SUMMARY
The Fund generated a -1.2% return in the month of February. By way of comparison, the (annual) return of the RBA cash rate plus 6% equated to approximately +0.7% for the month, whilst the Australian stock market declined by -2.5%. Calendar year to date the fund has returned a 4.9% gain compared to cash plus 6% of 1.4% and a market return of 3.8%. We are pleased with the Fund’s ability to have participated in the upside in January, despite its more cautious positioning, whilst also proving resilient in a more challenging February.
February saw a reversal of some of January’s strong gains, with reporting season bringing to bear some of the risks that we have been speaking about in recent months. Specifically, elevated forecast risk was evident in the higher number of ‘beats’ and ‘misses’ compared to average, whilst the elevated cost environment became more evident in corporate earnings.
Notwithstanding a generally difficult month for equity markets, the Fund experienced a mostly positive reporting season in terms of benchmarking the updates from our holdings with their respective investment theses. Outlook commentary made it clear, for the first time, that factors such as the impact of rising rates and inflation on household budgets, and rising cost pressures on operating expenses, are beginning to materialise in corporate earnings.