Milford Australian Absolute Growth Fd 1 is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Absolute Return 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 Milford Australian Absolute Growth Fd 1 has Assets Under Management of 0.00 M with a management fee of 1.02%, a performance fee of 0.15% and a buy/sell spread fee of 0.2%.
August was an eventful month, with Australian result releases and some market volatility that saw a significant market pullback before a recovery later in the month. The Fund was down 1.0% for the month, slightly behind the ASX 200 return of -0.7%.
A couple of poor results offset the contribution of a number of strong results. Iress fell 38% after reporting a disappointing result and outlook. Underlying costs are rising faster than expected, which means the net costout benefit we had hoped for has decreased. While we believe Australian/NZ assets will be attractive to a strategic buyer, rising costs and a poor balance sheet have materially reduced our confidence in management’s ability to realise value. The size of the Fund’s position is very modest and remains under review.
ResMed fell 24.0% also on slower revenue growth and some margin weakness. This was coupled with euphoria surrounding new diabetes and weight loss drugs and their ability to disrupt the medical technology industry.
On the positive side we had many good results. Highlights included Carsales (+15.6%), Goodman Group (+13.7%), Monadelphous (+7.7%) and Universal Store (+6.1%) among others.
Through August, there were several companies that we either established new positions in or took much larger positions following weakness post their results. Telstra and Suncorp are a couple of examples.
Over the month, our long equity position increased to 85% and we maintain some derivative protection on top of that. There was a broad degree of caution in company outlook statements and, somewhat unsurprisingly, a lack of future earnings guidance. In our view, the long lag effects of monetary policy mean that economic and behavioural impacts are still ahead of us and hard to quantify. The portfolio is balanced for the wide range of outcomes. As we await more comfort on the economic outlook, we continue to build out a long shopping list of growth businesses to add to the portfolio once they reach more compelling valuations in the coming months.
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