A long-only actively managed fund has seen the best return since March in the Australian equities sector, while funds that sought value from companies outside the top 20 on the Australian Securities Exchange (ASX) also saw a boost.
According to FE Analytics, within the Australian Core Strategies universe, the Australia equity sector returned and average of 14.43% from 31 March, 2020, to 31 May, 2020.
The fund that returned the most in that time period was Katana Australian Equity (27.16%) followed by Antares Ex-20 Australian Equities (25.71%), Ganes Focused Value (23.93%), Crescent Wealth Australian Equity (23.53%) and Merlon Concentrated Australian Share (21.93%).
In its March quarter review, Katana said since early March it had worked on two fronts to re-position the portfolio.
“Firstly, the team has been critically assessing every stock holding to ensure that we are maximizing the risk adjusted return within the portfolio,” it said.
“In this regard, the portfolio managers believe that the portfolio is strongly positioned to generate solid returns when the market inevitably recovers.
“Secondly, the team has been working to raise cash to capitalize on an expected flood of capital raisings.”
The fund had predicted there would be a significant number of ASX-listed companies likely to ‘tap investors’ in the coming weeks and months.
“The sheer scale and urgency of these capital raisings has already seen some exceptional bargains in the likes of Cochlear, Webjet and IDP Education,” it said.
“These raisings are likely to accelerate, and provide a once in a decade opportunity to build and add to positions at fire sale valuations. To this end, the fund’s cash has been increased to approximately 30%.”
The Antares Ex-20 fund invested in ASX 200, but excluded the top 20 funds, one of a few funds that offered diversification by avoiding the top 20 equities on the ASX.
Its top holdings included a2 Milk Company, Afterpay, Aristocrat Leisure, Aurizon Holdings, IDP Education, James Hardie Industries, Lendlease Group, Metcash, Qube Holdings and Seek.
The two other ex-20 funds in the sector made an appearance near the top performers, as the Yarra Ex-20 Australian Equities returned 21.56% and the BetaShares Australian Ex-20 Portfolio Diversifier ETF returned 19.87%.
Although not specifically an ex-20 fund, the Ganes Focused Value fund’s top holdings also included companies outside the top 20 of the ASX.
Its top holdings included automotive cooling parts designer PWR holdings, MFF Capital, plumbing and bathroom supplier Reece, Dominos and aerial imagery technology and location data company Nearmap.
“The rapid recovery in share prices has been surprising given that COVID-19 and its second order effects still have some way to play out,” the fund said in its June review.
“Fears of a second wave are not without merit as we are witnessing in Victoria and the Americas.
“In Australia, the economic hangover once Jobkeeper and Jobseeker payments are terminated or reduced, and the sugar hit from early access to super fund balances could also have unintended consequences.”
Best-performing funds in the Australian equity sector over the last two months to 31 May 2020
