INVESTMENTS | FUND COMMENTARY
High Conviction Fund
The High Conviction Fund (Wholesale) (the ‘Fund’) commenced on 1 October 2021 and has delivered -9.9% since inception. This is -1.5% behind the S&P/ASX 300 Accumulation index benchmark and 3.6% ahead of the S&P/ASX 300 Industrials index (which excludes resources). The Fund fell -9.7% in the quarter ended 30 June 2022, which was ahead of the S&P/ASX 300 Accumulation Index benchmark return of -12.2%.
25 July 2022
Fund commentary
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The key influences on overall market returns were elevated inflation data, interest rate rises and concerns over future economic growth. Underperformance versus benchmark reflects the Fund’s material underweight to fossil fuel-oriented resource companies, consistent with our Ethical Charter.
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The Fund benefited from being relatively defensively positioned versus the benchmark, with large exposures to insurance, communications and consumer staples, sectors that are somewhat economically resilient. The Fund holds around 5% in cash.
Outlook for the Fund
Key company overweights in communications, staples, utilities and insurance are expected to be resilient to any slowdown in economic growth but also able to manage higher inflation due to strong market positions and pricing power. In general, the Fund continues to be relatively defensively positioned and oriented towards more mature companies with strong balance sheets.
Short-term volatility is expected to create opportunities for active management with a focus on long-term fundamentals. The Fund is oriented towards more mature companies in established industries that we believe are likely to be able to sustain their earnings independent of the economic cycle.
High Conviction (Wholesale) Fund Performance
As at 30 June 2022*
| fund | benchmark | |
|---|---|---|
| 1 month | -7.2% | -9.0% |
| 3 months | -9.7% | -12.2% |
| 6 months | -8.3% | -10.4% |
| since inception p.a. | -9.9% | -8.4% |
*Benchmark: S&P/ASX 300 Accumulation Index. Past performance is not a reliable indicator of future performance.
Inception date: 01/10/2021.
Australian agribusiness GrainCorp (GNC) was a large contributor to the Fund, returning 11.9% during the quarter ending 30 June 2022.
Contributors
Detractors
Portfolio changes
Fund strategy
The High Conviction Fund provides opportunity to invest in an actively managed and relatively concentrated share portfolio of companies predominantly drawn from the S&P ASX 300. Companies are selected on the basis of their social, environmental and financial credentials. The Fund utilises an active bottom up stock-picking and benchmark unaware management approach.
*Total returns are calculated using the sell (exit) price, net of management fees and gross of tax as if distributions of income have been reinvested at the actual distribution reinvestment price. The actual returns received by an investor will depend on the timing, buy and exit prices of individual transactions. Return of capital and the performance of your investment in the fund are not guaranteed. Past performance is not a reliable indicator of future performance. Figures showing a period of less than one year have not been adjusted to show an annual total return. Figures for periods of greater than one year are on a per annum compound basis. The current benchmark may not have been the benchmark over all periods shown in the above chart and tables. The calculation of the benchmark performance links the performance of previous benchmarks and the current benchmark over the relevant time periods.
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