Solaris Core Australian Equity PFO is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Cap Passive 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 Solaris Core Australian Equity PFO has Assets Under Management of 772.06 M with a management fee of 0.9%, a performance fee of 0 and a buy/sell spread fee of 0.6%.
The recent investment performance of the investment product shows that the Solaris Core Australian Equity PFO has returned 4.95% in the last month. The previous three years have returned 6.38% annualised and 14.01% each year since inception, which is when the Solaris Core Australian Equity PFO first started.
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 Solaris Core Australian Equity PFO first started, the Sharpe ratio is 0.55 with an annualised volatility of 14.01%. The maximum drawdown of the investment product in the last 12 months is -6.95% and -28.78% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
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 Solaris Core Australian Equity PFO has a 12-month excess return when compared to the Domestic Equity - Large Cap Passive Index of -0.41% and -0.28% since inception.
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. Solaris Core Australian Equity PFO has produced Alpha over the Domestic Equity - Large Cap Passive Index of -0.03% in the last 12 months and -0.02% since inception.
For a full list of investment products in the Domestic Equity - Large Cap Passive Index category, you can click here for the Peer Investment Report.
Solaris Core Australian Equity PFO has a correlation coefficient of 0.99 and a beta of 0.99 when compared to the Domestic Equity - Large Cap Passive 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.
For a full quantitative report on Solaris Core Australian Equity PFO and its peer investments, you can click here for the Peer Investment Report.
For a full quantitative report on Solaris Core Australian Equity PFO compared to the ASX Index 200 Index, you can click here.
To sort and compare the Solaris Core Australian Equity PFO financial metrics, please refer to the table above.
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SMSF Mate does not receive commissions or kickbacks from the Solaris Core Australian Equity PFO. All data and commentary for this fund is provided free of charge for our readers general information.
The S&P/ASX 200 Accumulation index delivered -0.7% in August outperforming global markets which also delivered negative absolute returns with the S&P500 returning -1.8% and the MSCI World down -1.7%.
August reporting season saw 162 companies deliver results and brought a marked increase in intraday volatility and dispersion between winners and losers. The broader economy has demonstrated resilience as revenue has marginally exceeded expectations however there has been margin compression resulting from headwinds such as labour costs, interest costs, and higher inflation throughout businesses.
The Reserve Bank of Australia (RBA) elected to keep rates on pause and so the cash rate remains at 4.1% Against a backdrop where earnings downgrades outnumbered upgrades, 8 out of 11 sectors posted negative returns for the month.
Consumer Discretionary (+5.7%), Property (+1.6%) and Energy (+0.5%) were the best performers. Utilities (-3.8%), Consumer Staples (-3.2%) and Information Technology (-2.1%), were the worst performing sectors.
The top three performers included Altium (+26.7%) as the company delivered a strong FY23 result and reiterated aspirational 2026 targets, demonstrating that their strategy is working; Inghams Group (+24.3%) as the poultry farmer’s FY23 and future guidance exceeded the market’s expectations and G.U.D Holdings (+24.0%) as the car product distributor reported results showing a 32% increase in Net Profit after Tax and Amortisation.
The worst performers were Chalice Mining (-39.6%) as the share price of the mineral explorer reacted to the announcement of a disappointing mine scoping study; Iress (-38.3%), the financial services software provider delivered a disappointing result and cut their dividend and Core Lithium (-38.3%) as the Lithium explorer reached 12 months lows after undertaking a capital raising during the month.
A portfolio holding in focus is Altium, which is of one of our preferred holdings in the Software & Services sector.
Altium is a global provider of software for Electronic Computer Aided Design, in addition to Parts listing platform, Octopart. Altium delivered a solid FY23 result showing the broader business is performing well. The management team have been successful in executing on their strategy of converting customers from Standalone to Term and SAS based licensing and breaking into the Enterprise customer segment due to their Cloud platform offering.
Solaris continues to see opportunity and growth in Altium, supported by the announcement of multiple Enterprise customers including a significant exclusive deal with Japanese Semiconductor company Renesas.
The S&P/ASX 200 Accumulation index delivered 2.9% for July, underperforming global markets as the MSCI World returned 3.3% and in the US, the S&P500 returned 3.1% in USD.
