September, 2023
After fees and expenses, the Portfolio declined by 3.30% during the month, underperforming its benchmark by 41 bps.
The largest positive contributors were CSL, QBE Insurance and Incitec Pivot. Our underweight to CSL contributed positively, as the globally focused biotechnology continued to weaken following the release of its FY24 group earnings guidance which was below market expectations (~10% lower than consensus for group FY24 NPATA). QBE Insurance outperformed as the insurer gained positive sentiment from a higher-for-longer outlook for medium-term interest rates, as well as a decline in the number of natural disasters during the peak of the North American catastrophe season and on the back of the El Niño declaration in Australia. Incitec Pivot’s outperformed after announcing an overall positive FY23 trading update.
The largest negative contributors were Tabcorp, Sims Metal and Northern Star. Wagering operator Tabcorp underperformed following Entain’s announcement of softer online gaming revenue. Sims Metal was a detractor as the scrap steel distributor lacked improvement in its trading conditions. Gold miner Northern Star underperformed due to a ~4% fall in the gold price from its near-record highs.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-11.pdfAugust, 2023
After fees and expenses, the Portfolio decreased by 2.61% during the month, underperforming its benchmark by 184 bps.
The largest positive contributors were Carsales.com, NEXTDC and Wisetech Global. Online auto classified Carsales.com outperformed in August following its fullyear FY23 results (net profit increase of 23% was higher than expectations). Similarly, NEXTDC also outperformed on the back of its FY23 results release. Our underweight position in WiseTech was a source of outperformance, as the share price of the logistics industry software solutions provider fell after reporting its full-year results (earnings guidance was lower than consensus).
The largest negative contributors were ResMed, Alumina and Wesfarmers. The medical equipment manufacturer ResMed, underperformed due to increased focus on the potential future impact of weight loss drugs, an eventual return of competitor Phillips into the sleep-apnoea device market and reported decline of its gross margin. The share price of Alumina dropped after the alumina and aluminium producer reported a net loss in their half-year report. Our underweight position in Wesfarmers was a detractor as the diversified conglomerate outperformed during the period following its solid FY23 results, which was led by the core Bunnings business and Kmart.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-10.pdfJuly, 2023
After fees and expenses, the Portfolio increased by 2.95% during the month, outperforming its benchmark by 6 bps.
The largest positive contributors were CSL, United Malt and Sandfire Resources. Biotechnology company CSL outperformed in July following the pre-release of earnings guidance in June which fell below market expectation (around 10% lower than consensus for group FY24 NPATA). United Malt outperformed during the month after European bidder Malteries Soufflet signed a binding deal to buy United Malt at $5.00 per share (a +45% premium to the undisturbed priced) following an extensive period of due diligence. Copper producer Sandfire Resources outperformed after posting a 13% quarterly production increase at its MATSA copper operations in Spain to achieve a total annual production of 99kt.
The largest negative contributors were Iluka Resources, National Australia Bank and Tabcorp. Iluka Resources underperformed after confirming it expects softer demand in 2H23 despite a robust June quarterly production report. The weaker outlook was also highlighted by competitor Tronox, further fueling market concerns. Our underweight to National Australia Bank was a detractor for the month as NAB benefitted from the market pricing in a higher probability of a soft landing and interest rates remaining higher for longer. Northern Star underperformed following a mixed June quarterly report; the gold producer had a strong quarter but FY24 production guidance was 8% below market expectations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-9.pdfJune, 2023
After fees and expenses, the Portfolio increased by 1.12% during the month, underperforming its benchmark by 62 bps.
The largest positive contributors were CSL, Sims Metals and QBE Insurance. Our underweight to the globally focused biotechnology company CSL contributed positively to performance in June following the company updating earnings guidance which came in below market expectations (approximately 10% lower than consensus for Group FY24 NPATA). The weaker operating outlook was driven by lower growth in its core blood plasma business, Behring, as cost pressures push out the margin recovery story. Sims Metals outperformed during the month with US scrap steel margins remaining strong, supporting earnings from the company’s US business SA Recycling. QBE Insurance was a source of outperformance due to ongoing strength in the premium rate environment. The company has substantially improved its underwriting discipline and product focus over the last five years, and we believe its 10.2 times FY23 earnings multiple excessively discounts the risks inherent in its business model.
