UBS Australian Share Fund aims to provide investors with a total return (after management costs) in excess of the S&P/ASX 300 Accumulation Index (Benchmark) when measured over rolling five year periods. Eligible investments of the Fund comprise securities listed on the Australian Stock Exchange or those we reasonably expect to list within six months. The Fund may also invest indirectly in listed Australian securities via investments in other UBS managed funds, including the UBS Australian Small Companies Fund which in turn invests in companies which may be listed in New Zealand but not in Australia – this exposure is likely to be small. The Fund may invest in financial derivatives to gain exposure to the Australian sharemarket or to manage investment risk. Normally the Fund will hold between 30 and 60 stocks and sub funds with at least 75% of the Fund invested in stocks that comprise the S&P/ASX 100 index.
After fees and expenses, the Portfolio declined by 3.30% during the month, underperforming its benchmark by 41 bps.
The largest positive contributors were CSL, QBE Insurance and Incitec Pivot. Our underweight to CSL contributed positively, as the globally focused biotechnology continued to weaken following the release of its FY24 group earnings guidance which was below market expectations (~10% lower than consensus for group FY24 NPATA). QBE Insurance outperformed as the insurer gained positive sentiment from a higher-for-longer outlook for medium-term interest rates, as well as a decline in the number of natural disasters during the peak of the North American catastrophe season and on the back of the El Niño declaration in Australia. Incitec Pivot’s outperformed after announcing an overall positive FY23 trading update.
The largest negative contributors were Tabcorp, Sims Metal and Northern Star. Wagering operator Tabcorp underperformed following Entain’s announcement of softer online gaming revenue. Sims Metal was a detractor as the scrap steel distributor lacked improvement in its trading conditions. Gold miner Northern Star underperformed due to a ~4% fall in the gold price from its near-record highs.
What is UBS Australian Share Fund UBS Australian Share Fund is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Cap Neutral 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 UBS Australian Share Fund has Assets Under Management of 389.67 M with a management fee of 0.9%, a performance fee of 0 and a buy/sell spread fee of 0.5%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the UBS Australian Share Fund has returned 3.7% in the last month. The previous three years have returned 7.6% annualised and 13.81% each year since inception, which is when the UBS Australian Share Fund 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 UBS Australian Share Fund first started, the Sharpe ratio is NA with an annualised volatility of 13.81%. The maximum drawdown of the investment product in the last 12 months is -4.34% and -42.85% 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 UBS Australian Share Fund has a 12-month excess return when compared to the Domestic Equity - Large Cap Neutral Index of -2.65% and -0.53% 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. UBS Australian Share Fund has produced Alpha over the Domestic Equity - Large Cap Neutral 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 - Large Cap Neutral Index category, you can click here for the Peer Investment Report.
What level of diversification will UBS Australian Share Fund provide?
UBS Australian Share Fund has a correlation coefficient of 0.98 and a beta of 1.02 when compared to the Domestic Equity - Large Cap Neutral 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 UBS Australian Share Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the UBS Australian Share Fund with the ASX Index 200 Index?
For a full quantitative report on UBS Australian Share Fund compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the UBS Australian Share Fund to do my own analysis?
To sort and compare the UBS Australian Share Fund financial metrics, please refer to the table above.
Has the UBS Australian Share Fund 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.
How can I invest in UBS Australian Share Fund?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the UBS Australian Share Fund. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 After fees and expenses, the Portfolio decreased by 2.61% during the month, underperforming its benchmark by 184 bps.
The largest positive contributors were Carsales.com, NEXTDC and Wisetech Global. Online auto classified Carsales.com outperformed in August following its fullyear FY23 results (net profit increase of 23% was higher than expectations). Similarly, NEXTDC also outperformed on the back of its FY23 results release. Our underweight position in WiseTech was a source of outperformance, as the share price of the logistics industry software solutions provider fell after reporting its full-year results (earnings guidance was lower than consensus).