Equity markets were supported by improving commodity prices, with Energy names outperforming on the back of stronger prices with Brent Crude Oil up 14.2%. Further, Iron Ore prices were stable over the month while Gold rebounded from its decline in June, up 2.4% for the month Meanwhile, despite strong employment data, the Reserve Bank of Australia (RBA) left cash rates unchanged at 4.10% but noted further increases may be required.
The top-performing sector for the month was Energy (+8.8%) aided by oil prices, followed by Financials (+4.9%) and Information Technology (+4.5%). The worst-performing sectors were Healthcare (-1.5%), Consumer Staples (-1.0%) and Materials (+1.4%)
The top three performers included Megaport (41.3%), after company management for the networking service business delivered the FY23 result and continued to provide positive guidance for future years. Flight Centre Travel (+22.7%), as the travel company upgraded profit guidance, noting better demand from corporate clients and Costa Group Holdings (+21.7%), the share price of the fresh produce company surged after receiving a bid from a Private Equity firm.
The worst performers were Core Lithium (-28.9%), the most shorted stock in the ASX200, underperformed following an operational update that downgraded production guidance for future years. Lake Resources (-25.0%) continued to underperform following a disappointing management update in June, and further announcement of increased capital expenditure. Syrah Resources (-22.7%) underperformed as the graphite producer keeps production paused due to oversupply and low prices for graphite.
The S&P/ASX 200 Accumulation index delivered 1.0% for the June quarter bringing the index return to 14.8% for the 2023 Financial Year. The local market underperformed the US equity market, as the S&P 500 returned 8.3% in the June quarter and 15.9% for the financial year, driven by ongoing outperformance by technology stocks in the latter half of the period.
The Reserve Bank of Australia (RBA) raised interest rates by 50 basis points during the quarter, bringing the cash rate to 4.10%, and with hawkish commentary and economic data prints not yet indicating a broad economic slowdown, expectations are for further rate hikes to continue. In terms of commodities, the month of June witnessed a reversal of the 12-month trend; Iron Ore up +8.1% for the month vs -7.1% for the year, Brent Crude Oil up +3.1% but down -34.8% for the year whereas Gold retreated -2.2% for the month but returned +6.2% for the year. The top-performing sector for the quarter was Information Technology (+21.1%) buoyed by the strong performance of global technology stocks, followed by Utilities (+5.5%) and Energy (+3.8%). Conversely, the worst-performing sectors were for the quarter were Healthcare (- 3.2%), Materials (-2.5%), and Consumer Discretionary (-1.7%).
The top three performers included Megaport (+75.2%) after company management for the networking service business announced significant upgrades to earnings for the next two financial years, Telix Pharmaceutical (62.6%) the biotech firm provided a positive quarterly update with increased revenue and demand for their diagnostic imaging agent and Life 360 (+53.8%) which provided a positive Q1 update indicating the growing technology safety company is on track to be cash-flow positive this financial year.
The worst performers were Syrah Resources (-50.7%), who continues to underperform following April’s quarterly business update and subsequent capital raising through a convertible note; Lake Resources (-32.6%) whose share price fell post management update that disappointed due to timing delays and Perseus Mining (-30.7%) following an escalation of armed conflict near their goldmine in Sudan and deferral of their final investment decision.
The S&P/ASX 200 Accumulation index experienced a decline of -2.5% in May, underperforming global equities as the S&P500 delivered +0.2% and the MSCI World delivered -1.25% in local currency. The strength of technology stocks buoyed US equity markets as concerns regarding the US banking sector faded, and focus shifted to artificial intelligence (AI). Notably, NVIDIA, a US tech company, upgraded earnings from AI, and its share price surged over 50%.
The rate-hiking cycle of global central banks continues, with the Reserve Bank of Australia (RBA) increasing by 25 basis points to bring the cash rate to 3.85%. The US Federal Reserve also increased rates by 25 basis points. Meanwhile, commodity prices were under pressure during the month, with Iron Ore down over 4.5%, Oil (WTI) down over 11% and Gold down 1.4%.
Australian technology stocks performed well alongside their US peers, with Information Technology (+11.6%) the clear topperforming sector for the month, followed by Utilities (1.1%) and Energy (+0.2%). Conversely, the worst-performing sectors were Consumer Discretionary (-6.1%), Consumer Staples (-4.6%) and Materials (-4.4%).
