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Affluence Investment Fund

Affluence Investment Fund Update – June 2016

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Home » Affluence Investment Fund Update – June 2016

To view the full Affluence Investment Fund Update – June 2016 in pdf format, click here.

As we draw a line under another financial year, we are pleased to have delivered good performance in a very challenging market period. The Fund delivered total returns of 10.1% for FY16. The Morningstar multisector growth index (made up of many similar funds) returned just 4.0% for the year. The ASX200 accumulation index return was just 0.6% for the year, including dividends. Super fund returns for the 2016 financial year are not yet out, but in the 12 months to 31 May the average balanced super fund delivered just 1.6% (according to SuperRatings). It’s fairly safe to say the 12-month number to June won’t be too far off that.

The key contributors to our better performance were our investments in listed investment companies, property funds and a gold miners fund. Our investments in small cap share funds also did very well. We had very little exposure to larger stocks, which performed very poorly. The difference in performance between small and large cap stocks over the past 12 months has rarely been so wide. We wrote more on this topic and our outlook for large cap stocks in our quarterly outlook. Being underweight to international stocks and holding virtually no bonds also added a lot of value during the year.

Overall our underlying managers performed very well. We held many of our investments for only part of the year as we expanded the portfolio after opening the Fund. Had we been fully invested for the entire financial year, performance would have been even better.

While we got many things right this year, we missed the continued growth in listed property. AREITs delivered 24.6% total return and global REITs 19.8% total return in Australian dollar terms. By contrast our unlisted property fund investments delivered strong double digit returns, but not as much as their listed counterparts.

For the month of June it was pleasing once again to see the Affluence Fund deliver a positive performance (+0.7%) while the ASX 200 Accumulation Index was down 2.5%. Amongst our 19 unlisted Fund investments, the worst monthly result was -2.8%, just a touch worse than the market. More than half delivered positive performance. Our LIC investments had a mixed month in June, but still outperformed the market by around 2.5%. The newly listed WAM Leaders Fund was a key positive contributor.

During the month the Pengana Resources Fund, one of our two resource investments, announced the Fund would close permanently and return all capital. The Fund struggled to gain significant traction over the past few years, a sign of continuing negative sentiment towards the resources sector. It is a shame and we wish the talented managers of this Fund the best of luck in finding a new home. During June we identified a new manager in this space to act as a replacement, which we are particularly excited about.

At the end of June, the Affluence Fund held investments in 19 unlisted funds, which represented 60% of the total portfolio. It also held listed investments in 17 listed investment companies and other securities, representing 20% of the portfolio. The balance of 20% was held in cash. If you’d like further details of the Affluence Fund portfolio at any time, just email us and we’ll provide it to you.

If you would like to invest with us and get access to over 30 of Australia’s best fund managers, we encourage you to utilise our online application facility. Just follow the link on our website. If you’d like to add to your existing investment, you can either complete the one-page form available on our website, or use the online facility. A reminder, the cut-off for this month’s investment intake is July 25th.

If you know anyone that may be interested in the Fund, feel free to let them know.

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