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 October 2020 Unit Price – A$1.0429
Welcome investors to the monthly update for the Australian Equity Fund (AEF) for October 2020. Both the Australian and US equity markets tracked a similar path throughout October, with prices rallying higher during the first half of the month, only to then weaken into month end. As we mentioned in our update for September, we suspected that volatility would increase during October, largely because of the US election in early November. And while we did see a minor selloff into month end, prices have rebounded rather quickly this week, suggesting that any major fears surrounding the election were unfounded. The NAV price for the AEF for the end of October was 1.0429, representing a gain of 2.74% for the month.
| PORTFOLIOS | AEF |
|---|---|
| Latest Month | 2.74% |
| QTD | 2.74% |
| Calendar YTD | -6.48% |
| Financial YTD | 5.87% |
| 12m | -6.69% |
| Inception | 4.33% |
Monthly Commentary
The initial rally for the ASX Accumulation Index was stronger than what occurred in the US, and as a result, even after a relatively quick selloff into the end of the month, the Index ended the month for a gain of 1.93%. While in the US, a smaller rally unfolded, which was more than completely reversed by month end, with the S&P500 closing 2.66% lower, while the tech heavy Nasdaq100 declined 3.20% for the month.
In terms of the current positioning of the portfolio, we have maintained a relatively aggressive weighting to equities over this time, with the cash weighting of the fund decreasing from 12.3% at the end of September to just 8.9% by the end of October. Our systematic strategies all remain fully invested, while we have currently deployed around half of the 20% allocation we have to discretionary decisions.
As the charts below demonstrate, there has been little change to the sector exposure of the portfolio over the past month, the only major change worthy a mention is a reduction in materials stocks held to be just 5.8% of our total exposure. Interestingly, we currently hold four stocks that are members of both our momentum and quality models, being Super Retail Group (SUL), ARB Corp (ARB), Carsales.com (CAR), and Charter Hall Group (CHC), which explains why these companies are our greatest portfolio weights.
With the uncertainty of the US election now largely behind us, equity markets will begin discounting what 2021 has in stall. With Joe Biden holding a commanding position to take the presidency, while the Republicans will likely retain the Senate, we are currently looking towards at least 2 years of gridlock in Washington. This may actually prove a positive for US equity markets, as the proposed US corporate tax hikes by Biden will now likely stall, while the recent push by the Republicans to break up the tech giants will now be off the table. The big unknown will be the size of the next round of government stimulus, however post-election, both parties will be more eager to get a deal done. More locally, the RBA again cut interest rates this month, to a record low of 0.1%, which we believe will continue to provide a positive tailwind for risk assets, such as equities.
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
