October, 2020
The Antares High Growth Shares Fund delivered a return of 2.3% (net of fees) for the month of October 2020.
Australian shares provided a positive surprise with a modest gain in October. The Federal Budget’s announcement of income tax cuts and investment allowances was positively received by investors. News that Melbourne’s virus outbreak appeared to be contained with lockdown restrictions being gradually eased also assisted Australian share prices. Information Technology shares led the market buoyed by a takeover bid for Link Administration and another strong performance from Afterpay. Financial sector shares also surged with optimism that a supportive Federal Budget and Melbourne’s revival would mitigate potential loan losses with business and housing loans deferrals. However the industrials and energy sectors disappointed.
Contributing to Fund performance were overweight holdings in Nine Entertainment (NEC), Afterpay (APT) and BlueScope (BSL). NEC’s share price has continued to rise post delivering its results in August. The market is recognising NECs success in transforming a large proportion of its business to a digital subscription model. APT made a series of positive announcements during October including a tie-up with Westpac as the first partner on its new digital banking platform, a strong 1Q21 business update that revealed a 115% increase in underlying sales on the pcp and confirmation that AUSTRAC would not be taking any further regulatory action in relation to the AML/CTF Act. BSL provided a trading update in late October that indicated 1HFY21 earnings before interest and tax would be 30% ahead of the previous half (2HFY20). The company was enjoying strong demand for its products in Australia and the US.
Detracting value were overweight positions in Aristocrat Leisure (ALL) and Atlas Arteria (ALX) and an underweight position in CBA. While there was no new news from ALL, the stock has been very strong in recent months as the US Casino market opened from COVID ahead of people’s expectations. With COVID cases re-accelerating in the US the market may have looked to lock in some of those recent gains. The rapid escalation in coronavirus cases in Europe and subsequent lockdowns was a negative for toll road operators including ALX.
The banking sector rose strongly in October with the prospect of a loosening in the responsible lending laws and some hope that bad debts could be not as bad as feared. Australia’s economic data and survey measures continue to deliver mixed signals, with some bright spots. Employment and retail spending softened in September as Melbourne’s virus lockdown weighed on activity. However there were some encouraging signs. Business surveys shows signs of stabilising while consumer sentiment rebounded in October with optimism that the virus was being contained. Late in the month there were signs that Victoria would significantly ease coronavirus restrictions as the number of new cases hit zero. More announcements were made about state borders opening and (one way) flights resumed with New Zealand. The mood was tempered by continuing trade issues with China and uncertainty about how the US election will play out.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/fund-profiles-antares-high-growth-shares-fund-1.pdfSeptember, 2020
The Antares High Growth Shares Fund delivered a return of -3.0% (net of fees) for the month of September 2020.1 Australian shares performed poorly in September. The Energy sector recorded the largest falls on falling oil prices and expectations for asset write-downs as anti-carbon sentiment increases. Following a strong run over recent months, the Information Technology sector declined in line with a more cautious global appetite. Financial sector shares were also weak with concerns over rising doubtful debts as the ‘Jobkeeper’ and ‘loan repayment deferral’ programs taper off. The only significant bright spot in September was a small gain for the healthcare sector. Contributing to Fund performance were overweight holdings in James Hardie (JHX), Boral (BLD) and Aristocrat Leisure (ALL). The strength in US housing demand continues. Locally the home building sector has been resilient with share prices also supported by the anticipated stimulus measures in the Federal Government budget. These factors have been seen as beneficial to both JHX and BLD. Investor interest in sectors, including gaming, that will open up post coronavirus-related closures boosted ALL shares during September. Detracting value were overweight positions in Oil Search (OSL), Santos (STO) and Virgin Money UK (VUK). The oil price weakened over the month, reflecting the continuation of weak demand due to coronavirus restrictions as well as more commentary on the structural shift to electric vehicles. Both OSH and STO shares were weaker. Also out of favour were VUK shares which exited the S&P/ASX 100 during September. It was also a month in which the UK experienced a second wave of the coronavirus and accompanying disruption and uncertainty. Australia’s economic signals are mixed. On the plus side, the recent revival in employment continues, with August recording job gains of 111,000 and the unemployment rate edging down from 7.5% to 6.8%. Consumer sentiment also rebounded in September. Countering this is confirmation that the Australian economy is in a deep recession, with the economy contracting by 7% in the June quarter, the largest decline since quarterly data started in 1959. There was further bad news with retail spending falling 4.2% in August given Melbourne’s virus lockdown. Some state borders are opening up but the majority remain closed, with 1 November (after the Queensland election) flagged as the possible opening for QLD/NSW. Victoria remains isolated. In the US, it’s not just the presidential election result, but its validity and timing that is creating uncertainty. President Trump’s confirmation that he has coronavirus has added to confusion around how it will play out. While volatility appears to have diminished, uncertainty remains.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/fund-profiles-antares-high-growth-shares-fund.pdfticker: PPL0106AU
commentary_block: Array
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asset_class: Domestic Equity
asset_category: Australian Long Short
peer_benchmark: Domestic Equity - Long Short Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund