information technology also disappointed given rising bond yields. Shortages of gas, oil and coal saw energy prices surge and investors looked past ESG concerns to push the sector higher. Consumer Services stocks, including travel and international education that were directly impacted by the pandemic, were also strong as the prospect of re-opening becomes closer.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-1-1.pdfAugust, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of 4.7% (net of fees) for the month of August 2021.1 During the month, dividends were received from GPT, Metcash, Scentre Group and Transurban. Australian shares delivered a strong return in August. Reporting season was generally positive. The Information Technology sector surged as Square launched a $39b takeover bid for Afterpay. There were also strong gains for the healthcare and financial sectors given the Reserve Bank’s guidance that low interest rates would be maintained. However, resource sector shares were down as iron ore prices slumped by 25% as the Chinese steel industry signaled lower demand.
Contributing to performance were overweight holdings in Suncorp (SUN) and Downer EDI (DOW) and an underweight position in CBA. Suncorp’s FY21 result was ahead of expectations and reflected provision releases across the insurance and banking divisions and a stronger insurance margin. The prospect of upgrades and capital initiatives were viewed positively. DOW delivered a good result with underlying earnings up by 21% and strong cash generation. It increased the payout ratio to 60% in 2H plus announced a $400m on-market buyback. CBA reported an increase in FY21 cash profit buoyed by strong housing demand. This was expected by the market as were dividend and buyback announcements.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-5.pdfJuly, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of 0.4% (net of fees) for the month of July 2021.1 During the month, dividends were received from ANZ Banking Group and National Australia Bank.
Australian shares made slight gains in July. The resources sector performed well given higher metal prices and a weaker Australian Dollar. The industrial sector, utilities and consumer staples also performed solidly given RBA’s guidance of low interest rates. However, the information technology sector lost ground after a strong June. Contributing to performance were overweight holdings in Iress (IRE) and Medibank Private (MPL) and not owning Afterpay (APT). Late in July IRE announced it had received a conditional takeover offer of between $15.30-$15.50 per share from EQT Funds Management and advised shareholders to take no action. IRE also held an investor day where it announced an on-market share buyback of up to $100m. MPL outperformed the market in July because lockdowns in Sydney and Melbourne should lead to fewer elective surgeries (again). There were also several broker earnings forecast upgrades. While there was no new news, the market‘s preference for value oriented stocks, driven especially by M & A appeal, saw a rotation away from longer duration growth stocks such as APT.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-4.pdfJune, 2021
The annual income yield to 30 June 2021 for the Antares Dividend Builder Fund was 4.35% compared to the Benchmark’s 2.77%. The fund delivered a return of 1.8% (net of fees) for the month of June 2021.1 During the month, dividends were received from Amcor and Westpac.
Australian shares delivered strong returns in June. The information technology sector made robust gains reversing its slump in May. Communications, consumer staples and consumer discretionary sectors also made strong gains with optimism on the Australian economic recovery. The only negative sector performance came from financials but this follows the sector’s strong 20% gain over the past six months.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-3.pdfMay, 2021
The annual income yield to 30 June 2020 for the Antares Dividend Builder Fund was 4.38% compared to the Benchmark’s 3.21%. The fund delivered a return of 2.5% (net of fees) for the month of May 2021.
Australian shares made healthy gains in May. Bank shares delivered strong returns given solid profit results for the half year on low funding costs and declining debt impairment costs. Consumer discretionary and healthcare also made solid gains with consumer optimism on the Australian economic recovery. Sectors that disappointed included information technology which essentially reversed all of the previous month’s gains. Utilities also fell sharply.
