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| Fund Overview | The Fund is managed as one portfolio but comprises and combines two separately managed exposures: 1. An investment in the top 20 stocks of the markets, which the Fund achieves by taking an indexed position in the S&P/ASX 20 Index; and 2. An investment in the stocks beyond the S&P/ASX 20 Index. This exposure is managed on an active basis using a fundamental core approach. The Fund may also invest in securities expected to be listed on the ASX, securities listed or expected to be listed on other exchanges where such securities relate to ASX-listed securities.Derivative instruments may be used to replicate underlying positions and hedge market and company specific risks. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Accumulation Index. The Fund typically holds between 40-55 stocks and thus is considered to be highly concentrated. This means that investors should expect to see high short-term volatility. The Fund seeks to achieve growth over the long-term, therefore the minimum suggested investment timeframe is 5 years. |
| Manager Comments | Outperformance over the past quarter was largely explained by a number of the larger positions with active allocations, including Aristocrat Leisure which represented by far the largest contributor and is benefiting from management's five year journey to re-energise the business. Other contributors included Fisher & Paykel Healthcare, a manufacturer of breathing support devices, BWX, a manufacturer of skin care creams, and Reliance Worldwide, a manufacturer of plumbing products and water control valves. The largest detractor to performance was Domino's Pizza Enterprises, however, Bennelong believes the stock offers attractive longer term returns. Bennelong are concerned that a major issue with the Australian market approaching reporting season is earnings risk if companies miss the market's expectations. Based on company meetings and industry contact, their belief is that many corporates are doing it tougher than is appreciated by the market. If correct, the assumed E in the current P/E ratio (15.8x) is too high and in reality the PE is actually higher. However, the current attraction of equities depends on the future direction of interest rates. |
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