The Investors Mutual Future Leaders Fund aims to provide a rate of return (after fees and expenses and before taxes) which exceeds the return of the S&P/ASX 300 Accumulation Index (ex. S&P/ASX50, ex LPT) on a rolling four year basis. The Fund will invest in a diversified portfolio of quality ASX listed Australian and New Zealand shares outside the Top 50 shares listed on the ASX.
The Future Leaders Fund had a solid quarter, up +1.6%, well ahead of the benchmark’s -1.1%. For the quarter the Fund benefitted from solid results by several of our quality holdings in the August reporting season, while our caution towards the resources sector aided performance relative to the benchmark.
Global share markets declined in the September quarter as bond yields rose sharply and sticky inflation led investors to focus on the likelihood that the Fed and other central banks will need to keep interest rates ‘higher for longer.’ Most markets fell, with the MSCI World Index down -2.4% and the NASDAQ down further, -4.0%, reversing some of its impressive recent gains.
Local markets took a lead from overseas, with the ASX 300 down -0.8% for the quarter. Energy was the strongest sector, up +21%, buoyed by soaring oil prices, driven by supply cuts from Saudia Arabia and Russia. The interest rate sensitive Real Estate sector was weak, down –6.2%, weighed down by the move higher in bond yields. The Materials sector was also very weak, down -9.4%, as lithium companies came under pressure in-line with a pullback in the lithium price.
Many of the Fund’s holdings performed well over the quarter, with several rallying following strong results during reporting season including Ampol, GUD, Regis Healthcare, A2B Australia, and SG Fleet. Australian Clinical Labs, (see below) and Kelsian disappointed. Kelsian had a slightly weaker than expected result due to temporary labour issues, but we believe it’s well placed for growth in FY24 after new contract wins and recently acquiring All Aboard America, which is trading strongly.
During the quarter we trimmed our positions in several companies on share price strength including GUD, HMC Capital, A2B and Ampol and increased our holdings in ACL, Austal and Kelsian on share price weakness. We also added EVT Limited to the Fund, which we believe is being priced by the market at an attractive discount to the fair value of its portfolio of quality property assets, effectively placing a low value on its operating businesses.
What is Investors Mutual WS Future Leaders Investors Mutual WS Future Leaders is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Small 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 Investors Mutual WS Future Leaders has Assets Under Management of 471.06 M with a management fee of 0.99%, a performance fee of 15.38% 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 Investors Mutual WS Future Leaders has returned 4.9% in the last month. The previous three years have returned 3.1% annualised and 12.93% each year since inception, which is when the Investors Mutual WS Future Leaders 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 Investors Mutual WS Future Leaders first started, the Sharpe ratio is NA with an annualised volatility of 12.93%. The maximum drawdown of the investment product in the last 12 months is -3.9% and -44.38% 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 Investors Mutual WS Future Leaders has a 12-month excess return when compared to the Domestic Equity - Small Cap Index of 2.3% and -1.16% 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. Investors Mutual WS Future Leaders has produced Alpha over the Domestic Equity - Small 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 - Small Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Investors Mutual WS Future Leaders provide?
Investors Mutual WS Future Leaders has a correlation coefficient of 0.91 and a beta of 0.94 when compared to the Domestic Equity - Small 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 Investors Mutual WS Future Leaders and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Investors Mutual WS Future Leaders with the ASX Index Small Ordinaries Index?
For a full quantitative report on Investors Mutual WS Future Leaders compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Investors Mutual WS Future Leaders to do my own analysis?
To sort and compare the Investors Mutual WS Future Leaders financial metrics, please refer to the table above.
Has the Investors Mutual WS Future Leaders 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 Investors Mutual WS Future Leaders?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Investors Mutual WS Future Leaders. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 The Fund was up +0.7% in August, well ahead of the benchmark which was down -1.1%.
The Fund’s outperformance came on the back of good performances from several key holdings in the portfolio, which given strong market positions and resilient end demand, allowed them to grow revenues and maintain operating margins.
Several of our holdings were up strongly after reporting better than expected results, including GUD, Clearview Wealth, and Regis Healthcare, and in the case of TPG Telecom, also a potential material asset sale. Mayne Pharma’s performance was disappointing, dropping after reporting lower-than-expected revenue for its key women’s contraceptive product, Nextstellis. Management confirmed Nextstellis is on track to meet expectations in FY24.
As expected, reporting season was mixed given the differing impact of high inflation and rising interest rates on companies over the last 12 months, with outlook statements generally cautious given some cost pressures continue to build. We continue to focus on well-established companies with strong recurring earnings and competitive advantage that we believe can continue to perform well, despite uncertain economic conditions in the year ahead.
Performance Commentary - July 31, 2023 The Fund had a strong month in July, up +3.9%, in line with the benchmark’s +4.0%. All sectors recorded gains over the month except Healthcare and Materials, as lithium companies fell due to a weaker than expected lithium price auction outcome.
Over the month the Fund benefitted from a number of good performances as investors grew more positive about the prospects for numerous industrial companies. GUD rallied as industry data showed that automotive deliveries continue to grow while SG Fleet, A2B and Hipages also performed well. Ampol rose after reporting a solid 2nd quarter performance across its non-refining businesses. Pro-pac Packaging also rose after an update which revealed improved cashflow and an increase in revenue.
Australian Clinical Labs declined after the ACCC raised issues with its proposed merger with Healius. While this was not unexpected, and a merger does unlock significant synergies, we believe the outlook for a standalone ACL remains attractive.
August will see the majority of companies report their FY23 results. We are expecting a mixed reporting season given the sharp increase in interest rates over the last 12 months and other costs which are weighing on various parts of the economy. Given this backdrop, we continue to act cautiously, focusing on well established companies with strong competitive advantages and recurring earnings that are likely to perform well in a range of economic conditions.
Performance Commentary - June 30, 2023 The Future Leaders Fund had a solid quarter, up +2.4%, slightly ahead of its benchmark’s return of +2.3%. While the Fund’s performance was strong over the second half of the year, up +9.7%, a difficult first six months of the year saw the Fund lag the benchmark over the year to June, returning +4.9%, behind the benchmark’s +14.7%. For the year the benchmark’s gains were boosted by a strong rally in resources stocks, particularly lithium miners, and richly-priced tech stocks. We are cautious of the current pricing for many miners given the uncertain outlook for global economic growth and wary of many of the tech stocks given their high valuations, preferring to skew the portfolio to reasonably-priced industrials with more resilient businesses.
Global markets were up for the quarter with the MSCI World Index +6.7%, led by the Nasdaq, +13%. Upgraded guidance from US chipmaker Nvidia early in the quarter led to a strong rally in the US tech sector. Gains became more widespread late in the quarter as optimism grew that the rate-rising cycle was near its end, with economic data revealing the US economy is proving more resilient than feared.
The ASX 300 lagged global markets, rising +1.0% for the quarter, as the strong lead from overseas markets was tempered by a RBA rate hike which made local investors more cautious, compounded by a raft of negative retailer updates. For the Mid and Small Cap Index, Technology gained +13.5% amid general optimism towards tech stocks, while weakness amongst the retailers led the Consumer Discretionary sector lower. Strength in the mid-cap miners, particularly lithium players, helped the Materials sector record only a slight decline over the quarter, in contrast to heavy falls experienced by many small resources companies.
For the quarter the Fund benefitted from several strong performances as many stocks recovered from oversold levels. Codan, Aurizon, Adbri, SG Fleet and HMC Capital all posted gains. Kelsian rose significantly after settling a US acquisition, opening up a substantial new market opportunity for the business. Austal also gained after winning a new contract with the US Navy, potentially worth up to US$3bn, while press speculation around takeover interest in the company also contributed.
For the quarter the main detractors were Pact, as explained below, and Bega which fell after providing guidance that its FY24 profits would be flat on FY23, due to higher farmgate milk prices impacting the profitability of its commodity bulk milk division.
Over the quarter we took advantage of share price strength to take part profits and trim our positions in Codan, A2B Australia, Integral Diagnostics and Southern Cross Media (following a raid of the register by fellow radio operator ARN at a 42% premium). While we added to our positions in ACL, Hipages and Readytech on share price weakness.
Performance Commentary - May 31, 2023 The Fund had a disappointing month in May, down -3.3%, compared to the benchmark’s decline of -1.5%. A number of weak updates by retailers revealed a rapid slowdown in the economy is occurring following multiple rate rises and persistently high inflation. Given the uncertain environment many small cap stocks drifted lower over the month. The strong guidance from US chipmaker Nvidia sparked a rally in the IT sector, especially anything related to AI.
The Fund’s poor relative performance was mainly due to our lack of exposure to richly priced technology stocks as well as lithium names which rallied due to ongoing corporate activity. Performance was also negatively impacted by disappointing updates from Pact, oOh!media and ARN. Many stocks such as A2B and ACL also drifted lower, on little news, reflecting heightened investor uncertainty. We remain comfortable with the long-term positioning of these companies. The Fund benefitted from many resilient performances including Aurizon, Ampol and Kelsian. HMC Capital and Adbri also rose after reporting positive updates.
Economies still face significant issues amid slowing consumer demand and high inflation. Further rate rises are probable. In this environment we continue to act cautiously, focusing on well-established companies with strong competitive advantages, reasonable valuations and recurring earnings that are likely to perform better in a range of different economic conditions.
Performance Commentary - April 30, 2023 The Fund had a solid month in April, up +2.5%, though lower than the benchmark which rose +3.1%. The broader market was boosted by continued optimism that the RBA had paused its interest rate increases, with the benchmark boosted by gains in many cyclicals, including retail and travel-related stocks. These hopes were quashed on 3 May as the RBA raised rates by 0.25% and warned that more increases were coming. Also helping the index was a rally in gold and lithium stocks.
The Fund benefitted from many strong performances over the month including Codan, HMC Capital and Integral Diagnostics, which rose after Medicare indexation settled higher than expected, and TPG Telecom with investors gaining confidence that mobile prices are increasing. Pact Group was the main detractor, with the market disappointed at no news on any asset sale.
The continuing sharemarket strength implies a belief in a painless retreat from high inflation as well as an early easing of interest rates. The RBA rate increase is a reminder that there is more work to do to bring inflation under control. As such we continue to adopt a cautious stance, focusing on well-established companies with competitive advantages and recurring earnings, making them more resilient and likely to continue to perform well in a range of different economic conditions.
Performance Commentary - March 31, 2023 The Future Leaders Fund had a very strong quarter, up +6.8%, well ahead of the benchmark which rose +1.5%. Performance was driven by strong gains in several key holdings after reporting in line, or better than expected results.
Global markets gained over the quarter, however volatility was high as investor sentiment fluctuated on concerns about inflation and economic conditions and the path of interest rates globally. In March the collapse of several regional US banks and the forced merger of Credit Suisse with UBS caused further volatility, however these concerns quickly eased as regulators took decisive action.
The Fund’s benchmark was up +1.5%, with mixed performance at a sectoral level. Information Technology and Communication Services sectors were strongest, both up +10.6%, mirroring strong gains seen offshore. Materials were also strong, boosted by the Albemarle bid for Liontown and gold miners rallying in line with the gold price. Holding performance back Financial Services (-6.9%) declined on worries about the unfolding banking crisis as well as poor performances by some of the fund managers.
The Fund benefitted from strong performances by ACL, GUD, Infomedia, Codan and Myer following positive first half FY23 results. United Malt also rallied late in the quarter after reporting a takeover approach and A2B was up significantly after selling a Sydney property. Holding back performance were Aurizon and Southern Cross Media after weaker than expected results. We remain confident in these companies’ long-term prospects.
Over the quarter we took advantage of share price strength to take part profits and trim our positions in Infomedia, Kelsian, Myer and Orica. We added to our position in ACL early in the quarter and Aurizon and Tabcorp on share price weakness.
Performance Commentary - February 28, 2023 The Fund had a strong month in February, up +2.3%, well ahead of the benchmark which fell -3.6%.
Global markets were weaker during February as inflationary concerns resurfaced and bond markets sold off. Resource stocks were weak due to concerns about global growth, with lithium stocks particularly soft due to a failed producer auction and weak EV sales in China.
For the month the Fund benefitted from good results during February’s reporting season from a number of the stocks held in our portfolio including Ampol, A2B, GUD, Infomedia, Pact, Australian Clinical Labs, SG Fleet, Kelsian and Ridley Corp. While Aurizon and Integral Diagnostics fell over the month, on the back of softer than expected results, we remain comfortable holding these stocks as we are confident in their medium to long-term outlook.
We continue to position the Fund in well-established, profitable companies that continue to trade well despite the current economic uncertainties, while staying alert to opportunities that market volatility may present.
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