August, 2021
The S&P/ASX 200 Accumulation Index rallied +2.5% over August, marking the 11th consecutive month of gains and the most extended series of successive monthly advances since 1943. The fund outperformed its benchmark for the month by 0.43%. August was dominated by company reporting season, with the majority of the top 300 companies presenting half-year or full-year results. Results for the period to 30 June were broadly strong, however the outlook and trading updates were soft due to the draconian lockdowns in Sydney and Melbourne impacting economic activity. Relative to consensus expectations, approximately 33% of companies reporting exceeded expectations, 33% were in line, and 34% were below expectations. Capital management was a key theme, with solid conditions over the past months enabling a wave of dividends to be declared (over $31.5 billion), combined with over $15 billion in buybacks (over half of which are off-market taxefficient buybacks). In addition to this, mergers and acquisitions activity is heightened, with many stocks subject to corporate activity.
Another critical development over the month was investors increasing confidence in the vaccination program, where momentum continues to build nationally. Key thresholds for re-opening are expected to be met soon and as a result companies exposed to a relaxation of restrictions (travel, physical retail, casinos, toll roads) outperformed during the month. With respect to commodities, heat came out of the iron ore price (-14.3%) as China curtailed steel production due to seasonal factors and a focus on improving air quality, while the oil price (WTI -7.4%) was weaker in anticipation of weakened demand worldwide due to the surge in COVID-19 cases
The top three moves within the Index included Wisetech Global (+57.0%) which reported high growth in revenue and users combined with a strong outlook of 26%-38% EBITDA growth, Afterpay (+39.2%) appreciated after agreeing to a merger proposal with Square, and Blackmores (+37.4%) which reported underlying earnings growth of 61.2% on the prior year assisted by improving international sales and an underlying business improvement program. The bottom three moves included Champion Iron (-22.5%) and Fortescue Metals (-15.7%) which were both impacted by sharp falls in the price of iron ore and Boral (-15.0%) which highlighted an uncertain outlook as we approach 2022 and expects underlying market conditions to be mixed due to ongoing impacts of COVID-19
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asset_category:
peer_benchmark:
broad_market_index:
manager_contact_details: Array
ticker: SOL0001AU
release_schedule: Monthly
structure: Managed Fund
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factsheet_url:
https://solariswealth.com.au/adviser/performance/
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