The largest negative contributors were Link Group, Fortescue Metals and Northern Star. Link Group fell at month-end after a large superannuation client (representing ~4% of revenue) elected not to renew its contract for FY25. Fortescue Metals traded higher as iron ore prices continued to rise, where the benchmark 58% Fe Index rebounded to close at US$96.70/t at month-end on expectations of Chinese economic stimulus. Northern Star underperformed in June as gold prices declined ~3% to close at US$1,908/oz at month-end and the market was disappointed with the announced US$1.5bn capital cost to expand the KCGM Mill. In spite of the market sentiment, Northern Star remains our preferred gold exposure given its asset quality and strong cost control.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-8.pdfMay, 2023
After fees and expenses, the Portfolio declined by -1.57% during the month, outperforming its benchmark by 96 bps.
The largest positive contributors were Xero (XRO), NextDC (NXT) and Worley (WOR). The online accounting software provider Xero outperformed following the announcement of a strong result, with subscribers and revenues in line with expectations and EBITDA ahead of estimates. Following the previous month’s largest ever individual contract announcement, data centre provider NEXTDC continued to outperform with the market’s conviction in Artificial Intelligence (AI) applications as a driver of demand grew. Worley also rallied in the month, with leading indicators (Factored Sales Pipeline +36%, Rolling 12 Month Bookings +28%, Backlog +8%) and structural drivers pointing to strong top-line growth.
The largest negative contributors were CSL (CSL), Tyro Payments (TYR) and Sandfire Resources (SFR). Globally focused biotechnology company CSL was a detractor as it outperformed, despite the challenging outlook for blood plasma economics which include elevated non-donor fee cost inflation, increased competition, adverse relative product growth rates and product substitution risk in the longer run.
Domestic payments provider Tyro underperformed after prolonged takeover negotiations came to an end. Sandfire Resources was a negative contributor, despite achieving an important milestone through the first concentrate production at the Motheo project in Namibia, as copper prices declined by about 5% to close out the month at US$3.68/lb.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-7.pdfApril, 2023
After fees and expenses, the Portfolio gained 2.54% during the month, outperforming its benchmark by 69 bps.
The largest positive contributors were Reliance Worldwide (RWC), Rio Tinto (RIO) (not held) and Fortescue Metals (FMG) (not held). The manufacturer and distributor of plumbing and heating parts, Reliance, outperformed following the release of the company’s March-quarter trading update. The diversified miner Rio Tinto and iron ore producer Fortescue were contributors during April, with both stocks underperforming on falling iron ore prices. During April the benchmark 62% Fe iron ore index fell 15% to close at $106.05/t as construction and infrastructure activity in China fell below expectations.
The largest negative contributors were United Malt (UMG), CSL (CSL) and NAB (NAB) (not held). The global commercial malt processor and distributor underperformed during the period. United Malt received a takeover bid from peer Malteries Soufflet priced at $5.00/share (+45% premium to prior closing price) in the prior month and retraced modestly from its highs to close near to deal terms. We believe that the likelihood of a deal proceeding is high. Our underweight to the globally focused biotechnology company CSL detracted from performance in the month, which included several minor but supportive data points for the outlook for Behring (approximately 65% of group earnings), its blood plasma business. NAB outperformed during the period as the Australian banking sector reversed some of the selloff in banks following the failure of Silicon Valley Bank, Signature Bank and Credit Suisse.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-6.pdfMarch, 2023
After fees and expenses, the Portfolio increased by 2.21% during the month, outperforming its benchmark by 245 bps.
The largest positive contributors were United Malt, NAB, and Xero. United Malt outperformed after a takeover bid was received from peer, Malteries Soufflet priced at $5.00/share (+45% premium to last close). NAB underperformed during the month, caught up in the global selloff of banks following the failure of Silicon Valley Bank, Signature Bank and Credit Suisse. Xero outperformed during the period after announcing plans to reduce the size of its workforce by 15%. The cost-out will lead to a reduction in operating expenditure/sales from the recent levels of 83-85% over recent results down to a more sustainable level of ~75% from FY24.
The largest negative contributors were Newcrest Mining, Incitec Pivot and Worley. Newcrest Mining traded higher as the gold price rallied 9% in March on macro uncertainty and an expected slowdown of interest rate rises globally. Incitec Pivot underperformed over the period as the price for Tampa ammonia fell 23% in March on weaker gas prices in Europe and weaker demand. Worley underperformed as spot WTI oil pricing fell 3% over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-5.pdfFebruary, 2023
After fees and expenses, the Portfolio declined 1.40% during the month, outperforming its benchmark by 115 bps.
The largest positive contributors were QBE insurance (QBE), Link Administration (LNK) and The Lottery Corporation (TLC). Link Administration appreciated during the month as the company made material progress to resolving the uncertainty overhanging it UK Fund Solutions business. QBE Insurance performed strongly during the month in which it reported a solid full year result, largely in line with expectations, and with the guidance for gross written premium growth for 2023 of mid to high single digit growth leading to upgraded earnings expectations. The Lottery Corporation outperformed during the period, with the stock reporting a strong result underpinned by both a solid Lotteries print and improving Keno momentum.
The largest negative contributors were Northern Star (NST), PEXA (PXA) and Macquarie Group (MQG). Northern Star was a negative contributor during the month. Following a period of strong outperformance late in 2022, NST tracked the gold price lower in February, with gold declining 5% to US$1,817/oz at month end. PEXA underperformed during the month despite reporting a solid result for the six months to December 2022. With the background of the anticipated slowdown in house transaction volumes in Australia already an overhang on the stock, PXA guided to a slower roll out of its UK platform and higher than anticipated losses in its startup digital business. Macquarie performed strongly during the month on limited news flow, albeit that continued volatility in US and European energy markets through their winter seasons should be positive for MQG’s commodity business.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-4.pdfJanuary, 2023
After fees and expenses, the Portfolio gained 5.99% during the month, underperforming its benchmark by 30 bps.
The largest positive contributors were Reliance Worldwide (RWC), Sandfire Resources (SFR) and JB Hi-Fi (JBH). Reliance Worldwide outperformed over the month of January following the news of the widespread freeze event in the US in late December. These freeze events occur every ~3 or so years and this one should provide a solid boost to sales as repairs are undertaken to rectify frozen pipes. Sandfire Resources was a positive contributor to the portfolio. Copper prices increased ~10% over the month to close at US$4.17/lb on expectations the re-opening of China post COVID-zero would support copper demand. JB Hi-Fi outperformed during the period, with the stock continuing to re-rate higher on a strong trading update and resilient consumer spending patterns. Margins at both JB Hi-Fi and The Good Guys held up better than expected, with no evidence as yet of a reversion to pre-COVID levels.
The largest negative contributors were Incitec Pivot (IPL), Origin Energy (ORG) and Macquarie Group (MQG). Incitec Pivot underperformed over the month of January as ammonia prices fell 23% to $790/t. Ammonia prices in Europe have been falling with demand in Asia very soft, the removal of a 5.5% EU import duty & EU gas prices in late Dec at their lowest level for seven months. Origin Energy – which is under a takeover offer – lagged the market during the month, falling modestly despite an upgrade to its full year earnings guidance for its Energy Markets business. Macquarie Group performed strongly during the month on limited news flow, albeit continued volatility in US and European energy markets through their winter seasons should be positive for MQG’s commodity business.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-3.pdfDecember, 2022
After fees and expenses, the Portfolio declined by 3.17% during the month, outperforming its benchmark by 12 bps.
