During February 2020 the Ethical Partners Australian Share Fund returned -6.89% versus the S&P/ASX 300 Accumulation Index of -7.76%, outperforming the market by 0.88%(after fees). Over the last quarter the Fund benefited from underweight positions in Property and Materials. Key detractors over the last quarter included an overweight position in both Financials and Consumer Discretionary an underweight position in Healthcare.
Ethical Partners’investment process continues to be focused on investing in sound businesses at conservative valuations. As a consequence of this around 40% of the companies currently in the portfolio have net cash balance sheets (or close to), all are producing solid cash flows and all are conservatively valued on an earnings (not sales)multiple or have a valuation based on hard assets. As a result we have not had to change the way we think about stocks or our portfolio positioning in response to equities markets selling off.
Owning interests in well run businesses that produce solid cash flows has stood the portfolio in good stead. It means that we have options during market volatility and are not holding companies that rely on equities markets to be orderly for them to be well financed. Knowing our companies well means that we can selectively add to existing positions or find new holdings during market volatility.
While the response to climate change risk by regulators, financial institutions and publicly listed companies is welcome, it currently is not enough to ensure a safe climate. This submission provides a comprehensive assessment of the current risks relating to Australia's key export sectors.
It is estimated that 100 pairs of hands touch your clothes before they arrive in your wardrobe. That’s 100 people at risk of modern slavery, poor working conditions, and exploitation. Ethical Partners has recently signed the Investor Statement in Support of the maintenance and expansion of the Bangladesh Accord.
During March 2021 the Fund returned 3.07% versus the S&P/ASX 300 Accumulation Index of 2.30%, outperforming the market by 0.77%. An overweight position in consumer staples and an underweight position in materials contributed to relative performance while an overweight position in financials and an underweight position in consumer discretionary detracted from relative performance. The Fund is +20% over the last six months.
Globally, 15% of the population are persons with disabilities. The labor force participation rate globally for people with disabilities sits at 32.8% compared to 77.1% for those without disabilities. We believe it is imperative that investors use their shareholder voice to raise the awareness of this important diversity issue and help companies to improve their inclusion.