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.
31 December 2019 Unit Price – A$1.1152
Welcome investors to the monthly update for the Australian Equity Fund (AEF) for December 2019. The NAV price for the Australian Equity Fund ended December at 1.1152, a loss for the month of 1.97%. Calendar year-to-date, the AEF has gained 20.85%, compared to the ASX200 Accumulation Index which has rallied 23.40%.
Monthly Commentary
Coming into the last trading day of the year, the AEF looked set to close only slightly lower for the month but a very weak session on that day brought it to a monthly loss of 1.97%. This represented a marginal outperformance compared to the ASX 200 for the month, helped by the uncorrelated 20% allocation to the defensive strategy. Although the end of year was weak, 2019 was overall a very strong year for equities. The AEF climbed 20.85% which we would consider an above average year in terms of absolute return. Much of the performance occurred in the first half of the year after coming off a relatively weak end to 2018 and the gains were consolidated in the second half of 2019.
In terms of individual stocks, Aristocrat Leisure (ALL) has shot to first place in the top 10 holdings after being picked up in both our Quality and Momentum 100 strategies. With the second highest weighting, Silver Lake Resources (SLR) was bought in early December and was already showing gains of 19.04% at the end of December. This is largely the result of a rally in gold prices which has occurred over the past two weeks. This performance certainly helped the ASX200 Momentum strategy but this was nevertheless the weakest of our strategies in December.
The sector composition of the fund saw some significant changes during the month with a switch out of Industrials and Consumer Discretionary and into Financials and Information Technology. Although Financials now makes up 14.4% of the fund, it still doesn’t include any of the big four or even regional banks. Rather, the Financials stocks held are more from the asset management and financial technology side of the sector and include HUB24 (HUB) and Magellan Financial (MFG). Information technology is now our largest sector exposure at 24.5% of the fund and includes stocks such as Xero (XRO), Altium (ALU) and Wisetech Global (WTC).
Going into the new year, geopolitical tensions concerning Iran and the US are looking likely to be the main driving force for markets for at least the first couple of weeks. Later in January, we expect to get a resolution for Brexit with the UK very likely to leave the EU by 31 January. Interest rates will again be a key theme for the year with Australia currently still at record low rates while the recent trajectory of US rates has been down.
We have recently made minor tweaks to our strategies that will affect the number of holdings in the fund. This will generally reduce the number of holdings and should make it easier for the fund to outperform the broader stock market. We may see slightly more volatility as a side effect but we believe it is more than compensated by the higher expected return.
We thank all investors for being with us in 2019 and look forward to a strong 2020. 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