The largest positive contributors were Evolution Mining (EVN), Sandfire Resources and QBE Insurance. Evolution Mining benefitted from the gold price rising to US$1,828/oz at period end. Following a period of significant underperformance, we now see attractive valuation support for EVN. Sandfire Resources was a positive contributor during the period, with copper prices up 9% over the month to close at US$3.73/lb. We like copper as a commodity given its leverage to electrification as a key material in batteries and electric motors. QBE Insurance outperformed following its third quarter trading update late in the prior month, with improving market confidence in the earnings power of the business into 2023.
The largest negative contributors were Aristocrat Leisure, Tyro Payments and Nine Entertainment. Aristocrat Leisure underperformed during the period following a slightly disappointing result, which saw Digital revenue slow more than expected post COVID-19 (largely flat y/y in US$, with softening 2H momentum). Tyro Payments declined during the month following the conclusion of unsuccessful takeover discussions with suitors Westpac and Potentia. Nine Entertainment underperformed during the period following Domain’s (DHG) earnings downgrade in late December. DHG reported a weaker than expected listings environment since its AGM, as well as softer than expected yield in 2Q23.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-2.pdfNovember, 2022
After fees and expenses, the Portfolio gained 6.51% during the month, outperforming its benchmark by 2 bps.
The largest positive contributors were Origin Energy, Sandfire Resources and National Australian Bank (not held). Our overweight position in Origin Energy outperformed following a takeover approach from a consortium Brookfield and EIG priced at $9.00 per share, a 55% premium to the pre-bid share price, and valuing the company at an enterprise value of $18.4b. Sandfire Resources was also a positive contributor, with copper prices increasing 9% over the month to close at US$3.73/lb. We like copper as a commodity given its leverage to electrification as a key material in batteries and electric motors. Our underweight position in National Australian Bank contributed to outperformance, with the banking sector underperforming amidst concerns that we are rapidly approaching the peak of benefit from higher interest rates.
Further, the cost outlook for banks has deteriorated which, along with bad debts normalizing, suggests earnings are likely nearing the peak. The largest negative contributors were Aristocrat Leisure, Fortescue Metals (not held) and Reliance Worldwide. Aristocrat Leisure underperformed following the release of a slightly disappointing trading result, with Digital momentum slowing ahead of expectations. Longer term, we see significant opportunities across both Land-Based and Digital gaming and retain conviction in ALL’s growth potential. Our underweight position in Fortescue Metals Group was a detractor during the period as the stock outperformed on rising iron ore prices.
During November the benchmark 62% Fe index rose 27% to close at $101.50/t on expectations that a shift away from COVID-zero policies in China would support industrial production and housing starts. Reliance Worldwide underperformed following the release of a weaker than expected market update from listed peer James Hardie (JHX). While the market is now pricing for a significant decline in earnings – the company trades on a P/E multiple of 12 times compared to a mid-cycle multiple of 17 times) – we remain confident in the demand environment given the defensive nature of the majority of RWC's repair and remodelling sales.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share-1.pdfOctober, 2022
After fees and expenses, the Portfolio gained 7.2% during the month, outperforming its benchmark by 122bps.
The largest positive contributors were CSL, Link Group and Fortescue Metals (not held). Our underweight position in CSL contributed to returns following the company’s investor day for its newly acquired Vifor business. Investors remain cautious on the acquisition given the size and shift from CSL’s strong position in the global plasma market. Link Group recovered somewhat during the month following sharp underperformance in the prior month following termination of the agreed deal with Dye & Durham to acquire the company. Fortescue Metals (FMG) underperformed on the back of lower iron ore prices. As a high-cost iron ore producer, the company is highly levered to movements in spot iron ore prices; the benchmark 62% Fe index’s 17% decline to US$79.50/t drove a 12.4% decline in FMG's share price in October.
