SUMMARY
The Fund performed well in August, generating a strong return of +3%. The Australian stock market continued its year-to-date gains with a +2.6% return for the month.
Despite a mostly encouraging August reporting season, we find ourselves somewhat surprised that the Fund has performed as well as it has – right now protecting capital and generating a sufficient return is hard. On the capital preservation side, we are utilising a broader range of our capital preservation tools, drawing increasingly from elements such as put options, exposure to gold/utilities, and an overall bias towards defensively characterised business models.
In terms of generating a sufficient return, our proven investment approach has us incrementally focused on ‘hard assets’ in order to maintain a defensively biased portfolio, currently generating an after-tax cash earnings yield of c7% (and growing), with significant balance sheet capacity across the portfolio to realise further value through accretive investments or capital returns.