SUMMARY
The Fund generated a -0.6% return in May. By way of comparison, the Australian stock market rose by 0.9%, whilst the return of the RBA cash rate plus 6% equated to approximately +0.8% for the month. Calendar year to date, the Fund has achieved a return of +2.2%, compared to the market growth rate of +3.5% and the cash plus 6% benchmark of +4.2% over the same period.
Volatility was a key feature of trading in May for the Australian market. After a weaker month in April, May began positively with the market up over 3% at its highs, before softer labor numbers and (another) stronger than expected monthly CPI print saw the index retreat to +0.9% by months end. The market’s return was almost entirely driven by Financials with the banks alone contributing 80bps to the market’s performance. At a sector level, Technology stocks substantially outperformed (+5.5%), along with Utilities (+3.4%), Financials (+2.6%), whilst REITS (+1.8%) recovered some of their April losses. Communications was the softest sector during the month, primarily driven by declines in Telstra and Seek.
The Fund’s “underweight” position in the banks and lack of exposure altogether to the higher multiple tech space drove much of the relative underperformance during the month. From an absolute perspective, the Fund benefited from its exposure to Aristocrat Leisure (strong 1H results in May), Contact Energy (Rio contract update), and BHP (broader materials resilience). The main detractors during May were Telstra, SG Fleet, Super Retail Group, and Resmed.