Coal bans weighs heavy on IML fund

IML resources equities Aussie equities China

16 March 2021
| By Laura Dew |
image
image
expand image

Investors Mutual has been a victim of China’s ban on coal imports with one of its resources holdings having downgraded its profit expectations as a result of the ban.

In an webcast, portfolio manager Hugh Giddy said a negative contributor to performance was Orica which was affected by a coal import ban from China and foreign exchange effects.

Coal was one of several items banned for import into China at the end of last year as trade tensions escalated between China and Australia.

Giddy said: “A negative for us was Orica which said profits would be below expectations as coal mining was weak with China banning imports of Australian coal. They are one of many customers but it did cause interruptions to coal mining volumes in the period. It was also hurt by foreign exchange translation as the Australian dollar has been quite strong against the US dollar”.

However, the firm said it felt comfortable with its level of resources exposure given the elevated levels of commodity prices and had added to Orica on share price weakness in its Concentrated Australian Share fund.

Shares in Orica were down 15% since the start of the year to 12 March, 2021 compared to returns of 3.8% by the ASX 200 over the same period.

Meanwhile, the firm said positive performance had come from Nine Entertainment and Newscorp due to the two firms’ real estate arms. Since the start of the year, Newscorp was up 40.8% while Nine had risen 31%.

Share price of Orica, Newscorp and Nine versus ASX 200 since start of the year to 12 March

“They are doing well because people are interested in the news, people want to know what is happening with COVID which is a major interest. They are also benefitting from the rebound in housing which is doing a lot better, who would have thought we would have another housing boom but the low interest rates and much higher employment than people thought means people are out buying houses and house prices are going up,” Giddy said.

“Newscorp and Nine both have online classified ads, Nine has Domain and Newscorp has realestate.com and those are significant portions of those two businesses.”

The IML Concentrated Australian Share fund had lost 2.7% over one year to 28 February, 2021, according to FE Analytics, versus returns of the 10.1% by the Australian equities sector within the Australian Core Strategies universe.

Performance of IML Concentrated Australian Share fund versus Australian equity sector over one year to 28 February 2021

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

2 days 18 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

1 week ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 5 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 6 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

5 days 22 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

5 days 1 hour ago