The largest negative contributors were National Australian Bank (not held), Reliance Worldwide and OZ Minerals. NAB performed strongly over the month as the market factored in higher expectations around the pace of net interest margin expansion as the banks benefit from the higher interest rate environment. Reliance Worldwide underperformed during the period following its 1Q23 result which showed volumes are softening across the business (-1.9% in 1Q), with an expectation that volumes will be down by mid-single digits in the Americas division over FY23. OZ Minerals underperformed despite no incremental news, with BHP’s takeover offer for the company weighing on share price performance relative to market gains.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ubs_aust_share.pdfSeptember, 2022
UBS Asset Management (Australia) Ltd has appointed Yarra Funds Management Limited ABN 63 005 885 567 AFSL No. 230251 as the investment manager ('Portfolio Manager') of the Fund. The Portfolio Manager is an active Australian fund manager which specialises in managing long-only, concentrated Australian equity strategies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/191186552.pdfAugust, 2022
After fees and expenses, the Portfolio gained 2.35% during the month, outperforming its benchmark by 117bps.
The largest positive contributors were OZ Minerals, IGO and Qantas. OZ Minerals outperformed during the month as a result of BHP’s $25/sh takeover offer for the company, IGO was a key contributor during the period on continued lithium price strength ahead of consensus forecasts and Qantas outperformed following the announcement of its full year results. The very strong demand environment for domestic and international travel has seen QAN balance sheet repair quickly with net debt now back below targeted levels and the company announcing a $400 buyback.
The largest negative contributors were TPG Telecom, Reliance Worldwide and NextDC. TPG underperformed following a slightly disappointing (4% miss at the EBITDA level) result., Reliance the global provider of water control systems and plumbing solutions for domestic, commercial and industrial applications underperformed as investor concerns grew around a weakening cycle and de-stocking risk. NextDC underperformed along with the technology sector despite a solid full year result in line with expectations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/190847780.pdfMay, 2022
After fees and expenses, the Portfolio declined by 2.71% during the month, outperforming its benchmark by 5 bps. The largest positive contributors were Worley, Amcor and Goodman Group (not held). Worley outperformed due to expectations the global energy crisis will stimulate capex for both oil & gas and energy transition projects.
Amcor announced EPS in the third quarter came in at US20.4 cents per share, 4% above consensus and 13% above the prior year. Further, management upgraded full-year guidance for 9.5- 11% EPS growth, above its prior guidance for 7-11%. Goodman underperformed amid higher interest rates and after key tenant Amazon called out excess capacity in its fulfillment and transportation network.
The largest negative contributors were Link Administration, Nine Entertainment and JB Hi-Fi. Link underperformed over speculation the recent acquisition by Dye and Durham may not complete and after the ACCC temporarily suspended its approval timeline until it received further information. Nine underperformed despite delivering a solid trading update during the period. Management expects FY22 EBITDA to be up 22% y/y, unchanged versus its previous guidance, supported by slightly stronger underlying metrics. JB Hi-Fi
underperformed as concerns about the company reaching peak earnings growth overshadowed a stronger-thanexpected sales growth for 3Q22 across its key divisions (JBH Australia +11.1%, JBH NZ +4.8% and The Good Guys +5.0%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/188132440.pdfApril, 2022
After fees and expenses, the Portfolio increased by 5.39% during the month, underperforming its benchmark by 151 bps. The largest positive contributors were IGO Limited, Incitec Pivot and CSL (underweight). IGO outperformed amid higher lithium prices, with spodumene rising 4% to US$2,710/t. Incitec Pivot strengthened as the ammonia benchmark price increased to a record high of US $1,625/t, compared to US$545/t a year ago. CSL underperformed the rising market without any materially negative news.
The largest negative contributors were Sandfire Resources, Link Administration and Insurance Australia Group. Sandfire Resources declined following its 1H22 result at the end of the prior month in which management gave disappointing cost guidance for the newly acquired MATSA project. Link Administration underperformed without any material news, with the takeover from Dye & Durham on track to be completed mid-year. Insurance Australia Group declined after increasing FY22 CAT guidance by $55mn to $1.1bn in response to the flooding along the East Coast of Australia
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/186398137.pdfJanuary, 2022
After fees and expenses, the Portfolio declined by 4.42% during the month, outperforming its benchmark by 203 bps. The largest positive contributors were BHP Group, Worley and Origin Energy. BHP outperformed amid higher iron ore prices (up 18% to US$142/t), as it completed the unification of its dual-listed structure and, lastly, after announcing a solid 2QFY22 result with strong iron ore production offsetting lower-than-expected volumes from copper, met coal and oil. Worley and Origin outperformed as oil prices increased, with Brent Crude rising 20% to US$92/bbl. Additionally, Origin announced a strong 2QFY22 result: LNG prices were ahead of expectations, averaging US$11.80/mmbtu, while production was solid due to planned maintenance completing ahead of schedule.
