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.
30 June 2020 Unit Price – A$0.9851
Welcome investors to the monthly update for the Australian Equity Fund (AEF) for June 2020. The AEF was largely flat for the month of June, with the NAV price dipping 0.03% to close at 0.9851. Australian stocks in general, as measured by the ASX200 Index remain approximately 16% below the highs from February 2020, set below on the onset of the Covid-19 outbreak. Following a sharp decline into March, Australian equity prices have recovered strongly throughout April and May before momentum has stalled slightly in June.
| PORTFOLIOS | AEF |
|---|---|
| Latest Month | -0.03% |
| QTD | 10.31% |
| Calendar YTD | -11.66% |
| Financial YTD | -12.90% |
| 12m | -12.90% |
| Inception | -1.45% |
Monthly Commentary
Before we discuss the current fund composition, we have a note regarding the end of financial year tax reporting. The 2020 end of financial year accounts are currently in the process of being lodged, which are conducted by EY (Ernst and Young) in conjunction with Mainstream the administrator, as well as oversight from Rivkin and Perpetual. This process tends to take 4-6 weeks, as all funds in Australia need to complete this process at the same time. As such, we expect that the 2020 tax documents will be ready for our investors by mid-August, at which point we will email these directly to each investor.
The AEF was approximately 90% invested in ASX listed equities throughout the month of June and finished the month with a cash weighting of 11.90%, with the balance in equities. As noted in recent updates, we have recently made a change to the overall portfolio makeup by removing a 20% exposure to a defensive macro/bond fund, with this capital now allocated to a discretionary stock portfolio. Currently, approximately three quarters of this allocation (14.7% of total capital) is at work, with a focus on larger cap stocks, which are not present in either our quality or momentum systematic strategies. The current holdings are Woodside Petroleum (WPL), Commonwealth Bank (CBA), Macquarie Bank (MQG), Charter Hall (CHC) and Scentre Group (SCG). Like the GEF, the AEF has a large weighting to technology stocks at 23.9%, which far outweighs the ASX200 Index weighting to this sector of 3.5%. This is followed by financials and materials at 13.9% and 13.8% respectively. We wish to reiterate that the AEF retains the ability to build a 60% cash weighting, which would occur if our momentum strategies (40%), and the discretionary portfolio (20%) both moved to a 100% cash position.
Regarding technology stocks, given the current economic shutdowns that have been in force, and more recently, either extended or reintroduced in some areas, including Greater Melbourne, we are witnessing quite a shift in investor preferences from companies reliant on face to face human interaction to those who can conduct business online. This has been very evident in the US and to a lesser extent in Australia, with the likes of Appen (APX), Afterpay (APT), and Xero (XRO), and NextDC (NXT) all rallying above the respective highs prior to the Covid-19 outbreak. So, despite there being plenty of negative news at present, firstly, we always said that equity prices would bottom well before the economic news became positive, and secondly, we believe there will be some clear winners from the changing economy brought about by the pandemic, with a shift towards technology.
The top 10 holdings within the fund can be found in the below table, which total a weighting of approximately 1/3 of total assets. For the month, Afterpay (APT), Appen (APX), and Domino’s Pizza (DMP) were the top performing stocks held, while Scentre Group (SCG) and HUB24 (HUB) were the poorest 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
