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 August 2020 Unit Price – A$1.0382
Welcome investors to the monthly update for the Australian Equity Fund (AEF) for August 2020. Following on from a 2.22% increase in July, the AEF lifted higher again in August, with the Fund’s NAV price increasing by 3.10% to finish the month at 1.0382. Looking at the performance of equity markets more broadly, the recovery off the March lows continues, with both Australian and US share markets pushing higher throughout August. By month’s end, the ASX Accumulation Index had gained 2.83%, while in the US, the S&P500 Total Return Index added 7.19%.
| PORTFOLIOS | AEF |
|---|---|
| Latest Month | 3.10% |
| QTD | 5.39% |
| Calendar YTD | -6.90% |
| Financial YTD | 5.39% |
| 12m | -11.80% |
| Inception | 3.86% |
Monthly Commentary
We discussed last month how US equities have far outperformed local equities since the recovery began, with this performance differential only widening further throughout August. This is best demonstrated by Chart 1 below, which shows the relative performance of the ASX200, S&P500, and Nasdaq100 since March 23, which was the date that the recovery from the February to March decline began. Since that date, and up until September 2, the ASX200 has rallied 33.3%, returning prices to around the 6100 level, and still some 15% or so below the prior peak at around 7200. Compare this to both the S&P500 (+56.4%) and the Nasdaq100 (+72.8%) which have now both fully retraced the prior decline to be setting new all-time highs. This outperformance can be largely explained by the large weighting to technology stocks in the US (particularly the Nasdaq), which have been significant beneficiaries of the increased shift to online shopping and communications brought about by the COVID-19 pandemic.
Chart 1 – Relative Performance from March 23 to September 2.
In terms of the composition of the current portfolio, the three strategies that make up the backbone of the Fund, being Quality, ASX100 Momentum, and ASX200 Momentum, are all currently fully invested. More so, we have also allocated a little over half of the remaining 20% which we have allocated to discretionary investments into the market, with the result being a relatively low level of cash, at 4.7%. The portfolio is quite diversified at present, with a good spread across a variety of different sectors, the biggest weighting being consumer discretionary (+21.8%) and materials (+16.4%).
The Quality strategy has changed composition quite a bit over the past month, which is often the case in August and September, as it coincides with reporting season, when companies update the market with their 2020 financial year results. All in all, Australian equities held up quite well despite many companies reporting considerably worse results than the year prior, which much of the negativity already priced in. Throughout August, Afterpay (APT), Carsales.com (CAR), and Mineral Resources (MIN) were the top performing stocks from the portfolio, gaining 33.6%, 13.0%, and 12.1% respectively, while it was several mid-cap mining stocks, specifically Saracen Mineral Holdings (SAR, -13.0%) and Silver Lake resources (SLR, -11.4%) which were the worst performers.
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
