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 January 2021 Unit Price – A$1.0592

Welcome investors to the monthly update for the Australian Equity Fund (AEF) for January 2021. For the month of January, the AEF declined 1.66%, concluding with a NAV price of 1.0592.

Monthly Commentary

Broadly speaking, equity markets have begun 2021 reasonably subdued. Prices drifted higher for much of January before a small but sharp sell-off occurred into month-end. Encouragingly, after the first week of February, this sell-off has been reversed, with both major equity indices recovering to new highs. In Australia, much of the weakness related to commodity-related stocks, with the ASX200 Energy and Materials Indices being the worst performers, declining 8.9% and 5.9% respectively. There were no significant gains across the other sectors, with the utilities (+1.3%) and consumer staples (+1.1%) indices the top performers.

Government policy, both locally and in the US continues to provide a positive tailwind for equities, and asset prices more broadly. In the February RBA meeting, Governor Philip Lowe stated that the current RBA cash rate of 0.1% was likely to remain unchanged for up to 4 years. More so, the RBA has committed to buying another $100 billion in bonds to get long-term interest rates lower. Interestingly, despite the RBA extending its quantitative easing (QE) program, the yield on the Australian 10-year bond has ticked up to its highest level since March last year. Nevertheless, with interest rates likely to remain at low levels for the foreseeable future, asset markets should continue to perform strongly. Signs are already beginning to emerge across property prices in Sydney and Melbourne, and we expect equity markets will also benefit over the months to come. In the US, government stimulus is coming more from the fiscal side, with the Biden administration pushing to get their Covid-19 Stimulus package, currently in the order of around US$1.9 trillion, through the House. This is planned to include direct payments to Americans of US$1400, in addition to funding to states and cities.

In terms of the current composition of the portfolio, we remain largely fully invested, with just a 3.2% cash weighting as of month-end. Regarding the discretionary portion of the Fund, which accounts for 20% of overall assets, we only made the one change during January, which was selling Star Entertainment (SGR), based on our view that the reopening of Australian borders to foreign visitors is likely to take longer than initially anticipated. We are yet to reinvest the proceeds raised. We have seen a decent change in our exposure to consumer discretionary stocks, with many stocks, such as ARB Corp. (ARB), Breville Group (BRG), Super Retail Group (SUL), and Kogan (KGN) being picked up in the Quality strategy. This sector has now become our largest weighting at 28.1%, followed by information technology (19.0%) and materials (18.5%). Please see the tables below for full details regarding our sector exposure, and top 10 holdings.

Looking ahead, February has begun in a rather bullish fashion, with prices quickly recouping the late January decline. And with positive monetary and fiscal tailwinds, not to mention, the continued economic recovery, we believe equity markets remain an attractive option for investors with a three-to-five-year time horizon.

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