Antares Ex-20 Australian Equities aims to outperform the S&P/ASX 200 Total Return Index excluding the companies listed on the S&P/ASX 20 Total Return Index (after management fee) over rolling five-year periods. The Fund is an actively managed, concentrated portfolio of Australian equities outside the largest 20 Australian listed companies by market capitalisation (as defined by the S&P/ASX 20 Total Return Index) that Antares identifies as having the potential to offer significant long-term capital growth. The Fund may also invest in equities expected to be listed on the Australian share market.
The Fund weathered a volatile September, with a decline of 4.3% (net of fees) in line with its benchmark’s fall. The month saw a sharp move up in interest rates, particularly at the longer end of the curve. The yield on US 10 Year Treasuries spiked from 4.11% to 4.57%, driven by higher for longer rate expectations, a resilient US economy and sharply higher crude oil prices. Such dramatic moves drive increases in volatility and push up discount rates on equities, which especially hurts the longer duration infrastructure and technology segments of the market. Paladin Energy (PDN) was the best contributor for the month. The Uranium producer rallied as uranium prices globally began to climb, expectations around increased use of uranium globally in the energy transition lifted and as the company successful navigates the restart of its Langer Heinrich mine in Namibia, scheduled for 1 st Quarter 2024.
Ventia Services (VNT) also enjoyed a solid month. There was no specific company news released, although we note that VNT was not rewarded by the market after releasing a solid FY 23 profit result in August. With the flurry of results late, it may be the market was catching up with that news.
Finally, Metcash (MTS) was also a solid contributor. Again, there was little company specific news released but the read through from the results released by grocery rivals Coles and Woolworths, as well as hardware group, Bunnings, all suggested that MTS was more than holding its own, despite expectations of a loss of share in a post COVID normalisation.
Detracting from performance was Block (SQ2). The company suffered a small outage in its Square Seller retail point of sale equipment globally which hurt sentiment, while the march up in longer duration interest rates hurt its valuation as discount rates spiked, disproportionately impacting longer duration equities such as SQ2.
What is Antares Ex-20 Australian Equities Antares Ex-20 Australian Equities 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 Antares Ex-20 Australian Equities has Assets Under Management of 1.54 M with a management fee of 0.85%, a performance fee of 1.01% and a buy/sell spread fee of 0.3%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Antares Ex-20 Australian Equities has returned 3.15% in the last month. The previous three years have returned 3.57% annualised and 19.13% each year since inception, which is when the Antares Ex-20 Australian Equities 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 Antares Ex-20 Australian Equities first started, the Sharpe ratio is NA with an annualised volatility of 19.13%. The maximum drawdown of the investment product in the last 12 months is -5.42% and -29.54% 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 Antares Ex-20 Australian Equities has a 12-month excess return when compared to the Domestic Equity - Micro Cap Index of -4.83% and -0.28% 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. Antares Ex-20 Australian Equities 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 Antares Ex-20 Australian Equities provide?
Antares Ex-20 Australian Equities has a correlation coefficient of 0.95 and a beta of 0.96 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 Antares Ex-20 Australian Equities and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Antares Ex-20 Australian Equities with the ASX Index Small Ordinaries Index?
For a full quantitative report on Antares Ex-20 Australian Equities compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Antares Ex-20 Australian Equities to do my own analysis?
To sort and compare the Antares Ex-20 Australian Equities financial metrics, please refer to the table above.
Has the Antares Ex-20 Australian Equities 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 Antares Ex-20 Australian Equities?
If you or your self managed super fund would like to invest in the Antares Ex-20 Australian Equities please contact Level 16, 33 Exhibition Street Melbourne, VIC 3000 Australia via phone 1800 671 849 or via email -.
How do I get in contact with the Antares Ex-20 Australian Equities?
If you would like to get in contact with the Antares Ex-20 Australian Equities manager, please call 1800 671 849.
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Antares Ex-20 Australian Equities. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 August was a disappointing month for the strategy, which delivered a return of -3.1 (net of fees), compared to that of its benchmark at -1.4%. While the market’s return for the month was relatively benign it masked some substantial volatility at a stock specific level in response to the results season outcomes. Over 20 companies in the ASX 200 moved up or down by more than 10% post report release – the highest number we can recall. This was despite limited levels of earnings revisions. Positioning and liquidity seem to be in command of stock prices at present.
Our best contributor for the month was Cochlear (COH), which delivered strong earnings growth as implant surgeries normalised as hospital waiting times globally began to return to pre COVID levels. More encouragingly, the outlook provided by COH was above expectations, even after allowing for a lift in development expenses, while implant surgery into older cohorts was called out as a focus of Sector allocation future growth. Given the importance of social interaction in a healthy aging process, we have been hoping to see this progress.
Medibank (MPL) also performed well in August. Like COH, it recorded a solid profit result, above the market’s expectations. It also showed a strong fourth quarter recovery in new policy additions, indicating the company was putting the operational impacts of last year’s cyber attacks behind it.
TPG Telecom (TPG) also had a good month. It confirmed it was in negotiations with Vocus to sell its fibre network for a sum of approximately $4.1bn. This is a very good price. It also enjoyed the benefit of market leader, Telstra, driving up mobile telephony yields, which it followed.
Detracting from performance were Block Inc (SQ2) and Judo (JDO). Having risen by more than 21% in July, SQ2 shares were sold down in August after reporting its 2Q23 results. This was despite the company exceeding expectations and upgrading full year EBITDA guidance. The decline appears to be driven by the outlook provided by management whereby 3Q23 gross margins were decelerating, as well as overall macroeconomic concerns. A material portion of SQ2’s earnings are exposed to transaction volumes in small and medium sized businesses, which are adversely impacted by a slowdown in US consumer spending.
Performance Commentary - July 31, 2023 The portfolio returned 3.1% net of fees in July, behind the benchmark which returned 3.4% during the month. Markets were strong as a series of data points has led markets to believe that a soft landing can be achieved. It appears that the market is more convinced that inflation can be curbed without a significant increase in unemployment, allowing Australia to avoid a recession – resulting in a “risk on” trade. Our strongest contributor was Block (SQ2) which despite limited stock specific news rallied 21.4% as part of the risk-on trade and more positive sentiment on the resilience of the US consumer.
Seek (SEK) also benefited from a shift in thinking about the macroeconomic environment. The market has previously been concerned about SEK’s volumes if the unemployment rate were to increase.
Judo (JDO) shares increased after providing an update which showed that it had grown its loan book by 46% to $8.91 billion in FY23.
Aurizon (AZJ) shares finished the month weaker. Late in the month the company held an investor day where it provided FY23 EBITDA guidance towards the bottom end of its previous target range of $1.42-1.47bn due to the impact of wet weather, production issues and labour shortages. In addition, the company provided FY24 EBITDA guidance of $1.59-1.68bn. At the investor day, Aurizon announced bullish FY30 targets for its Bulk business and containerised freight strategy, which the market is not yet giving the company credit for as it is early days on execution.
Tabcorp (TAH) was softer in July as the market grew concerned about the potential for regulatory change. The Standing Committee on Social Policy and Legal Affairs handed down its findings and recommendations in the prior month. Amongst the recommendations are a total ban on all forms of gambling advertising and sponsorship, a ban on all inducements and the creation of a national online regulator. Whilst we are cognisant of this risk, we believe that Tabcorp is likely to be the exclusive winner of the Victorian wagering license which could provide a significant uplift to EBITDA in the near to medium term.
IGO Limited (IGO) provided a strong Q4 production and sales update. However, the company also gave FY24 production and capex guidance, of which the latter disappointed the market as it was significantly ahead of expectations.
Performance Commentary - June 30, 2023 June was a roller coaster month with volatility in the Australian market moving up in a material fashion. The standard market benchmark index, the S&P / ASX 200 oscillated between a peak of 7,350 and a low of 7,090 points. Our benchmark, which excludes the Top 20 companies, generated a return of 0.8%. Amidst such volatility it was pleasing, that the Fund delivered a net return of 1.3% which bettered our benchmark.
The tug of war between inflation curtailing policies of central banks and resilient global economies continues, although there were clear signs that the Chinese economy has not rebounded as many had hoped in the wake of the lifting of all COVID 19 restrictions.
Our best contributor for the month was Aurizon (AZJ) which benefitted from a realisation in the market that its Central Queensland Coal Network asset is a beneficiary of the higher inflationary environment. This led to several broker upgrades which took the stock higher as investors sought inflation havens.
Ventia Services (VNT) also contributed well. In June, VNT continued to win new business and extend its existing contracts. We have liked VNT for its contract risk management processes and its exposure to contracts in relatively economically insensitive areas, such as defence.
Finally, Paladin (PDN) performed well as its share price rebounded after being sold-down in late May driven by fears of partial government intervention in its key Namibian asset, Langer Heindrich. It also benefitted from more positive sentiment towards nuclear energy as a genuine option in the global quest to drive down emissions from energy production.
Detracting from performance was Seek (SEK). There was no news released by the company, and the shares drifted lower on concerns about the outlook for job volumes in Australia and New Zealand, given market fears of a looming and significant recession in Australia.
Performance Commentary - May 31, 2023 Australian shares fell in May as lower commodity prices, higher interest rates and weak consumer spending cautioned investors.The sharpest falls were in the consumer discretionary and staples sectors given signs of a retail recession for consumer spending. The combination of higher mortgage interest rates, rising rents and stubborn inflation pressures is squeezing purchasing power.
There was also notable weakness in the resource sector given lower coal and iron ore prices on China concerns. Financials also disappointed given the prospect of lower profit margins with higher deposit interest rates and more sedate credit demand. Echoing the US market and the surge of investment interest in anything remotely related to artificial intelligence (AI), the Australian Information Technology sector posted a double-digit gain for May. The strategy generated a net return of -1.6% for the month, compared with our benchmark decline of -1.4%. Sector allocation Our best contributor was Telix (TLX). TLX held its AGM in May at which the company noted its plans to build on the success of Illuccix, which is used in the detection of prostate cancer and also on the results from its Phase III ZIRCON study of TLX250-CDx in clear cell renal cell carcinoma.
Management reiterated their strategy and confirmed $100m in R&D investment for 2023. Tabcorp Holdings (TAH) held its investor day where it outlined its progress towards its FY25 targets. The company highlighted its ongoing investment in data analytics and its new brand marketing initiatives. Worley (WOR) reiterated guidance at its investor day and put forward targets for margin expansion and double-digit growth over the medium term.
The company also highlighted that its pivot to sustainability is gaining momentum. Of stocks held in the portfolio our biggest detractor was IDP Education (IEL). IEL shares were sold off sharply on news that the Canadian government was opening the English testing in the Student Direct Stream market to other providers.
Performance Commentary - April 30, 2023 April saw markets rally on relief around signs that banking issues which flared in March had been adequately quarantined by regulators and central banks. Despite this, it was not a “risk on” month, rather one which saw outperformance of more defensive stocks. The strategy generated a net return of 3.4% for the month, in line with our benchmark. Our best contributor was Telix Pharmaceuticals (TLX). Shares in TLX enjoyed a stellar month after reporting revenue of A$100m for the first quarter of 2023.
Consensus broker estimates of revenue for the full calendar year 2023 were A$360m and following the disclosure of first quarter numbers that consensus forecast was increased to A$470m, an upgrade of 30% which in turn drove the stock price up 35%. Our decision to exit Mineral Resources (MIN) earlier in the year was rewarded as the stock provided a disappointing March quarter update and materially underperformed the market as a result, helping our relative performance. Sector allocation Finally, Northern Star (NST) rallied as gold received a fresh bid on signs that the US economy may be weakening.
This led to a weaker US dollar, thereby benefitting gold prices. Our biggest detractor was Block Inc (SQ2) which fell on the release of some research from a short seller which alleged that many of the cash app accounts on the SQ2 platform were fraudulent or used for nefarious purposes. We have read the report and following additional disclosure from SQ2, as well as a number of discussions with US based analysts and benchmarking of payment issues as disclosed by major US banks such as Bank of America, we feel the research to be unfounded and have retained our position.
Performance Commentary - March 31, 2023 The portfolio outperformed in March, delivering a net return of 0.4% which compared to the benchmark return of -0.6%. March was dominated by the uncertainty caused by the US banking crisis and an ongoing focus on central bank action in response to inflation. REITS and financial services underperformed while materials and communication services outperformed.
Of stocks held in the fund, our best contributor in March was Ventia (VNT) which saw strong share price performance after delivering a CY22 result in late February that beat consensus expectations and prospectus guidance. The result highlighted the non-discretionary nature and predictability of revenue and a business that has managed costs well in an inflationary environment. The company also provided guidance for CY23 NPATA growth of 7-10%, underpinned by strong pipeline visibility and record work-in-hand. Major shareholders Apollo and CIMIC also sold down 93 million shares in March, representing 22% of the company’s issued capital which has improved liquidity in the stock.
Northern Star (NST) shares rallied during the month as the US banking crisis saw gold prices increase by 8%. The company provided an update on its Pogo Operation in Alaska where gold production was halted in order to repair damage to the ball mill motor that was discovered during routine repairs. While the disruption is expected to impact production by 20-40k oz in FY23, the company’s production guidance remains unchanged.
Cochlear (COH) continued to perform well in March, following a strong result in February which saw earnings guidance for FY23 maintained. The post COVID recovery in elective surgeries continues and earnings are also likely to benefit from the launch of the Nucleus 8 product. We also believe COH shares may have benefitted from investors positioning in higher quality, defensive stocks given the market uncertainty in March.
Performance Commentary - February 28, 2023 February saw markets cool after a strong January. The strength of the US economy is driving expectations of higher rates for longer which is creating increasingly negative sentiments in markets. The strategy generated a net return of -1.7% for the month, which, disappointingly, trailed that of our benchmark at -1.3%. We have historically performed well in reporting periods, this time however, we think the market had a very strong macro lens and has missed some interesting developments in key holdings. Our best contributor for February was Medibank Private (MPL).
We have maintained our view that the market over-reacted to the potential impact on customer retention after its cyber security incident. This was partially vindicated in its half year result as policy numbers stabilized and began to grow again in February, whilst claims inflation, a key aspect of our thesis, was lower than expected, which helped support the stock. Sector allocation Lottery Corporation (TLC) also enjoyed a strong month on the back of a result that beat expectations. Revenue growth was ahead of market and costs were well-managed leading to upgrades, taking the share price with it. Further, TLC benefitted from being seen as a “defensive growth” stock that could deliver in a choppy market.
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