Ironbark Karara Australian Small Comp aims to outperform the benchmark (before fees) over rolling 4-year periods. The Fund will primarily invest in securities of 25 – 65 companies included in the S&P/ASX Small Ordinaries Index, however up to 15% of the Fund may be invested in securities included in the S&P/ASX MidCap 50 Index.
The Ironbark Renaissance Australian Small Companies Fund (the ‘Fund’) returned 2.61% (net) for the quarter, an outperformance of 3.15% when compared to the S&P/ASX Small Ordinaries Accumulation Index which returned -0.54%.
At a sector level in defensive services the Fund’s holding in OFX Group performed strongly after reporting a strong full year result and positive outlook statement. Also in defensive services, shipbuilder Austal contributed strongly to performance after a series of new contract announcements and numerous reports of a potential takeover offer. Stock selection in precious metals and tourism also added value, while the Fund’s overweight to the financials sector contributed positively this quarter.
Sectors that detracted included the investment manager’s stock selection in metals led by falls in Aurelia Metals and Aeris Resources after base metal prices were lower over the quarter. The investment manager’s stock selection in Media also detracted, namely their holding in oOH Media after it provided a weak trading update in May. Also hurting performance was the Fund’s zero weighting to nuclear stocks which benefited from a rising uranium price during the quarter. The Fund’s underweight to information technology and stock selection in food and beverage also detracted in the period.
Other stocks that added value over the quarter include holding in lithium producer Alkem which announced a merger deal with lithium processing business Livent. Service Stream performed strongly after being awarded additional work by NBN and receiving a material tax refund from the ATO, as did the Fund’s holding in insurance broker AUB Group which continues to benefit from the Tyser’s acquisition and ongoing premium rate increases in the insurance market.
What is Ironbark Karara Australian Small Comp Ironbark Karara Australian Small Comp is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Micro Cap Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Ironbark Karara Australian Small Comp has Assets Under Management of 464.07 M with a management fee of 1.13%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Ironbark Karara Australian Small Comp has returned 6.4% in the last month. The previous three years have returned -1.15% annualised and 16.57% each year since inception, which is when the Ironbark Karara Australian Small Comp first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Ironbark Karara Australian Small Comp first started, the Sharpe ratio is NA with an annualised volatility of 16.57%. The maximum drawdown of the investment product in the last 12 months is -4.7% and -47% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Ironbark Karara Australian Small Comp has a 12-month excess return when compared to the Domestic Equity - Micro Cap Index of -0.96% and -0.69% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Ironbark Karara Australian Small Comp has produced Alpha over the Domestic Equity - Micro Cap Index of NA% in the last 12 months and NA% since inception.
What are similar investment products? For a full list of investment products in the Domestic Equity - Micro Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Ironbark Karara Australian Small Comp provide? Ironbark Karara Australian Small Comp has a correlation coefficient of 0.94 and a beta of 1.01 when compared to the Domestic Equity - Micro Cap Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Ironbark Karara Australian Small Comp and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Ironbark Karara Australian Small Comp with the ASX Index Small Ordinaries Index? For a full quantitative report on Ironbark Karara Australian Small Comp compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Ironbark Karara Australian Small Comp to do my own analysis? To sort and compare the Ironbark Karara Australian Small Comp financial metrics, please refer to the table above.
Has the Ironbark Karara Australian Small Comp been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Performance Commentary - September 30, 2022 The Renaissance Smaller Companies strategy delivered a positive (net) return of 2.03%1 over the quarter to 30 September 2022. At a sector level, the services sector was the biggest contributor to performance, aided by stock selection in Austal Limited and OFX Group. Stock selection in the EV/Lithium space, namely Allkem (lithium) and Syrah Resources (graphite) added value, as did stock selection in Food & Beverage stocks Tassal Group and Select Harvest.
Sectors that detracted included stock selection in Information Technology, stock selection and an overweight allocation to Metals as well as a zero weighting in thermal coal stocks. NRW Holdings was a strong contributor to returns, up 44% over the period. In August, NRW upgraded earnings guidance as part of its full year results, generating very strong cashflow and increasing its dividend. The results illustrated a very solid year for the company in challenging conditions. Austal Limited was a positive contributor, up 28% over the period. Austal’s share price jumped in early July after it was announced they had won a contract worth up to US$3.3 billion (A$4.4 billion) for the detailed design and construction of up to 11 Heritage-class Offshore Patrol Cutters (OPC) for the United States Coast Guard. This was a key contract win for the company that is in the final stages of completing the construction of Littoral Combat Ships for the US Navy. Allkem Limited was a positive contributor, up 34% over the period. Allkem is an experienced producer of lithium and is the investment manager’s only pure lithium exposure in the portfolio. During reporting season, it produced a solid FY22 result with strong underlying earnings and cash generation due to a lower working capital build during a strong growth period. The main detractors to performance at a stock level were zero holdings in thermal coal producer New Hope Corporation up 82%, and lithium developer Liontown Resources 41%. Alliance Aviation also detracted from performance, down 13%.
Alliance’s FY22 result was slightly weaker than expected with underlying profits at the bottom end of its guidance range. COVID and general aviation industry disruptions continue to hamper Alliance’s activity with the deployment of their E190s which have again been delayed due to the lack of experienced pilots. Service Stream also detracted, down 18%. Service Stream shares dipped after the company released its FY22 results, with earnings missing market expectations. The result was also impacted by a $5 million profit provision against a fixed price construction project and pressure on the metering services margins.