The top three performers included Life360 (+34.1%), which provided a positive Q1 update indicating the growing technology safety company is on track to be cash-flow positive this financial year. Lithium miners Lake Resources (+26.2%) and Allkem (+21.2%) also outperformed, with Allkem announcing a merger with US manufacturer, Livent.
The worst performers were Syrah Resources (-26.0%), who continues to underperform following April’s quarterly update and subsequent capital raising through a convertible note; Lovisa (-22.5%), as local and international peers downgraded, impacting the fast fashion jewellery chain and IDP Education (-22.5%) sold off post announcement that their stranglehold in the Canadian market will be opened to competitors, impacting future earnings.
A portfolio holding in focus is Worley, a global provider of project delivery and consulting services to the Energy and Resources industries. Historically, Worley’s business primarily involved consulting services for carbon-intensive industries such as Oil & Gas, Resources, and Chemicals, resulting in earnings that were closely tied to the capex cycles of these companies, making them cyclical in nature. However, as the world undergoes a significant transition toward achieving net-zero emissions, Worley has strategically positioned itself as a leader in sustainability. They are poised to benefit from the increasing investment in energy transition and decarbonization initiatives.
Worley offers a diverse range of services in key areas including Carbon Capture and Storage, Hydrogen, and Wind. Currently, approximately 35% of their revenues are derived from sustainability projects, and they have set an ambitious target of reaching 75% by 2026. This commitment was reaffirmed by management during a recent investor day, where they highlighted the strong outlook and margins for sustainability projects.
Solaris expects continued earnings growth, that is less cyclical in nature given the future investment in decarbonisation by energy and resources companies and given Worley’s position as market and technical leader in this space.
The S&P/ASX 200 Accumulation Index returned 1.85% in April. The Reserve Bank of Australia paused rate hikes as they sought time to assess the lagged impact of the previous ten hikes, despite the strong domestic labour market. Investors viewed the pause as supportive for equities and aided the delivery of a positive return for the market for the month.
Throughout the month, mining companies provided quarterly trading updates, with many proving disappointing, citing challenges on production, weather and costs. Materials was the only sector to deliver a negative return, driven by the quarterly updates. The exception was gold companies that outperformed as gold prices continued to rally.
Real Estate (+5.3%) was the top performing sector for the month as the relief in rate hikes was positive, specifically for companies with residential exposure. Information Technology (+4.7%) and Industrials (+4.5%) were also strong performers.
Conversely, the challenging quarterly updates from miners led Materials (-2.6%) to be the worst-performing sector for the month, followed by Utilities (+1.4%) and Energy (+1.7%).
The top three performers included Telix Pharmaceutical (+47.1%), the biotech firm provided a positive quarterly update with increased revenue and increased demand for their diagnostic imaging agent. Megaport (+36.7%) after company management announced significant upgrades to earnings for the next two financial years, and Blackmores (+35.0%) received a takeover bid at a substantial premium, $95, from Japanese company Kirin Holdings.
The worst performers were Syrah Resources (-37.1%), whose share price fell following a disappointing quarterly update and subsequent capital raising through a convertible note; Brainchip (-14.7%), the semiconductor company continues to underperform with full-year results showing another loss. Star Entertainment Group (-11.2%) also underperformed after announcing a downgrade to earnings from challenging operating conditions resulting in a reduction of staff. A portfolio holding in focus is Pilbara Minerals, a hard rock lithium miner producing spodumene in the Pilabara regions of Western Australia. Lithium is seen as a critical mineral for the energy transition, required for batteries and electronic vehicles.
Lithium pricing has been volatile due to supply and demand imbalances but we expect demand to remain strong and for pricing to stabilize.
Within our resources exposure, we predominately invest in companies with tier one assets. By tier one we preference assets that are low cost, high grade, low risk jurisdictions, long life and can generate cash flow through the inevitable commodities cycle. Pilbara ticks all the boxes and with a competent management team who are doing well operationally. Lithium assets are technically difficult to bring on new supply as we have seen recently. Supply is taking longer to come to market.
This is currently to the benefit of Pilbara as they are already in production. Pilbara have close to A$3 billion net cash on their balance sheet and we are excited by their growth ambitions in downstream production Solaris expects continued production growth and cash flow generation from Pilbara Minerals. Pilbara is producing minerals vital for the energy transition.
