Fund Objective: The Rivkin Australian Equity Fund 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 April 2020 Unit Price – A$0.9467
Welcome investors to the monthly update for the Australian Equity Fund (AEF) for April 2020. The AEF rebounded throughout the month of April, gaining 6.01% for the month, ending the month with a NAV price of 0.9467. This follows a sharp fall during the prior 2-months as equity markets sold off aggressively due to the Covid-19 pandemic.
Monthly Commentary
The Australian Equity Fund begun the month of April with a 9.6% cash position since both the ASX100 and ASX200 Momentum strategies had begun to reduce exposure to equities. As a reminder, both these momentum strategies can move to a 100% cash position and do so as the number of up trending stocks available decreases. Throughout the month of April, the momentum strategies have reduced their exposure even more, going from a combined 28.1% of assets to currently accounting for 20.6% of assets. Normally, this reduction in equity exposure would lead to an increase in the cash position of the fund, however we made a discretionary decision not to do so throughout April, due largely to the extremely oversold nature of the market. Instead, we have redirected the bulk of this now available capital position towards ‘market exposure’ via the purchase of an ASX200 ETF, which closely tracks the performance of the broader ASX200 Index. This decision has so far proved to be a good one, as equities continue to recover off the March lows.
At month end, the AEF had a total exposure to ASX listed equities of 65%, comprised mostly of individual stock positions but also a 7.8% market position discussed above. The remaining 35% is allocated to the defensive macro credit strategy (25.7%) and cash (9.3%). To conclude our look at the current portfolio composition, more than 70% of all stock exposure is in 4 sectors at present, being information technology (27.3%), health care (15.4%), communications (15.1%), and consumer staples (14.4%).
The top performing stocks for the month of April were Pro Medicus (PME), Appen (APX), and Hub24 (HUB) which gained 34.6%, 31.2%, and 26.9% respectively. PME has rallied strongly following the announcement of an on-market share buyback, with the company set to acquire up to 10% of shares on issue, a clear indication that management view recent falls in the share price as on overreaction. Appen on the other hand appears to have weathered the recent storm better than most, with EBITDA figures still forecasted to grow 25% over the prior year.
In terms of the current economic climate, Australia has done an extremely good job of reducing the spread of Covid-19, evidenced by the very low rate of new daily cases. As such, the Morrison government is preparing the economy to reopen from this week. Given that it has been approximately 6 weeks since the restriction measures were first implemented, we believe many aspects of the Australian economy should be able to recover rather quickly. We would imagine that economic data will continue to look very pessimistic over the coming months, however it is important to recognise the difference between backwards looking economic data, and stock market performance, which is always forward looking. Put another way, stock prices will bottom well before the economic data shows improvement.
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
Fund Description & Information
The Fund 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; In addition, approximately 20% of the portfolio is held in a defensive strategy, which offers non-equity style returns.
Important Disclaimer
The Rivkin Australian Equity Fund 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