The largest negative contributors were ResMed, Alumina and Wesfarmers. The medical equipment manufacturer ResMed, underperformed due to increased focus on the potential future impact of weight loss drugs, an eventual return of competitor Phillips into the sleep-apnoea device market and reported decline of its gross margin. The share price of Alumina dropped after the alumina and aluminium producer reported a net loss in their half-year report. Our underweight position in Wesfarmers was a detractor as the diversified conglomerate outperformed during the period following its solid FY23 results, which was led by the core Bunnings business and Kmart.
Performance Commentary - July 31, 2023 After fees and expenses, the Portfolio increased by 2.95% during the month, outperforming its benchmark by 6 bps.
The largest positive contributors were CSL, United Malt and Sandfire Resources. Biotechnology company CSL outperformed in July following the pre-release of earnings guidance in June which fell below market expectation (around 10% lower than consensus for group FY24 NPATA). United Malt outperformed during the month after European bidder Malteries Soufflet signed a binding deal to buy United Malt at $5.00 per share (a +45% premium to the undisturbed priced) following an extensive period of due diligence. Copper producer Sandfire Resources outperformed after posting a 13% quarterly production increase at its MATSA copper operations in Spain to achieve a total annual production of 99kt.
The largest negative contributors were Iluka Resources, National Australia Bank and Tabcorp. Iluka Resources underperformed after confirming it expects softer demand in 2H23 despite a robust June quarterly production report. The weaker outlook was also highlighted by competitor Tronox, further fueling market concerns. Our underweight to National Australia Bank was a detractor for the month as NAB benefitted from the market pricing in a higher probability of a soft landing and interest rates remaining higher for longer. Northern Star underperformed following a mixed June quarterly report; the gold producer had a strong quarter but FY24 production guidance was 8% below market expectations.
Performance Commentary - June 30, 2023 After fees and expenses, the Portfolio increased by 1.12% during the month, underperforming its benchmark by 62 bps.
The largest positive contributors were CSL, Sims Metals and QBE Insurance. Our underweight to the globally focused biotechnology company CSL contributed positively to performance in June following the company updating earnings guidance which came in below market expectations (approximately 10% lower than consensus for Group FY24 NPATA). The weaker operating outlook was driven by lower growth in its core blood plasma business, Behring, as cost pressures push out the margin recovery story. Sims Metals outperformed during the month with US scrap steel margins remaining strong, supporting earnings from the company’s US business SA Recycling. QBE Insurance was a source of outperformance due to ongoing strength in the premium rate environment. The company has substantially improved its underwriting discipline and product focus over the last five years, and we believe its 10.2 times FY23 earnings multiple excessively discounts the risks inherent in its business model.
The largest negative contributors were Link Group, Fortescue Metals and Northern Star. Link Group fell at month-end after a large superannuation client (representing ~4% of revenue) elected not to renew its contract for FY25. Fortescue Metals traded higher as iron ore prices continued to rise, where the benchmark 58% Fe Index rebounded to close at US$96.70/t at month-end on expectations of Chinese economic stimulus. Northern Star underperformed in June as gold prices declined ~3% to close at US$1,908/oz at month-end and the market was disappointed with the announced US$1.5bn capital cost to expand the KCGM Mill. In spite of the market sentiment, Northern Star remains our preferred gold exposure given its asset quality and strong cost control.
Performance Commentary - May 31, 2023 After fees and expenses, the Portfolio declined by -1.57% during the month, outperforming its benchmark by 96 bps.
The largest positive contributors were Xero (XRO), NextDC (NXT) and Worley (WOR). The online accounting software provider Xero outperformed following the announcement of a strong result, with subscribers and revenues in line with expectations and EBITDA ahead of estimates. Following the previous month’s largest ever individual contract announcement, data centre provider NEXTDC continued to outperform with the market’s conviction in Artificial Intelligence (AI) applications as a driver of demand grew. Worley also rallied in the month, with leading indicators (Factored Sales Pipeline +36%, Rolling 12 Month Bookings +28%, Backlog +8%) and structural drivers pointing to strong top-line growth.
The largest negative contributors were CSL (CSL), Tyro Payments (TYR) and Sandfire Resources (SFR). Globally focused biotechnology company CSL was a detractor as it outperformed, despite the challenging outlook for blood plasma economics which include elevated non-donor fee cost inflation, increased competition, adverse relative product growth rates and product substitution risk in the longer run.