The largest negative contributors were Rio Tinto (not held), Woodside Petroleum (not held) and Santos (not held). Rio Tinto outperformed as the iron ore price increased by 18% to US$142/t, which outweighed a worse-than-expected 4Q21 result with production coming in at the lower end of 2021 guidance for most commodities. Woodside Petroleum and Santos outperformed as oil prices increased, with Brent Crude rising 20% to US$92/bbl. Additionally, both companies released strong 4Q21 results with record quarterly revenue (at US$2.9bn and $1.5bn respectively).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/184034442.pdfDecember, 2021
After fees and expenses, the Portfolio increased by 2.64% during the month, underperforming its benchmark by 1 bp. The largest positive contributors were CSL (underweight), Link Administration and Afterpay (not held). CSL declined after announcing the acquisition of Vifor Pharma for US$11.7bn during the period. The purchase was partly funded by a capital raising of $US5bn, with the placement at an 8% discount to the last closing price prior to the announcement. Link outperformed after receiving several takeover offers during the period and giving a positive trading update. The highest offer came from Canadian-based group Dye & Durham at $5.50 per share, representing a 28% premium to its closing price prior to an earlier offer from Carlyle Group. The company’s board has recommended shareholders vote in favour of the scheme in the absence of a superior proposal. Afterpay underperformed during the period without any material news.
The largest negative contributors were TPG Telecom, Insurance Australia Group and QBE Insurance. TPG Telecom partially retraced outperformance from prior months as its founder sold a block of shares during the period. Insurance Australia Group underperformed despite holding an investor day where it reaffirmed FY22 guidance for 10-12% margins and “low single-digit” GWP growth. QBE Insurance underperformed without any material news during the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/182700141.pdfNovember, 2021
After completing 1H2021 with strong momentum, renewed COVID-related lockdowns in Melbourne and Sydney will see the Australian economy contract in 3Q21, albeit it has been notable how well both business surveys and employment indicators have held up in Q3, suggesting a modest contraction than might have been expected several months ago. Real-time data suggests Q4 economic growth will rebound solidly, led by the service-based industries.
We continue to believe the interruption to economic growth from renewed lockdowns will be an aberration within an improving trend. Indeed, the fundamentals that will drive the economic recovery remain in place. The recovery in labour market income has been sufficient to offset the gradual withdrawal of temporary fiscal support. Moreover, the accumulation of an estimated $185bn in excess household saving, in concert with strong asset price gains, leaves the consumer uniquely positioned to underpin economic growth in 2021- 2022. Dwelling investment is set to provide solid support for economic growth over the next 6 months as previously approved housing moves through the construction phase, and a broader-based lift in business investment expectations is an important step in ensuring a sustained economic recovery. We expect the global economy to expand 6% and the Australian economy to expand 4.5% in 2021. We expect another strong year of economic growth in 2022 of 4.0%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/181143617.pdfSeptember, 2021
After fees and expenses, the Portfolio decreased by 0.69% during the month, outperforming its benchmark by 120bps. The largest positive contributors were TPG Telecom, Fortescue Metals Group (not held) and Kathmandu. TPG Telecom outperformed as a re-opening beneficiary in response to accelerating vaccination rates; tourists and migrants make up a large portion of its Mobile business. Fortescue Metals Group declined alongside the iron ore price, which fell 23% to US$119/t of concerns around China’s property construction market. Investors looked through Kathmandu’s worse-thanexpected FY21 result, instead focusing on its leverage to reopening and the offshore launch of its Kathmandu brand into Europe and Canada in FY22. The largest negative contributors were Macquarie Group (not held), Woodside Petroleum and BHP Group. Macquarie Group delivered a positive market update, announcing it expects 1H22 NPAT guidance to decline only slightly on the strong performance in 2H20 ($2bn), ahead of market expectations on investment income and less headwinds in its commodities business. Woodside Petroleum outperformed alongside higher oil and gas prices in response to the emerging energy crisis in the EU and China, with Brent Crude rising 8% to US$79/bbl. BHP Group declined alongside the iron ore price, which fell 23% to US$119/t of concerns around China’s property construction market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/180181990.pdfAugust, 2021
After fees and expenses, the Portfolio rose by 2.15% during the month, underperforming its benchmark by 46 bps.
