Despite strong Oil prices, our zero holdings of Energy companies was not a material detractor from performance during the month. Looking at other sectors, taken together, our 28% overweight position in Small Caps contributed to approximately 80% of the Fund’s underperformance during the month as many of these companies did not participate in the rally that was largely lead by stocks in the 20 Leaders.
Given the composition of the domestic market and strong domestic economic conditions with respect to retail spending, savings, employment and growth the Australian market has already outperformed many other global markets this calendar year and the favourable market environment should see our Small Cap positions realise their potential, as they can grow faster and are cheaper than their larger counterparts.
The last few months has seen wide sector divergence between Industrial and Resources as markets grapple with inflation and the first Central Bank interest rate hikes in years.
Since October 2021 the relative returns are:
--> S&P/ASX 300 Accumulation Index is up +3.6% since 31 October 2021. Over the same period;
--> S&P/ASX 300 Industrials Accum Index has underperformed the market by -7.1%
--> S&P/ASX 300 Resources Accum Index has outperformed by +29.4%
--> S&P/ASX Small Ords Accum Index has underperformed by -8.7%
--> S&P/ASX 300 Industrials Accum Index has underperformed by -15.5%
--> S&P/ASX Small Resources Accum Index has outperformed by +18.3%
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During February 2022 the Fund returned 1.87% versus the S&P/ASX 300 Accumulation Index of 2.09%, underperforming the market by 0.21%. Over the past 12 months the Fund has returned 14.7%, outperforming its benchmark by 4.45% (after fees).
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