SUMMARY
The Fund generated a -3.0% return in the month of May. By way of comparison, the (annual) return of the ‘RBA cash rate +6%’ equated to approximately +0.5% for the month, whilst the Australian stock market declined by -3.1% over the month.
Global Inflation continues its upward march. We believe domestic inflation is likely to experience further upward pressure, with wage growth just starting to emerge, energy prices likely to accelerate and retailers talking of the need for price points to go up. Central banks continue to pursue hiking policies in an attempt to reign in escalating inflation, whilst withdrawing quantitative easing measures. The cost of money is going up at the same time as the availability of money is going down.
Despite elevated volatility in markets, we remain as focused as ever on our primary objectives of capital preservation and generating a reasonable real return for our investors. We continue to believe this is best served by a disciplined approach and consistent investment methodology. A variety of good businesses, run by honest and competent management teams, at the right price, will create a well-diversified portfolio of ever-growing cash earnings streams.