The Australia economy completed 1H2021 with strong momentum, prompting the RBA and consensus to upgrade expectations for both 2021 and 2022 calendar year growth. Both the size of the economy and the number of people employed comfortably exceed pre-pandemic levels. Clear highlights were the unemployment rate declining from a peak of 7.5% in July 2020 to just 4.6% in July 2021 and June quarter GDP rising 0.7%, well ahead of expectations. Nevertheless, renewed COVID-related lockdowns in Melbourne and Sydney will sharply impact the data in 3Q21 and materially alter our growth forecasts for the remainder of 2021 and 2022
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/179317191.pdfJuly, 2021
After fees and expenses, the Portfolio rose by 0.47% during the month, underperforming its benchmark by 64 bps.
The Australian economy completed 1H2021 with strong momentum, prompting the RBA and consensus to upgrade expectations for both 2021 and 2022 calendar year growth. Both the size of the economy and people employed comfortably exceed pre-pandemic levels. The unemployment rate declining from a peak of 7.5% in July 2020 to just 4.9% in June 2021 is the clear highlight. Nevertheless, renewed COVID-related lockdowns in Melbourne, Sydney and South East Queensland will sharply impact the data in 3Q21 and materially alter our growth forecasts for the remainder of 2021 and 2022.
We believe the interruption to economic growth from renewed lockdowns will be an aberration within an improving trend rather than a view altering event. Indeed, the fundamentals that will drive the economic recovery remain in place. The recovery in labour market income has been sufficient to offset the gradual withdrawal of temporary fiscal support.
Moreover, the accumulation of an estimated $171bn in excess household saving, in concert with strong asset price gains, leaves the consumer uniquely positioned to underpin economic growth in 2021-22. Dwelling investment is set to provide solid support for economic growth over the next 12 months following a surge in demand for new housing construction, and a broaderbased lift in business investment expectations is an important step in ensuring a sustained economic recovery.
We expect the global economy to expand 6.5% and the Australian economy to expand 4.75% in 2021, a downward revision from our pre-lockdown forecast of 6%. We expect another strong year of economic growth in 2022 of 4.0%
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/176088907-1.pdfJune, 2021
After fees and expenses, the Portfolio increased by 2.57% during the month, outperforming its benchmark by 32 bps.
The S&P/ASX 300 Accumulation Index increased by 2.3% in the month to 30 June 2021, taking its 12-month return to 28.5%. The ASX matched global indices, with the MSCI World Index returning 2.4%, despite most major cities going into lockdown at one point during the month in response to COVID-19 cases. Information Technology (+12.4%) rebounded in the period as the Australian 10-year bond yield retraced -12 bps to 1.5%, supporting the sector’s valuation (given long-dated cash flows). Top contributors to the benchmark included Afterpay (APT, +27.4%), Altium (ALU, +29.8%) and Megaport (MP1, +22.9%).
The strength of the economic recovery is particularly evident via record levels for business conditions, business confidence and the strength in employment growth. The level of employment already exceeds pre-COVID levels, and after peaking at 7.5% in July 2020 the unemployment rate has declined sharply to 5.1% in May 2021.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/174806777.pdfMay, 2021
Australian equities rose in May as Financials and Consumer Discretionary stocks more than offset weakness across Utilities and Information Technology.