The first quarter of 2023 has seen the first cracks of the global rising rate cycle with the collapse of Silicon Valley Bank in the US, and the takeover of Credit Suisse by UBS in Switzerland. The higher bond yields have weighed on equities, but these events were viewed as signs of fragility in the global financial system, and prompted volatility in Australia, with the local markets giving back most of the gains from the strong start to the year, underperforming global equity markets. The S&P/ASX 200 Accumulation index finished the quarter up 3.5%.
Despite the volatility in equity and credit markets, central banks continue to raise rates as inflation continues to print high, albeit declining in Aus. The RBA raised rates for the 9th and 10th consecutive times to bring the official cash rate to 3.6% in Australia, while the Bank of England and the FOMC also raised rates during the period. The top-performing sectors were Consumer Discretionary (+11.4%), Communication Services (+9.4%) and Information Technology (+8.1%). The worst-performing sectors were Financials (-3.0%), Energy (-1.0%) and Real Estate (+1.2%).
The top three performers for the quarter were all beneficiaries of take-over bids including Liontown Resources (+95.5%), United Malt Group (+36.9%), and Newcrest Mining (+33.0%). Liontown Resources, a lithium exploration and mining company, received a bid from US company Albermarle at a ~65% premium to its share price, which was rejected by the board. United Malt Group received a takeover bid from Malteries Soufflet and entered exclusive due diligence while gold miner, Newcrest Mining, received a non-binding indicative offer from US entity, Newmont Corporation.
The worst performers were Lake Resources (-44.4%), Brainchip (-36.2%) and Megaport (-34.7%). Lake Resources reached 52- week lows and was impacted by the chairman selling, while Brainchip, developer of AI software delivered a disappointing full year result. Megaport’s CEO abruptly resigned, causing the stock to decline 15%.
After a solid start to the year, equity markets pulled back in February as the S&P/ASX 200 Accumulation index returned -2.5%, in line with global markets as the S&P500 returned -2.6% and MSCI World ex Australia -2.4%.
Central banks remained hawkish, and bond markets priced higher rates, with the yield on the U.S. 1yr bond reaching over 5% for the first time in 20 years. The Reserve Bank of Australia raised rates again in February, bringing the Australian cash rate to 3.35%. While the macro environment continues to prove a headwind to equities, the Australian reporting season provided an opportunity for further volatility at the sector and company level, as over 300 companies reported during the month. At a sector level, the best performers were Utilities (+3.4%), Information Technology (+2.7%) and Industrials (+1.5%). The worst performers were Materials (-6.6%), Financials ex property (-3.2%) and Energy (-0.8%).
At a company level, two of the top three performers were automobile related, including G.U.D. Holdings (+25.3%) on positive half-year results showing auto sales momentum improving, and Eagers Automotive (+19.9%) delivering strong FY22 results and positive guidance for FY23. Link Administration Holdings (+19.3%) outperformed from news flow on a possible resolution to pending FCA regulatory issues and associated fines.
Conversely, Domino’s Pizza (-33.1%) underperformed after delivering a disappointing result and concerns regarding margin pressure. Mining was one of the worst-performing sectors, led by Lake Resources (-23.3%), impacted by a fall in lithium price and Silver Lake Resources (-22.7%) as gold stocks were impacted by rising real yields.
A portfolio holding in focus is Orica, a global Ammonium Nitrate (AN) manufacturer and technology provider operating across Australasia, the Americas, Europe, and Africa. Disruption in the ammonia market from European curtailments has resulted in higher AN prices globally and on the East Coast of Australia. Orica are positioned to benefit, given the favorable industry structure as Orica is generally one of two main players and will be able to pass on higher AN prices to customers. We expect to see a subsequent uptick in sales and profits, and this is further supported by the cost advantage Orica has with supply of lowcost gas on the East Coast of Australia (gas is a feedstock in making AN). Orica’s technology offering is also notable. They are well advanced compared to competitors in their higher margin technology offer. Management have been investing time and capital into broadening their offer which utilizes digital and automated technologies to create safer and more productive blast outcomes for customers. We expect strong earnings growth over the next few years as the benefit of higher AN prices, and a superior technology offering is realized by the focused management team.
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