Over the last quarter eight out of ten of our largest overweight positions outperformed including our two largest overweight positions at 31 December 2019; Bega Cheese(+30.6% out performance YTD) and Graincorp (+22.2% outperformance YTD) that were operating at bottom of the cycle conditions (and valuations) for much of the last year but are now seeing improving conditions even amidst the current downturn. With respect to industry sectors the Fund benefited from overweight positions in Consumer Staples and Financials (namely Health Insurance) and an underweight position in Banks. Key detractors over the last quarter included an overweight position in both Consumer Discretionary (namely Services and Retail)and an underweight position in Healthcare.
The Fund’s characteristics of lower leverage (debt) and higher cash flow than the overall market proved more resilient with respect to performance, without performance for the month near the market low for the month on 20 March peaking at +1.78%. With the market rallying +11.8% in the last six trading days of the month, the outperformance fell away but we believe our conservative positioning and focus on strong company fundamentals will again assist in weak markets as we look forward.
Full report attached.
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.