Strategy Objective: The Rivkin Australian Defensive Income Strategy 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. The strategy focuses on income over capital growth and invests in high dividend paying blue chip stocks, hybrid securities, and takeover arbitrage.

31 March 2021 Equivalent Unit Price – A$1.0112

Welcome investors to the monthly update for the Rivkin Australian Defensive Income Strategy (RADIS) for March 2021. For the month of March, the Defensive Income portfolio gained 1.58%with the Equivalent Unit Price ending the month at 1.0112

Monthly Commentary

Equity markets for the most part continued their slow but steady recovery from the March 2020 lows, but with a noticeable divergence between sectors. The ASX200 closed at the end of March at 6790, up roughly 1.5% for the month. In the US, the S&P500 closed at 3973 points (+160 points) which was a new all-time closing high. Technology stocks, however, were flat overall despite a late month rally, after a big sell-off in February. For the month of March, the Defensive Income portfolio gained 1.58%.

The theme that accelerated in February continued throughout March, with the rotation from ‘growth’ stocks to ‘value’ stocks. The catalyst for this rotation has been the rapid climb in long-term government bond yields (particularly 10-year yields) as global economic growth expectations have improved and the potential impact that could have on inflation. At least towards the end of March, we have seen a ‘buy the dip’ mentality in these names as the growth stories remain unchanged despite the changing long-term bond yields. Our view remains that inflation is likely to be a short-term phenomenon until we see full employment and sustained wage growth in the US and locally, and the picture for equities therefore remains bright with supportive monetary and fiscal environments and rapidly recovering economies.

Throughout March, the Event Strategy component continued to perform well with Vitalharvest Freehold Trust (VTH) receiving multiple new bids, while some of the arbitrage opportunities progressed further to completion. The Low Volatility component of the portfolio saw a return to favour with renewed strength in the $USD, in which 50% of the portfolio is priced. With a new infrastructure bill in the works following on from the COVID-relief bill earlier in the year, the ingredients for a strong recovery in the US could lead to continued performance from the $USD and the equities exposures, so there is reason to be optimistic in the short term.

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 Rivkin Australian Defensive Income Strategy invests predominantly in listed Australian securities whose characteristics satisfy one or more of the strategies that occupy the portfolio. These strategies include: Blue Chips, being high dividend paying stocks from the ASX50, Hybrids Securities, which as the name suggests are a hybrid between a debt and equity instrument, and Events, which include opportunities such as takeover arbitrage.

Important Disclaimer

The Rivkin Australian Defensive Income Strategy 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