The S&P/ASX 300 Accumulation Index rose 2.3% during the month, taking its 12-month return to 28.7%. The benchmark outperformed overseas Indices (with the S&P500 returning 0.7%), supported by the major banks on the back of the federal government’s big spending federal budget – with $96bn of stimulus announced over 5 years – and Australia’s strengthening housing market.
Within Banking (+7.3%), the Commonwealth Bank (CBA, +12.0%) and Westpac Bank (WBC, +8.2%) delivered betterthan-expected updates. CBA’s 3Q21 update revealed revenue growth, slightly higher net interest margins (NIMs) and significantly lower than expected bad and doubtful debts. WBC announced 1H21 cash NPAT of $3.537mn, 9% ahead of consensus, and announced an ambitious cost-out program. Elsewhere, Consumer Discretionary (+3.2%) was led by Aristocrat Leisure (ALL, +10.8%) as its 1H21 results highlighted its leverage to the re-opening US economy and strong competitive position. Other top performers included Crown Resorts (CWN, +5.4%) and JB Hi-Fi (JBH, +4.9%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/173295749.pdfApril, 2021
After fees and expenses, the Portfolio rose by 2.64% during the month, underperforming its benchmark by 106 bps. The largest positive contributors were Woolworths (not held), Aristocrat Leisure and Carsales.com. Woolworths announced 3Q21 sales, with the Australian Food division down 2.1% y/y as it cycled strong sales during the onset of COVID-19. Aristocrat Leisure continued to outperform following management’s roundtable late in the prior month.
Commentary suggested Land Based Gaming (40% of group EBIT) was tracking ahead of expectations, with 92% of venues now open, and Digital (51% of group EBIT) was benefiting from a permanent – rather than temporary – step-up in activity following COVID. Carsales.com outperformed during the period without any material news.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/171886445.pdfNovember, 2020
After fees and expenses, the portfolio increased by 10.96% over the month, outperforming its benchmark by 73bps. Positive contributors were Worley, Origin Energy and ANZ Bank. Worley and Origin Energy outperformed after Brent Crude increased by 27% during the period, with the latter delivering a positive Investor Day. Management guided for higher production and lower costs at APLNG, offsetting a more challenging Energy markets outlook.
ANZ Bank delivered a positive 2H20 result, where overall relief on bad and doubtful debts and capital requirements outweighed continued weakness in revenue (-1.2% h/h). Negative contributors were National Australia Bank (not held), APA Group and Ansell. NAB delivered a solid 2H20 result in which revenue increased by 5.3%, underpinned by a turnaround in market income. APA announced the construction of a $460mn pipeline connecting Perth Basin gas fields to the Goldfields Region in Western Australia. The project represents a step-up in risk as only 25% of the pipeline capacity will be contracted at commencement. Ansell underperformed despite upgrading FY21 guidance. Management expects EPS in the range of US135-145c, above its prior forecasts.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/162518974.pdfticker: SBC0817AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.ubs.com/content/dam/static/asset_management/australia/factsheets/ubs_aust_share.pdf
asset_class: Domestic Equity
asset_category: Australia Large Blend - Core / Style Neutral
peer_benchmark: Domestic Equity - Large Cap Neutral Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
UBS Australian Share Fund aims to provide investors with a total return (after management costs) in excess of the S&P/ASX 300 Accumulation Index (Benchmark) when measured over rolling five year periods. Eligible investments of the Fund comprise securities listed on the Australian Stock Exchange or those we reasonably expect to list within six months. The Fund may also invest indirectly in listed Australian securities via investments in other UBS managed funds, including the UBS Australian Small Companies Fund which in turn invests in companies which may be listed in New Zealand but not in Australia – this exposure is likely to be small. The Fund may invest in financial derivatives to gain exposure to the Australian sharemarket or to manage investment risk. Normally the Fund will hold between 30 and 60 stocks and sub funds with at least 75% of the Fund invested in stocks that comprise the S&P/ASX 100 index.