INVESTMENTS | FUND COMMENTARY
Australian Shares SMA Portfolio
The SMA portfolio recorded -14.1% (net) in the quarter ended 30 June 2022, underperforming the benchmark ASX200 Accumulation Index’s return of -11.9%. It returned -16.5% (net) over the last 12 months, compared to the benchmark's return of -6.5%.
25 July 2022
Portfolio commentary
-
The portfolio recorded -14.1% (net) in the quarter ended 30 June 2022, underperforming the benchmark ASX200 Accumulation Index’s return of -11.9%. The June quarter was the worst quarterly performance of the ASX200 benchmark index since the Covid-19 pandemic began. Market expectations are for further interest rate rises in the near term to combat high inflation reads, which is expected to curb growth and temper global economic activity. The Financials sector was a positive contributor during the June quarter, benefiting from stock selection.
-
The portfolio delivered a return of -16.5% (net) over the last 12 months, compared to the ASX200 Accumulation Index’s return of -6.5%.
-
The decline in the benchmark ASX200 index reversed the gains we saw during calendar year 2021 and the broad-based index is now trading back at pre-pandemic levels.
-
At a sector level, our underweight exposure to the materials & energy sectors was a headwind for the portfolio, with the carbon intensive sectors performing well in the current inflationary environment and benefiting from sustained commodity price increases. The portfolio only has a 2% weighting to those sectors, driven by our Ethical Charter which largely excludes the energy sector, compared to the ASX 200 benchmark weighting of 29%. The portfolio’s relative overweight positions in information technology and healthcare detracted from performance during the financial year, following prior periods of strong performance. We retain our bias to these growth sectors, as we see valuation appeal and attractive medium-term fundamentals.
Outlook for the Portfolio
The portfolio continues to have significant exposure to key growth thematics in information technology, healthcare, and renewables. These sectors account for almost 40% weighting of the portfolio, compared to ~15% in the ASX 200 index. In the short-term, commodity price strength and inflation concerns may remain a headwind in these sectors; however, we believe the portfolio has the right exposures to help deliver strong returns over the long-term and see valuation appeal in these sectors.
While inflationary concerns and commodity price increases were a headwind, we are confident our key exposures in healthcare, information technology, and renewables will help deliver strong performance over the long-term.
Australian Shares SMA Portfolio Performance
As at 30 June 2022*
| fund | benchmark | |
|---|---|---|
| 3 months | -14.1% | -11.9% |
| 1 year p.a. | -16.5% | -6.5% |
| since inception p.a. | 12.0% | 12.4% |
*Source: Praemium portal. Benchmark: S&P/ASX 200 Accumulation Index. Past performance is not a reliable indicator of future performance.
Inception date: 16/04/2020.
Fintech company EML Payments (EML) was the single biggest detractor from performance, declining 59% over the quarter ending 30 June 2022.
Contributors
Detractors
Portfolio changes
Portfolio strategy
Leveraging the expertise and experience of our award-winning investment team, the Australian Ethical Australian Shares Portfolio is an actively managed portfolio with a mix of quality growth stocks and traditional yielding stocks shaped by our Australian Ethical Charter.
This is general information only and is not intended to provide you with financial advice or take into account your individual investment objectives, financial situation or needs. You should obtain and consider the relevant Financial Services Guide, Product Disclosure Statement and Target Market Determination relating to this product before making a decision. Our SMA portfolio is available for investment via Praemium and HUB24.
This commentary may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, Australian Ethical accepts no responsibility for the accuracy or completeness of, nor does it endorse any such third party material. To the maximum extent permitted by law, we intend by this notice to exclude liability for this third party material.