In January 2020 Australian market increased 4.9%, in the second best market performance out of 48 developed and emerging equity markets around the world. This was largely due to large Australian growth and defensive stocks finding support in the face of new economic uncertainty. US ten year bond yields fell over 20% during the month, back to levels seen last August as markets feared that global growth will slow following the outbreak of coronavirus. In this environment Defensives outperformed including Healthcare stocks (that continued to be the largest contributor to market returns) along with stocks leveraged to lower bond yields such as infrastructure and REITS. Cyclicals and value oriented names underperformed during the month. “Dr Copper” the industrial metal that most closely tracks global economic growth perceptions fell more than 10% and had a14 day losing streak from mid-January, its longest losing streak in three decades.
The Fund’s top 10 overweight positions currently have a weighted average PE of 19.7x versus the Fund’s top 10 underweight stocks at a weighted average PE of 27.3x. The largest underweight positions include CSL Limited, Transurban, Newcrest, Aristrocratand Westpac. Most of these businesses have attributes that are stable or growing but have also been well recognized and hence trade at significant valuation premiums.
See attached for full report which includes our current view on CSL and Transurban.
During December 2020 the Fund returned 2.11% versus the S&P/ASX 300 Accumulation Index of 1.32%, outperforming the market by 0.79% (after fees). Overweight positions in Renewable Energy and Transition Commodities and an underweight position in Healthcare contributed to relative performance while an overweight position in Food Products and an underweight position in Information Technology detracted from relative performance.
Ethical Partners has made a submission to to the inquiry on the Climate Change Bill. In our view it is clear that we desperately need whole of government support around the important elements of this bill.
Biodiversity is a very important area of engagement for us at EPFM, and an area of increasing interest for investors. Experts believe that we are in the midst of the Earth’s sixth mass extinction event -some 75 per cent of terrestrial and 66 per cent of marine environments have already been severely altered by human activity and one million species face extinction – many within decades.
During October 2020 the Fund returned 2.85% versus the S&P/ASX 300 Accumulation Index of 1.89%, outperforming the market by 0.96% (after fees). Overweight positions in Insurance stocks and an underweight position in Metals & Mining contributed to relative performance while overweight positions in Consumer Staples and Media & Entertainment detracted from relative performance.