In a tough month to start the year the Australian Growth portfolio returned -3.3% in January, lagging the benchmark index which rose +1.6%.

There was wide dispersion of returns across the ASX in January. Bolstered by a strong rally in commodity prices, the Energy (+11%) and Materials (+9%) sectors rose strongly. In contrast, Information Technology (-9%) was the worst performing sector in the index, driven by concerns that advancements in Artificial Intelligence (“AI”) could impact the business prospects of traditional software companies.

Our investment style lends itself more to investing in the latter rather than the former two sectors and this drove our relative performance in January.

Specialist cooling products manufacturer PWH (+19%) was our best performing position. PWH announced it had secured a US$9.1m follow-on contract to supply cooling solutions for a U.S. government project. This followed the successful delivery of the first stage (US$5.5m) of the multi-year project in 2025. These contracts demonstrate PWH's growing reputation as a leader in advanced cooling technology for multiple end markets in the U.S.

Insurance claims software provider Fineos (-26%) was one of our worst performing positions. Despite delivering a positive yet brief quarterly update in January, alongside a number of other listed software companies, its share price fell sharply. This reflects investor concerns that AI could prove disruptive to the business models of software companies in general. Fineos announced it had signed two new smaller North American clients during 4Q25, while other customer implementations and legacy migrations continued to progress well. Pleasingly, it reiterated that it delivered on its positive free cash flow projection for the year-ended December 2025. The detailed financial results are being released in February, at which time management will be free to speak to investors. How AI will impact Fineos specifically will be a key focus in these discussions.