Diversified Shares fund Monthly Report December 2017

Transcription

1 Diversified Shares fund Monthly Report December 2017 About Diversified Shares fund Rated as Investment Grade by Lonsec. Australian investments generally have a market capitalisation greater than 200th ranked stock listed on the ASX. Has outperformed its benchmark after fees since inception. Only consists of companies that have passed Australian Ethical s positive and negative screens, based on the Australian Ethical Charter. Certified by the Responsible Investment Association Australasia. Performance returns 1 month 3 months 1 year 3 years 5 years 7 years 10 years Since Inception (%) (%) (%) (% p.a.) (% p.a.) (% p.a.) (% p.a.) (% p.a.) Fund (Retail)* Benchmark~ Relative Performance Fund (Wholesale)^ n/a n/a 15.7 Benchmark~ n/a n/a 15.7 Relative Performance n/a n/a +0.0 Alternative benchmarks S&P/ASX 200 Industrials S&P/ASX MSCI Global Climate (AUD)Net n/a MSCI World ex Australia (AUD) Net * Inception Date (Retail): 3 November 1997 ^ Inception Date (Wholesale): 23 January 2012 ~ AEDSF melded benchmark is constructed based on strategic asset allocation. Current composition is 75% ASX 200 Industrials and 25% MSCI World ex Australia. Past performance is not an indicator of future performance. Investment commentary The S&P/ASX 200 index ended the December quarter up 7.6% with each month in the quarter producing solid gains. The quarter began with increasing geopolitical uncertainty but the Australian equity market proved to be resilient with the S&P/ASX 200 index rising 4.0% in October. It was driven by the Technology sector which finished 8.7% higher for that month and up 15.7% for the quarter. The international component of the Fund is around 25% with the majority, about 55%, in US stocks. The S&P 500 performed strongly over the quarter, up 6.1%. Similar to the Australian equities market there were solid contributions from each month. The Fund outperformed its melded benchmark by 1.6% during the December quarter. The contribution by the domestic equities portfolio was an outperformance of 3.2% which offset the international equities portfolio underperformance of 0.7%. The strong performance in domestic equities was due to the overweight positions in the IT and Health Care sectors which were very strong. There was generally good outperformance in some of the Fund s other sectors, with 1

2 Telecommunications and Industrials featuring, more than offsetting the detracting sectors of Financials, Materials, REITS and Consumer Staples. The strongest stock performer in the domestic equities portfolio was Aconex which increased 92% after the Board unanimously recommended an acquisition proposal by Oracle. Blackmores was another strong performer with the share price appreciating 43%. The company reported a solid 1Q18 result which showed the company had turned the corner with its Chinese sales recovering after a substantial fall in daigou sales during FY17. Its transition to direct Chinese sales and a reduction of costs have resulted in a very positive outlook. Nextdc s share price appreciated 37% during the quarter. The share price reacted to the positive earnings guidance provided at the AGM. The biggest detractor in the domestic equities portfolio was G8 Education where the share price fell 17%. This was due to a trading update in December where the company downgraded its FY17 earnings expectation because of slower occupancy growth and higher labour costs. Lendlease was the next biggest detractor with the share price falling 9% over the quarter. At the AGM the company indicated there may be some challenges to a small number of engineering projects that will impact the construction segment earnings for FY18. Perpetual was the third largest detractor after the share price declined 7% over the quarter. The share price reacted negatively to the September quarter FUM released in October which reported a $400m decline on the previous quarter. Top holdings National Australia Bank 2.0% Telstra Corporation 1.9% CSL 1.9% Westpac Banking Corporation 1.8% Insurance Australia Group 1.6% Brambles 1.5% Suncorp Group 1.5% QBE Insurance Group 1.4% Resmed Inc. 1.4% AMP 1.4% Our ethical approach Australian Ethical is a specialist ethical fund manager. By investing responsibly in well-managed ethical companies, we believe we can deliver competitive financial performance to our clients and positive change to society and the environment. 2

3 Significant performers (for the quarter) Best Total Return Contribution Worst Total Return Contribution Aconex Ltd 92.2% 0.6% G8 Education -16.7% -0.1% Blackmores 43.4% 0.4% Lendlease Group -8.8% -0.1% Nextdc 37.6% 0.3% Perpetual -6.7% -0.1% Asset allocation Cash 0.7% International Equity 24.3% Large Cap 46.2% Small Cap 28.8% Sector allocation Telecommunication Services 6.8% Utilities 5.0% Cash 0.7% Consumer Discretionary 8.1% Consumer Staples 2.1% Property Trusts 10.1% Materials 2.2% Information Technology 14.1% Financial-X-Property Trusts 23.6% Industrials 10.5% Health Care 16.7% 3

4 Key information Portfolio Manager Ray Gin Ray is a Portfolio Manager. He has over 28 years experience in the equities market. Responsible entity: Minimum initial investment: Distribution: APIR: Australian Ethical Investment Ltd $1,000 (retail) $25,000 (wholesale)^ Six-monthly AUG0004AU (retail) AUG0019AU (wholesale) ARSN: Contribution fee: Establishment fee: Withdrawal fee: Termination fee: Performance fee: Indirect cost ratio: 2.20% pa (retail) 0.95% pa (wholesale) Buy sell spread: 0.15% Lonsec rating: Platforms: Fund size: Objective: Structure: Investment Grade AXA North, BT Wrap, Colonial FirstWrap, Emerald, Freedom of Choice, Macquarie, Netwealth, Oasis, Spectrum (SMF) $ Million To provide long-term growth through investment in listed companies on Australian and international stock exchanges that meet the Australian Ethical Charter. The Fund is an open-ended public unit trust. A full explanation of all of the fees and costs that you may be charged for investing in the Fund is provided in the Fund s Product Disclosure Statements available from our website. ^ Direct investors must maintain a minimum $500,000 investment across Australian Ethical s managed funds and a minimum of $25,000 in the Diversified Shares Fund. 4

5 Why invest ethically? Aligning values with investments You probably already understand the importance of having a portfolio that matches your appetite for risk, but equally, if not more important, is holding a portfolio that reflects your values. For example, if you value the provision of fair working conditions (and no child labour) then it s important to invest in funds that negatively screen out stocks on this basis. Portfolio diversification Ethical funds in particular, often invest in stocks that are not covered by many fund managers and brokers. Good for the world Your investments can help build a new low-carbon economy, fund medical and technology breakthroughs, efficient transport and more. For more information t e investors@ w Units in the managed funds are offered and issued by Australian Ethical Investment Ltd ABN , AFSL Our Product Disclosure Statements (PDS) and Financial Services Guide are available from our website or by phone and should be considered before making an investment decision. This information has been prepared without taking account of your individual investment objectives, financial situation or needs. Before acting on it, you should consider obtaining financial advice that is tailored to suit your personal circumstances. Australian Ethical is a registered trademark of Australian Ethical Investment Ltd 5