Accumulation Index of 0.33%, underperforming the market by -0.89% (after fees). An overweight position in Consumer Staples and underweight positions in Materials and Healthcare contributed to relative performance while a position in REITS and an underweight position in Banks and Consumer Discretionary detracted from relative performance. Consumer Discretionary, Information Technology and Banks outperformed into reporting season based on high expectations for earnings growth.
Every market cycle sees new and innovative company valuation methodologies emerge. This market cycle is no different, along with a record number of day traders and large amounts of speculative money chasing unprofitable companies. Loss-making companies are being valued on sales multiples or metrics based on Total Addressable Market (the size of the potential opportunity). As new methodologies are adopted, traditional measures have had less focus. One of those is Beta, a measure of risk. In the current market environment greed has taken precedence over risk.
Ethical Partners investment process focuses on both expected return and risk. It focusses the team on companies that are profitable, have strong cash flows, low debt and good sustainability credentials. This leads us to hold, all else equal, companies where the range of future cash flow outcomes is lower than for concept companies. While not explicitly targeted, the portfolio has a Beta of0.9, primarily as a result of our process, indicating that the portfolio of companies we hold is less volatile than the market. Companies with a Beta of less than one currently make up around 64% of the total portfolio. Seven out of our top ten active positions also have a Beta of less than one.
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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.
During February 2021 the Fund returned -0.08% versus the S&P/ASX 300 Accumulation Index of 1.48%, underperforming the market by -1.55%. An overweight position in Consumer Staples and an underweight position in Healthcare contributed to relative performance while an overweight position in Utilities and an underweight position in Materials detracted from relative performance.
The Australian Modern Slavery Act 2018 requires certain entities based, or operating in Australia, to report annually on the risks of Modern Slavery in their operations and supply chains, and actions to address those risks. Other entities, based or operating in Australia may report voluntarily. Whilst Ethical Partners does not meet the threshold for mandatory reporting, we have chosen to report voluntarily, as we believe that investors, asset managers and the financial sector have a crucial role to play in addressing Modern Slavery.
Ethical Partners has recently joined a range of stakeholders in creating 2021 Action Pledges that will contribute towards ending child labour by 2025. Backed by a resolution at the United Nations General Assembly, 2021 was declared as the International year for the Elimination of Child Labour.