SUMMARY
The Fund generated a +2.7% return in the month of October. By way of comparison, the (annual) return of the RBA cash rate + 6% equated to approximately +0.7% for the month, whilst the Australian stock market improved by +5.7%.
October is AGM season with company addresses typically providing investors with a trading update for their respective businesses. Whilst a number of sectors surprised on the upside during the month – such as Financials, and Discretionary Retailers, overall revisions were mostly skewed to the downside.
The impact of elevated inflation and cost of living pressures was yet to take full effect in corporate trading to October, however, investors anticipate a more substantial impact on earnings to come in 1H calendar 2023. Importantly while consumer surveys continue to show a decline in consumer confidence, discretionary spending data points remain intact. Our base working assumption is that the “gravity” of higher interest rates and cost of living expenses will materialise early in the new year.
Despite an elevated level of 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.