The Australian Growth Fund gives you access to invest in quality, growing Australian businesses. The Australian market is deeper and broader than in New Zealand, which provides numerous opportunities to invest in great businesses. Being such a broad market with so many investment opportunities means some companies are often poorly researched and not well understood by the market. The outcome of this is that high quality companies can trade below their inherent value. Our team making investment decisions are well informed and spend their time conducting their own research on this market.
There is a lot of diversity in the products and services that companies in the Australian market offer. Because of the population size,the growth path for Australian companies can be smoother than in New Zealand. This is important as it provides these companies a broader growth opportunity domestically, before they need to consider the challenging step of exporting their business model to chase growth.
|-15% Share Price Change||-0.5% Contribution to Return|
|-4% Share Price Change||-0.4% Contribution to Return|
Westpac Banking Corporation
|9% Share Price Change||0.3% Contribution to Return|
In the portfolio holdings below you will find a diverse range of companies. Some of these will be brands you know well, and others may be new to you. The companies we invest in range from banks and fast food brands, to companies in the healthcare and tech sectors.
The Australian Growth Fund returned -0.5% (net) in January. This compares to+0.1% return for the ASX 200 Index (70% hedged into NZ$).
ARB Corporation (+14.1% in A$) continued its strong performance of late following a positive trading update during the month. With borders shut, domestic tourism remains robust, driving strong demand for ARB’s vehicle accessories. Our bank shareholdings in ANZ (+4.5%), CBA (+1.7%), NAB (+4.2%) and Westpac (9.1%) also performed strongly in the month. The Australian economy has continued to rebound from the pandemic which has translated into expectations for lower bad debt provisions for the banks than originally anticipated. Coupled with a strong housing market and consumer spending, this has underpinned upgraded earnings forecasts for the banks and bolstered their share prices.
In contrast, a number of our defensive healthcare investments including Nanosonics (-14.8%), CSL (-4.1%), and Resmed (0.0%) had a tough month as investors rotated capital out of these previously strong performers into ‘value’ stocks such as the banks. In addition, these companies have substantial international US$ denominated earnings which have been negatively impacted by the weakness of the US$ in comparison to the A$. The international COVID-19 related lockdowns has also impeded the earnings growth of these businesses. We would expect the earnings growth from these companies to improve as the COVID-19 pandemic subsides.
Senior Portfolio Manager
Senior Investment Analyst
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