Strategy Objective: The Rivkin Australian Equity Managed Account aims to produce positive average annual returns while seeking to maintain a level of volatility lower than that of the S&P/ASX 200 Accumulation Index over the same investment period.
30 June 2020 Equivalent Unit Price – A$0.9974
Welcome investors to the monthly update for the Rivkin Australian Equity Managed Account (RAEMA) for June 2020. The RAEMA posted modest gains for the month of June, with the Equivalent Unit Price (EUP) gaining 1.37% to close at 0.9974. Australian stocks in general, as measured by the ASX200 Index remain approximately 16% below the highs from February 2020, set below on the onset of the Covid-19 outbreak. Following a sharp decline into March, Australian equity prices have recovered strongly throughout April and May before momentum has stalled slightly in June.
| RAEMA | |
|---|---|
| Latest Month | 1.37% |
| Quarter to Date | 15.80% |
| Calendar Year to Date | -8.52% |
| Financial Year to Date | -10.59% |
| 12-month | -10.59% |
| Inception | -0.26% |
Monthly Commentary
Before we discuss the current composition of the portfolio, we have a note regarding the end of financial year tax reporting. As all the assets are held in the individual name or entity of each investor, the tax reporting becomes relatively straight forward, particularly as we use an external software provided, Praemium, to generate tax reporting. As such, tax reports are now available by logging into your Praemium portal, however we will also email these reports out to each investor over the coming weeks.
The strategy was approximately 90% invested in ASX listed equities throughout the month of June and finished the month with a cash weighting of 8.1%, with the balance in equities. As noted in recent updates, we have recently made a change to the overall portfolio makeup by removing a 20% exposure to a defensive low volatility strategy, with this capital now allocated to a discretionary stock portfolio. Currently, approximately three quarters of this allocation (13.5% of total capital) is at work, with a focus on larger cap stocks, which are not present in either our quality or momentum systematic strategies. The current holdings are Woodside Petroleum (WPL), Commonwealth Bank (CBA), Macquarie Bank (MQG), Charter Hall (CHC) and Scentre Group (SCG). More so, the portfolio has a large weighting to technology stocks at 27.0%, which far outweighs the ASX200 Index weighting to this sector of 3.5%. This is followed by health care and industrials at 16.5% and 11.1% respectively. We wish to reiterate that the overall portfolio retains the ability to build a 60% cash weighting, which would occur if our momentum strategies (40%), and the discretionary portfolio (20%) both moved to a 100% cash position.
Regarding technology stocks, given the current economic shutdowns that have been in force, and more recently, either extended or reintroduced in some areas, including Greater Melbourne, we are witnessing quite a shift in investor preferences from companies reliant on face to face human interaction to those who can conduct business online. This has been very evident in the US and to a lesser extent in Australia, with the likes of Appen (APX), Afterpay (APT), and Xero (XRO), and NextDC (NXT) all rallying above the respective highs prior to the Covid-19 outbreak. So, despite there being plenty of negative news at present, firstly, we always said that equity prices would bottom well before the economic news became positive, and secondly, we believe there will be some clear winners from the changing economy brought about by the pandemic, with a shift towards technology.
The top 10 holdings within the portfolio can be found in the below table, which total a weighting of approximately 1/3 of total assets. For the month, Afterpay (APT), Fisher & Paykel Healthcare (FPH) and Domino’s Pizza (DMP) were the top performing stocks held, while Scentre Group (SCG) and HUB24 (HUB) were the poorest performers.
If you have any questions regarding the above or your investments with Rivkin in general, please call us on 02 8302 3605.
Performance
NAV Price Chart
Monthly Returns
Portfolio Composition
Sector Breakdown
Top 10 Stock Holdings
Strategy Weighting
Strategy Description & Information
The RAEMA Strategy invests predominantly in listed Australian companies whose characteristics satisfy one or more of the strategies that occupy the portfolio. These strategies include: Momentum 100 & 200, being two discreet segments (ASX 100 & ASX 200 ex the ASX 100) of securities that are enjoying positive price trends; Quality, being companies with robust earnings profiles that are priced favourably versus their peers; Income, being securities that provide a high yield relative to the broader market; and Low Volatility, which cushions market shocks.
Important Disclaimer
The Rivkin Australian Equity Managed Account is available to wholesale investors only. Past performance is not a reliable indicator of future performance. The value of your investment may rise and fall, and you may not receive the amount originally invested.
Contact
Thomas Silitonga – Director, Rivkin Asset Management
thomas.silitonga@rivkin.com.au – +612 8302 3605
