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.
31 May 2020 Equivalent Unit Price – A$0.9839
Welcome investors to the monthly update for the Rivkin Australian Equity Managed Account (RAEMA) for May 2020. The portfolio continues to recover from the February to March decline, with the equivalent unit price (EUP) gaining 6.41% during the month of May, ending at 0.9839, outperforming the ASX200 Accumulation Index which gained 4.36% for the month. Despite back to back positive monthly returns in April and May, the portfolio remains down for 2020, following a 37% decline for the ASX200 Index between February and March.
| RAEMA | |
|---|---|
| Latest Month | 6.41% |
| Quarter to Date | 14.23% |
| Calendar Year to Date | -9.76% |
| Financial Year to Date | -11.80% |
| 12-month | -7.42% |
| Inception | -1.61% |
Monthly Commentary
As we stated in last month’s update, “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.” We highlight this point, because equity markets continue to rally despite the economy lagging, with Australia all but guaranteed to enter a technical recession this year. On Wednesday this week, GDP figures released showed that the Australian economy contracted by 0.3% in the March quarter. Added to this, the protests, riots, and looting in the US are adding to the pessimistic mood, however equity markets are ignoring this for now.
Throughout the month we have made some changes to the composition of the portfolio, which we wish to discuss. The first of these is that we have made the decision to remove the 20% allocation to the Low Volatility strategy. We wish to emphasise that this is decision is not a reflection of our views on the current market environment in the short term, but more a longer-term strategic decision to transform the RAEMA to a 100% focused equity portfolio. As many of you would already be aware, we already offer the Low Volatility strategy as a standalone portfolio, for those wanting to diversify their investments away from straight equities. Going forward, investors can make their own allocation between our Australian equity portfolio and Low Volatility based on their own preference, instead of our predetermined 80/20 split, which is what the RAEMA has been up to this point. The monthly performance report for the Low Volatility strategy can be found here.
Going forward, this 20% allocation will be deployed into ASX listed equities on a discretionary basis. It will be invested in ASX200 stocks that as an investment team, we feel make a compelling investment, and that fall outside the Quality and Momentum systematic strategies. As of the end of May, we have allocated 17.4% of capital to this ‘bucket’, with a focus on larger cap names which we believe we benefit from the current recovery, including Macquarie Bank (MQG), BHP Group (BHP), and Charter Hall (CHC). Being discretionary, this portion of the portfolio will not always remain 100% invested.
The combined weighting of the ASX100 and ASX200 momentum strategies is currently 23.6% of FUM, up from 16.9% of FUM at the start of the month, as more and more uptrends begin to emerge. The allocation to quality is currently 44.2%, which leave the portfolio with a cash weighting of 14.8% at present. The portfolio is currently well diversified across the sectors, with the largest weightings to information technology (20.5%) and financials (18.7%). This is the highest weighting to financials since inception.
Notable performers over the past month include Fortescue Metals Group (FMG, +28.88%), Evolution Mining (EVN, +21.23%), and Appen (APX, +19.24%), while Ausnet Services (AST) and Technology One (TNE) were the worst performers, declining 6.18% and 3.79% respectively.
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
