Model Portfolios – February
Every month we provide our readers with an update on a few of Powerwrap’s new and existing Separately Managed Accounts on the Powerwrap platform. Please keep in mind the information disclosed is general in nature and does not take into account your personal situation.
Top 10 Model Portfolios by Funds Under Administration
Blackmore Capital Equity Investors Monthly Portfolio Update
“The danger of focusing on maximising current earnings is you systematically underinvest. You really need to make sure you focus on the long term.” John McFarlane (Chairman-Elect, Westpac)
Equity markets are exhibiting the dualities of light and darkness. Having rallied to record highs in January markets are feeling the confidence that central banks remain overwhelming accommodative to do “whatever it takes” to support risk appetite. Furthermore, recent global supply manager surveys point to a modest recovery in economic activity. Yet, a sense of uneasiness pervades as left-field events (coronavirus) have suddenly emerged threatening and disrupting global trade and population movements.
Navigating equity portfolios where valuations are near record highs and where risks can emanate from multiple catalysts requires careful craftsmanship. Blackmore Capital’s portfolios remain diversified across industry sectors with an overriding emphasis on earnings quality, balance sheet resilience and management execution.
Blended Australian Equity Portfolio | Australian Equities Income Portfolio
The Blended Australian Equity Portfolio finished the month of January up 4.36% compared to the ASX 200 Accumulation Index up 4.98%. Positive contribution for the Blended Australian Equity Portfolio was driven by Woolworths Group (WOW), CSL Limited (CSL), and Commonwealth Bank (CBA). Whereas, Nearmap (NEA), Event Hospitality & Entertainment (EVT), and Alumina (AWC) weighed on attribution.
The Australian Income Portfolio finished the month of January up 4.49% compared to the ASX 200 Accumulation Index up 4.98%. Positive contribution for the Australian Income Portfolio was driven by Woolworths Group (WOW), Commonwealth Bank (CBA), and Wesfarmers (WES). Whereas, Event Hospitality & Entertainment (EVT), Alumina (AWC), and Insurance Group Australia (IAG) weighed on attribution.
Interestingly, the key drivers for the rally in the ASX 200 have been concentrated in the defensive sectors namely, consumer staples, healthcare and gold. By contrast, investors remain cautious towards companies dependent on tourism (Event Hospitality & Entertainment), growth companies that miss optimistic revenue targets (Nearmap), and companies directly exposed to the heightened risk of natural disasters (IAG).
Recent changes to the Australian Equities Income Portfolio
Purchased GPT Group (GPT)
We added GPT Group to the portfolio, an additional property trust exposure to the existing position in Viva Energy REIT. GPT is one of the largest and most diversified Real Estate Investment Trusts in Australia and is the oldest listed on the ASX, having floated in 1971.
Its $24.8b portfolio is comprised of 43% Retail, 41% Office and 16% Industrial-Logistics properties. It also manages two wholesale property trusts in which it holds equity stakes. While its property portfolio typically produces income growth of 2-3%, its growth profile has been supplemented by acquisitions, developments and funds management. Its resilience comes from diversity, a conservative balance sheet and its outstanding performance in managing the sustainability of the portfolio, for which it is a global leader.
While the property sector has broadly been strong, GPT still trades at a modest premium to the value of its net tangible assets with its gearing at 22%, compared to its target range of 25-35%. For this reason it has the potential to buy back stock, while still being able to fund its $1.8b development portfolio. Its underlying 2% income growth rate in the near term will be supplemented by acquisitions in Industrial and the lower cost of debt following the buy back of interest rate hedges. There is the benefit of leasing up of developments and recovery from downtime in the Office portfolio to come in the medium term, while its distribution is maintainable for a current yield of 4.3%.
GPT’s Retail portfolio is high quality but still faces a difficult period due to the performance of the retail sector. Notwithstanding this, GPT’s diversification, developments and optionality of its capital structure give the group considerable resilience and a growth profile greater than portfolio income growth.
Blended Australian Equities Portfolio
The Blended Australian Equities Portfolio commenced investing in Feb 2014. Since its inception, the portfolio has achieved a compound annual return of 12.5% compared to the ASX 200 Accumulation Index of 9.1%.
Australian Equities Income Portfolio
The Australian Equities Income Portfolio commenced investing in May 2014. Since its inception, the portfolio has achieved a compound annual return of 11.0% compared to the ASX 200 Accumulation Index of 9.1%.
IML Adviser Roadshow – March 2020
Please attend a combined IML and Loomis Sayles lunch presentation to hear from IML Portfolio Managers Hugh Giddy, Michael O’Neill and Simon Conn, as well as an Investment Specialist from the Loomis Sayles Global Equity Fund.
Our speakers will discuss where they are uncovering Australian and global equity opportunities in the current environment and how they identify key companies which meet their strict quality criteria.
Monday 9th March, 12:30 – 2:00pm
PARKROYAL Parramatta, Marsden room, 30 Phillip St Parramatta NSW 2150
Thursday 12th March, 12:30 – 2:00pm
QT Perth, Murray Room, 133 Murray St, Perth WA 6000
Friday 13th March, 12:30 – 2:00pm
The Hilton, Victoria Room, 223 Victoria Square, Adelaide SA 5000
Monday 16th March, 12:30 – 2:00pm
Customs House, The Long Room, 399 Queen Street, Brisbane QLD 4000
Tuesday 17th March, 12:30 – 2:00pm
Four Seasons Hotel Sydney, 199 George Street, Sydney NSW 2000
Thursday 19th March, 12:30 – 2:00pm
Grand Hyatt Melbourne, Mayfair ballroom 1, 123 Collins St, Melbourne VIC 3000
Download IML’s 20 Lessons ebook
Merlon Capital Webinar with Ben Goodwin and Neil Margolis.
The team discussed the outlook for gold, oil and iron ore in light of the trade war and provided an update on positioning and performance for the Merlon Australian Share Income Fund.
To find out more, download the webinar recording and presentation.
2020 Outlook and Opportunities
Exclusive Video Webinar with Coolabah Capital’s Chief Investment Officer Christopher Joye
Monday 17 February 2020 | 2pm AEST
Raymond Lee and Dan Siluk of Kapstream Capital.
The team discussed:
- The drivers for global rates in 2020
- The impact of coronavirus on the portfolio
- The positioning and performance of the Kapstream Absolute Return Income Fund
Please find below the presentation and webinar recording: