Ironbark Karara Australian Share has been designed to provide total return of 2% p.a. in excess of the S&P/ASX 300 Accumulation Index over a rolling 3-year period net of fees. The Fund will utilise a long only strategy through implementing a machine learning based quantitative investment process which primarily invests in listed Australian equities.
The Ironbark Karara Australian Share Fund returned 13.13% (net) for the quarter, an underperformance of 0.66% when compared with the S&P/ASX 300 Accumulation Index return of 13.79% for the quarter. Although the timing has been uncertain, the Fund has been positioned for the pandemic re-opening trade. This reflected the view on the likelihood of improvement and, by any historical measure, the extreme valuations differentials. This was a major factor supporting fund performance over the quarter. Health care, which the fund is significantly underweight, was the second worst performing sector (down 4.7%). This added 0.91%, predominantly through CSL which fell 1.3%.
The sector was pressured by the strong currency, uncertainty around short term earnings from COVID 19 (both up and down), as well as rotation as investors covered bank shorts, jumped into tech and a few other niche sectors which seem to have stolen its thematic mantle. More broadly this could be characterised as broadening market earnings growth conflicting with high expectations and higher valuations. Qantas (up 19.8%), along with Star Entertainment (up 20.3%) and Sydney Airport (up 9.4%) saw belated appreciation that domestic travel will rebound strongly. Positions in each of these were trimmed in November following strong gains.
These lost steam in December with renews border closures. At below $5 a share, Qantas is pricing little for future international profitability, lowered costs and enlarged domestic market share. The investment manager expects Star can be re-rated for strong cost and cash performance not to mention its governance edge over Crown, which may create opportunities down the track. These gains were partly offset by the continuing gains in tech and disruptive thematic plays, which are adding billions of dollar of market capitalisation seemingly by the month. After pay (up 47.5%) alone detracted 0.34% and Xero (up 45.7%) another 0.31%. As a generalisation these stocks are being judged on short term metrics without context to the implied terminal market size, share and profitability. This leaves them highly vulnerable to any rise in interest rates, tightening in liquidity conditions or stock specific setback. Corporate activity and restructuring moves continued to simmer. Tabcorp (up 16.8%) rallied on press speculation that private equity was considering a take-private transaction. Telstra (up 7%) lagged despite setting out plans to monetise its mobile network towers and re-committed to improvement in mobile margins in the second half. Both companies have better growth, good potential for the removal in industry pressure points, and further restructuring upside when lined up against domestically oriented yield plays. Consequently, the investment manager sees their share price improvements as only reflecting part of the potential. Brambles (up 1%) and Aristocrat (up 3.8%) lagged despite upgrades to market estimates. Aristocrat’s accounting was aggressively conservative.
The declining Brambles share price assumes any uncertainty will be resolved to the negative and so surprised when guidance was tightened to the upside. Small cap positions within the Fund detracted approximately 0.80%. QBE’s downgrade was particularly disappointing given the investment manager’s expectation that COVID 19 related losses were sufficiently provisioned for. The company was caught by a historically large number of hurricane losses which got beneath their reinsurance cover. Importantly for the investment manager’s investment view, capital position remains solid enough and small attractional losses are to budget and ongoing extremely high premium rate increases suggest underlying earnings of the business should be lifting should normal conditions ever eventuate.
The investment manager expects portfolio rationalisation to be high on the agenda of a new CEO, which may provide a catalyst to close the discount to peers. Mining and metals exposures were largely a wash (overweight BHP, Rio and Saracen/Northern Star but underweight Fortescue, IGO and Oz Minerals) although energy companies made a good contribution. The Fund added to overweight positions in NAB, Telstra and Transurban.
What is Ironbark Karara Australian Share Ironbark Karara Australian Share 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 Ironbark Karara Australian Share has Assets Under Management of 17.30 M with a management fee of 0.92%, 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 Share has returned -2.71% in the last month. The previous three years have returned 8.12% annualised and 15.34% each year since inception, which is when the Ironbark Karara Australian Share 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 Share first started, the Sharpe ratio is 0.24 with an annualised volatility of 15.34%. The maximum drawdown of the investment product in the last 12 months is -10.03% and -45.13% 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 Share has a 12-month excess return when compared to the Domestic Equity - Large Cap Neutral Index of -3.77% and -2.13% 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 Share has produced Alpha over the Domestic Equity - Large Cap Neutral Index of -0.32% in the last 12 months and -0.21% 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 Ironbark Karara Australian Share provide?
Ironbark Karara Australian Share has a correlation coefficient of 0.97 and a beta of 1.09 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 Ironbark Karara Australian Share and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Ironbark Karara Australian Share with the ASX Index 200 Index?
For a full quantitative report on Ironbark Karara Australian Share compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the Ironbark Karara Australian Share to do my own analysis?
To sort and compare the Ironbark Karara Australian Share financial metrics, please refer to the table above.
Has the Ironbark Karara Australian Share 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 Ironbark Karara Australian Share?
How do I get in contact with the Ironbark Karara Australian Share?
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Ironbark Karara Australian Share. All data and commentary for this fund is provided free of charge for our readers general information.
Product Snapshot
Product Overview
Performance Review
Peer Comparison
Product Details