Performance Commentary - June 30, 2022 The Fund fell -21.29% (net) during the June quarter. This constituted -0.90% of underperformance when compared with the benchmark S&P/ASX Small Ordinaries Accumulation Index return of -20.39% for the quarter.
The strongest contributors to the Fund’s performance at a sector level were overweight positions in communication services and metals and mining as well as underweight positions in financials ex-property trusts and information technology. An overweight position in consumer discretionary detracted from relative performance.
At a stock level, positive contributors to quarterly performance included overweight positions in Uniti Group, Mineral Resources, Steadfast and SkyCity Entertainment.
Performance Commentary - March 31, 2022 The fund fell -7.70% (net) during the March quarter. This constituted -3.49% of underperformance when compared with the benchmark S&P/ASX Small Ordinaries Accumulation Index return of –4.21% for the three months. The strongest contributors to Fund performance at a sector level were overweight positions in communication services and underweight positions in financial ex-property trusts. An overweight position in metals & mining detracted from relative performance. At a stock level, positive contributors to quarterly performance included overweight positions in Silver Lake Resources, Uniti Group, Aussie Broadband and Eagers Automotive.
Performance Commentary - June 30, 2021 The strongest contributors to Fund performance at a sector level were overweight positions in communication services, consumer discretionary and metals & mining. An underweight position in information technology detracted from relative performance. At a stock level, positive contributors to quarterly performance included overweight positions in Mineral Resources, Uniti Group, Jumbo Interactive, ARB and IRESS.
Mineral Resources shares gained 41% over the quarter, in tandem with a 30% rise in the iron ore price and a 35% gain in the lithium price. The company hosted a three-day site visit of its WA mining operations during the period that coincided with the iron ore price hitting ten-year highs. Mineral Resources outlined ambitious growth plans that included doubling the mining services business, lifting iron ore volumes from 20 to 90 metric tonne per annum, and near doubling its lithium volumes, at the same time converting all spodumene to hydroxide.
Uniti shares added 44% as part of a sustained re-rating following strong financial year 2021 year-to-date results and investor repositioning out of takeover target Vocus Group, given Uniti’s similar status as a highly cash-generative telecommunications business with infrastructure-like fibre assets.
Performance Commentary - March 31, 2021 The Ironbark Karara Australian Small Companies Fund fell -1.56% (net) during the March quarter. This constituted 3.65% of underperformance when compared with the benchmark S&P/ASX Small Ordinaries Accumulation Index return of 2.09% for the three months.
The strongest contributors to Fund performance at a sector level were overweight positions in Communication Services and Consumer staples. An underweight position in Financials and overweight position in Information Technology detracted from relative performance.
At a stock level, positive contributors to quarterly performance included overweight positions in Uniti Group, SeaLink Travel, Vocus Group and Elders. Not holding Nanosonics also contributed to relative performance.
Performance Commentary - December 31, 2020 The Ironbark Karara Australian Small Companies Fund returned 8.31% (net) for the quarter, an underperformance of 5.52% when compared to the S&P/ASX Small Ordinaries Accumulation Index return of 13.83% for the quarter.
The strongest contributors to Fund performance at a sector level were overweight positions in utilities, information technology and consumer discretionary. An underweight position in real estate also benefitted. An overweight position in metals & mining and an underweight position in financials ex property trusts were the largest detractors from relative performance. At a stock level, positive contributors to quarterly performance included overweight positions in Mineral Resources, Meridan Energy, Mercury NZ and EML Payments.
Not holding Regis Resources also contributed to relative performance. Mineral Resources shares gained 50%, outpacing the 34% rise in the iron ore price and a flattening in the lithium price. The company outlined plans to grow its iron-ore business significantly over the next three to five years at its annual meeting. The current operations at Koolyanobbing (13 million tonnes per annum) and Iron Valley (8 million tonnes per annum) will continue to provide base production load, while new hubs at Ashburton (25 million tonnes per annum) and the Southwest Creek (40 million tonnes per annum) both set to be developed.
Recent issues with iron ore supply out of Brazil have supported the strong iron ore price in recent months, after Vale was forced to cut iron ore production for the third time in 2020 due to heavy rains and licence delays. Meridian shares gained 55% and Mercury NZ added 33% due in part to the New Zealand Labour Party’s push to delay the closure of Rio Tinto’s Tiwai Point aluminium smelter by three to five years. In the case of Meridian, the strong share price performance was also most likely driven by strong ETF buying with the iShares Global Clean Energy ETF holding adding 19 million Metgasco shares during the quarter.
EML Payments shares rose 47% as a beneficiary of the recovery trade on COVID 19 vaccine news and expectations that gift, and incentive volumes would recover over the Christmas period in-line with shopping mall foot traffic. The largest detractors from monthly performance included overweight positions in Saracen Minerals, Silverlake Resources and Austal. The US dollar gold price was flat over the quarter despite a combination of momentum-selling and ETF liquidation in response to vaccine developments, sending Saracen shares down 8% and Silverlake shares down 22%. While gold ETF holdings appear to be down 3.5 million ounces from their 111 million ounces high two months ago. Austal shares fell 19% after the company’s annual meeting provided 2021 financial year earnings before interest and tax guidance of $125 million, a little below consensus, impacted by reduced throughput and a stronger Australian dollar. Austal has typically been conservative in setting guidance and the investment manager recalls FY20 guidance was upgraded to greater than $110m in February this year before being upgraded again to greater than $125m in June before coming in at $130m.
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