SUMMARY
The Fund was up 3.1% in September, underperforming the Small Industrials by 1.2% and underperforming the Small Ordinaries by 2.0%. For the 12 months to September, the Fund was up 20.5%, underperforming the Small Industrials Index by 2.8% and outperforming the Small Ordinaries Index by 1.7%.
Co-Portfolio Manager Steve Black recently provided an exclusive webinar as the Fund approaches its 20-year milestone. In this insightful session, Steve dives into the current portfolio, breaks down the factors driving recent performance, and shares valuable perspectives on the market trends the investment team is closely monitoring for the road ahead. CPD points are applicable for Australian Financial Planners HERE.
COMMENTARY
After a brief wobble early in the month, global markets edged higher in September with a larger than expected interest rate cut in the US driving the American market up 2.5% and boosting bond prices slightly. Oil prices fell sharply, while the gold price rose to another all-time high driven primarily by central bank demand and investors seeking a hedge against a potentially weaker USD. The Chinese government revealed a dramatic change in policy, unveiling a range of monetary and fiscal measures aimed at curtailing deflation, stabilising a weak property market, and reigniting consumer demand.
Australian shares rose 2.2% with mining stocks up 12% driven by the Chinese stimulus and higher gold prices. Domestic smallcaps stocks rose 4.4% with small mining stocks outperforming strongly.
Our key positive contributors in September were:
Aussie Broadband (+15%) bounced after a positive research report brought attention to the stock. Catapult (+15%) and Promedicus (+18%) continue to re-rate as the market appreciates the global growth opportunity for two global leaders in their respective software fields. Netwealth (+10%) remains in a good position to gain further market share in the domestic platform market, while ZIP Co (+15%), which is a small investment for us, is exposed to the rising trend of buy-now-pay-later in the US market.
Our key negative contributors in September were:
ALS Group (-8%) retraced after a mild profit warning based on lower volumes in the gold assay market – an effect we see likely to reverse given the recent strength in the gold price. Coast Entertainment (-15%) has drifted as domestic tourism activity is under pressure due to poor consumer sentiment. Infomedia (-9%) and Propel Funerals (-5% ) faded in the absence of any stock specific news. Steadfast (-11%) was hit following an investigation into potential conflicts of interest in its strata insurance arm.