Contributing to performance were decisions not to own Afterpay (APT) and Macquarie Group (MQG) together with an overweight holding in Westpac (WBC). There was no particular news from APT but technology stocks were sold down heavily in early May, possibly in response to the market positioning for higher bond yields on the back of strong inflation data especially in the US. MQG released its FY21 results early in May. Although they were ahead of the prior year there was greater reliance on once -off or lumpy items. The company did not provide any guidance for FY22. All the major banks provided trading updates in May, with lower impairments driving earnings upgrades across the sector.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-2.pdfApril, 2021
The annual income yield to 30 June 2020 for the Antares Dividend Builder Fund was 4.38% compared to the Benchmark’s 3.21%. Recent company earnings guidance suggests the outlook for dividends is looking better in 2021 and we maintain our objective to deliver income in excess of our benchmark. The fund delivered a return of 2.8% (net of fees) for the month of April 2021.
Australian shares made strong gains in April. The resource sector returned 5.4% boosted by the surge in commodity prices including iron ore (20%) and copper (13%). The information technology sector also performed well partly buoyed by strong results from the major global technology companies. Sectors posting declines included energy, on the back of the fall in the oil price, consumer staples and utilities.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder-1.pdfJanuary, 2021
The annual income yield to 30 June 2020 for the Antares Dividend Builder Fund was 4.38% compared to the Benchmark’s 3.21%. Recent company earnings guidance suggests the outlook for dividends is looking better in 2021 and we maintain our objective to deliver income in excess of our benchmark. The fund delivered a return of 0.6% (net of fees) for the month of January 2021.1 Dividends were received from Metcash during January. Australian shares made modest gains in January. There were solid gains for consumer discretionary, communication and financial sector shares with the view that the Australian consumer is now experiencing improving prospects. However, these gains were countered by weakness in real estate investment trusts and industrials.
Contributing to capital returns was the decision not to own CSL and overweight holdings in Westpac (WBC) and Telstra (TLS). Concerns that the strength of the second wave of the pandemic in the USA would see more declines in plasma collections weighed on CSL. The strong Australian dollar also impacts the translation of US dollar earnings into AUDs. The banking sector was buoyed by the spike in bond yields following the democrat wins in the US Senate election in Georgia. Also supportive have been recent earnings upgrades that have been mostly due to lower bad debts. WBC was the best performer. During January TLS provided prior performance figures based on its new product reporting framework. The new framework was flagged in November 20 and will provide greater transparency, especially as TLS moves to restructure into three legal entities – InfraCo Fixed, InfraCo Towers and ServeCo. Detracting from returns was the decision not to own Afterpay (APT) and an overweight holding in Amcor (AMC).
Buoyant retail sales and increasing consumer confidence combined with APT’s entry into the S&P/ASX 20 in December – all seen as positive for APT’s share price. Despite upgrading EPS guidance for FY21 and buying back more shares, AMC shares have underperformed. AMC doesn’t hit sweet spots such as value or covid recovery and the relatively strong AUD doesn’t help. Australia’s economic data continues to strengthen, suggesting encouraging prospects for the new year. Strong job gains as well as optimistic business and consumer surveys suggest that the Australian economic recovery is gathering pace. Signs that Sydney’s virus outbreak is contained also provided a positive impulse. However new variants of the coronavirus and slow rollouts of vaccines globally have tempered this optimism.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/fund-profiles-antares-dividend-builder.pdfasset_class: Domestic Equity
asset_category: Australia Large Value
peer_benchmark: Domestic Equity - Large Value Index
broad_market_index: ASX Index 200 Index
manager_contact_details: Array
ticker: PPL0002AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.antarescapital.com.au/home/personal-investor/equities/dividend-builder/resources
Fund Profile
fund_features:
Antares Prof Dividend Builder’s primary objective is to regularly deliver higher levels of dividend income on a tax effective basis than the Benchmark. The Fund’s other objective is to achieve moderate capital growth in a tax effective manner over a rolling 5 year period. The Fund is an actively managed Australian share fund which aims to deliver regular dividend income and to achieve moderate capital growth by investing in a diversified portfolio of Australian companies. Antares’ strategy is to invest in a diversified portfolio of high yielding Australian companies that aim to grow their dividends over time, with an emphasis on securing franked income and minimizing portfolio turnover to keep net realized capital gains low.
structure: Managed Fund