Domestic payments provider Tyro underperformed after prolonged takeover negotiations came to an end. Sandfire Resources was a negative contributor, despite achieving an important milestone through the first concentrate production at the Motheo project in Namibia, as copper prices declined by about 5% to close out the month at US$3.68/lb.
Performance Commentary - April 30, 2023 After fees and expenses, the Portfolio gained 2.54% during the month, outperforming its benchmark by 69 bps.
The largest positive contributors were Reliance Worldwide (RWC), Rio Tinto (RIO) (not held) and Fortescue Metals (FMG) (not held). The manufacturer and distributor of plumbing and heating parts, Reliance, outperformed following the release of the company’s March-quarter trading update. The diversified miner Rio Tinto and iron ore producer Fortescue were contributors during April, with both stocks underperforming on falling iron ore prices. During April the benchmark 62% Fe iron ore index fell 15% to close at $106.05/t as construction and infrastructure activity in China fell below expectations.
The largest negative contributors were United Malt (UMG), CSL (CSL) and NAB (NAB) (not held). The global commercial malt processor and distributor underperformed during the period. United Malt received a takeover bid from peer Malteries Soufflet priced at $5.00/share (+45% premium to prior closing price) in the prior month and retraced modestly from its highs to close near to deal terms. We believe that the likelihood of a deal proceeding is high. Our underweight to the globally focused biotechnology company CSL detracted from performance in the month, which included several minor but supportive data points for the outlook for Behring (approximately 65% of group earnings), its blood plasma business. NAB outperformed during the period as the Australian banking sector reversed some of the selloff in banks following the failure of Silicon Valley Bank, Signature Bank and Credit Suisse.
Performance Commentary - March 31, 2023 After fees and expenses, the Portfolio increased by 2.21% during the month, outperforming its benchmark by 245 bps.
The largest positive contributors were United Malt, NAB, and Xero. United Malt outperformed after a takeover bid was received from peer, Malteries Soufflet priced at $5.00/share (+45% premium to last close). NAB underperformed during the month, caught up in the global selloff of banks following the failure of Silicon Valley Bank, Signature Bank and Credit Suisse. Xero outperformed during the period after announcing plans to reduce the size of its workforce by 15%. The cost-out will lead to a reduction in operating expenditure/sales from the recent levels of 83-85% over recent results down to a more sustainable level of ~75% from FY24.
The largest negative contributors were Newcrest Mining, Incitec Pivot and Worley. Newcrest Mining traded higher as the gold price rallied 9% in March on macro uncertainty and an expected slowdown of interest rate rises globally. Incitec Pivot underperformed over the period as the price for Tampa ammonia fell 23% in March on weaker gas prices in Europe and weaker demand. Worley underperformed as spot WTI oil pricing fell 3% over the month.
Performance Commentary - February 28, 2023 After fees and expenses, the Portfolio declined 1.40% during the month, outperforming its benchmark by 115 bps.
The largest positive contributors were QBE insurance (QBE), Link Administration (LNK) and The Lottery Corporation (TLC). Link Administration appreciated during the month as the company made material progress to resolving the uncertainty overhanging it UK Fund Solutions business. QBE Insurance performed strongly during the month in which it reported a solid full year result, largely in line with expectations, and with the guidance for gross written premium growth for 2023 of mid to high single digit growth leading to upgraded earnings expectations. The Lottery Corporation outperformed during the period, with the stock reporting a strong result underpinned by both a solid Lotteries print and improving Keno momentum.
The largest negative contributors were Northern Star (NST), PEXA (PXA) and Macquarie Group (MQG). Northern Star was a negative contributor during the month. Following a period of strong outperformance late in 2022, NST tracked the gold price lower in February, with gold declining 5% to US$1,817/oz at month end. PEXA underperformed during the month despite reporting a solid result for the six months to December 2022. With the background of the anticipated slowdown in house transaction volumes in Australia already an overhang on the stock, PXA guided to a slower roll out of its UK platform and higher than anticipated losses in its startup digital business. Macquarie performed strongly during the month on limited news flow, albeit that continued volatility in US and European energy markets through their winter seasons should be positive for MQG’s commodity business.
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