The economic effects of Covid-19 have been masked with Government stimulus, Central Bank liquidity injections, policy changes and debt forgiveness or deferral. We note the following:
- Directors obligations diminished: through temporary amendments to the Corporations Act with respect to continuous disclosure (which potentially weakens having an informed market); a six month holiday on laws around insolvent trading; ATO reportedly deferring payment notices to companies.
- Capital raisings hastened: ASX listing rules changed to increase size and speed of raisings.
- RBA liquidity: to cap rates in the bond market and provision of cheap funding to banks.
- Industry:direct support for the property and building industry.
- One off superannuation withdrawals: ~ $15bn.
- JobKeeper:~ 3.5 million workers and $70bn in wages support.
- JobSeeker:~ 1 million people with increased benefits.
- Loan deferrals: ~ $230bn of loan deferrals from both business and households.
- Rent deferrals: residential and commercial tenants.
The above have led to a stock market environment that is currently assuming no lasting effects of the Covid-19 pandemic and instead puts a lot of faith in the above measures to see us through. But many of these measures are slated to come to an end in the fourth quarter of 2020 where we believe the cash flow impacts will manifest for households and business. Despite the implication from rising share prices that all is well, we believe there are some companies that will face cash flow issues.
See attached for the full report.
During October 2021 the Fund returned 1.09% versus the S&P/ASX 300 Accumulation Index of 0.10%, outperforming the market by 0.99%. An overweight position in Materials added to relative performance while and overweight position in Financials detracted from relative performance.
This World Children’s Day, 20 November, we recognise the devastating and disproportionate impact the climate crisis is having and will continue to have on children. As the most anticipated event of the year, COP26, finishes, it remains clear we have never needed more urgent action from government, business and society to respond to the climate crisis
During September 2021 the Fund returned -1.19% (after fees) versus the S&P/ASX 300 Accumulation Index of -1.89%, outperforming the market by 0.70%. An underweight position in Healthcare and an overweight position in Transport added to relative performance. Over the last 12 months the Fund has returned 36.03%, outperforming the ASX300 Accum Index by 5.17%.