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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | Over the June quarter the Fund returned +4.47% versus the Index's +7.97%. Whilst the Fund has outperformed over the long term, Bennelong noted performance over the past year had been disappointing. The largest detractor over the quarter was Reliance Worldwide after the company downgraded its earnings guidance in May, however, Bennelong believe the shares now look well placed for attractive returns over the medium term. Not having any exposure to the strongly performing banks was the next major reason for the Fund's relative underperformance. Bennelong believe earnings headwinds remain for the banking sector; net interest margin remain under pressure, credit growth remains soft, bad debt could trend upward if employment or the general economy start to suffer. The next largest detractors were Corporate Travel Management and Costa Group. The main positive contributor was Aristocrat Leisure after the company reported strong half year results in May. |
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