In a complete reversal of what we saw in October, November saw the Australian Growth fund rebound strongly, rising +7.6% and outperforming the benchmark index which rose +4.6% over the month.

James Hardie (+24.6%) was our best performing company following a strong Q2 trading update that resulted in the company delivering earnings guidance for Q3 which was materially above market expectations. This was driven by strength in its key North American division. Although sales volumes are softer than in the prior year, JHX is strongly outperforming the broader building products market in the US. Allied to this, it has increased its selling prices, and seen input costs fall. This has translated into record profit margins and strong cash generation for the company which in turn has bolstered its balance sheet strength.  The company is well positioned to benefit from any improvement in the housing construction (and renovation) markets in the US and its Asia Pacific markets.

Xero’s share price fell (-3.4%) after a softer than expected first half FY24 earnings result. The headline subscriber growth rate of 13% in the first half of the year reflected robust growth in Australia and NZ offset by slower growth in the UK and the US.  Part of this reflects the fact that Xero is now more focussed on the quality of new subscriber additions, rather than the overall quantity of subscribers.  Management also pointed out that the postponement of the next ‘making tax digital’ regulations in the UK also removed a catalyst for businesses to adopt software products like Xero. Overall, Xero continues to grow its revenue robustly. The company also reiterated its guidance that operating costs will total 75% of revenue in FY24. This is substantially lower than what costs have been as a proportion of revenue historically. This indicates that Xero is still very focused on controlling its cost base which should bode well for continued growth in cash generation in future periods.