In March the Australian Growth Fund fell -8.0%, underperforming the benchmark index which fell -3.6%. Apart from Utilities (0.0%), all other sectors on the ASX delivered negative returns as heightened global economic uncertainty weighed on share markets globally. Information Technology (-10%), Consumer Discretionary (-6%) and Healthcare (-5%) were the worst sectors overall.

Insurance software provider, Fineos (+17%) was our standout performer during the month. Investors continued to warm to the strong financial result delivered by management in late February. Revenue for CY 2024 came in at the top end of management's guidance range. Importantly, this was helped by recurring revenue which grew at a 15% underlying annualised rate. Costs were well controlled and essentially flat on the year, leading to a sharp improvement in cash flow generation and adding credence to management's contention that the company will be sustainably cash generative on an annual basis. Fineos has also made progress in deploying software on time and on budget for key North American customers, boding well for future customer wins in that market.

James Hardie (-24%) was one of our worst performers in the month. The share price reacted sharply to James Hardie's announced acquisition of large US decking manufacturer AZEK. Investors seemed to accept the strategic logic of the acquisition, with AZEK being a large-scale manufacturer in a fast growing and underpenetrated segment of the residential building industry. Its growth rate and profit margins are similar to those of James Hardie and its product suite is a complementary fit with fibre cement siding. However, James Hardie is paying a high price for the acquisition, and in investors' eyes is ceding a lot of the value of the acquisition to AZEK shareholders. We share these concerns. However, we also acknowledge that there is a lot we have yet to learn about management thoughts and plans in relation to AZEK. We will focus on that in our discussions with management over coming months.