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.
The tragic human rights situation currently unfolding in Myanmar holds particular significance to our Sustainability Analyst Georgina. Please read Georgie’s poignant thoughts on her visit to the camp, our expectations on our portfolio companies in regard to Myanmar, and why Ethical Partners has recently signed on to the Investor Statement on Human Rights and Business Activities in Myanmar.
As members of the Investor Group on Climate Change, Ethical Partners Funds Management strongly endorses its new roadmap released today in conjunction with the CDP and the Principles for Responsible Investment. It is entitled: "Confusion to clarity: A plan for mandatory TCFD-aligned disclosure in Australia".
During May 2021 the Fund returned 1.56% versus the S&P/ASX 300 Accumulation Index of 2.31%, underperforming the market by -0.75%. An underweight position in IT and an overweight position in Westpac contributed to relative performance while an overweight position in Consumer Staples and an underweight position in CBA detracted from relative performance.