Hi,
Welcome to our last update for 2022.
All three Affluence funds delivered good returns in November, as stock markets once again moved higher during the month. As values continued to increase, we took some profits and increased our cash levels. As always, detailed fund reports can be accessed below.
Also below, you’ll find our annual Melbourne cup inspired LIC tip sheet, including our three favourite picks for the next year. Keep reading to learn about some other things we found interesting this month, including consumer sentiment, a daring heist and Washington’s teeth.
Should you wish to invest with us, applications for the Affluence Investment Fund and Affluence Small Company Fund close on Friday 23 December. Applications for the Affluence LIC Fund close Friday 30 December. Go to our website and click “Invest Now” to apply online or access application and other forms for any of our funds.
As always, thanks for reading and for your continued interest in what we do. We wish you all the best for the holiday season and a Happy New Year.
If you have any questions or want to give us some feedback, reply to this email or give us a call.
Regards,
Daryl, Greg and the Affluence Team.
Affluence Fund Reports
Affluence Investment Fund
The Affluence Investment Fund increased 3.1% in November. Since commencing over eight years ago in November 2014, the Fund has returned 8.0% per annum, including monthly distributions of 6.5% per annum.
At month end, 59% of the portfolio was invested in unlisted funds, 15% in the Affluence LIC Fund, 13% in listed investments, 1% in portfolio hedges and 11% in cash.
The cut-off for monthly applications and withdrawals is Friday 23 December.
Affluence LIC Fund
The Affluence LIC Fund increased 3.5% in November. Since the fund commenced over 6 years ago, returns have averaged 11.9% per annum, including quarterly distributions of 8.1% per annum.
The average discount to NTA for the portfolio at the end of the month was approximately 17.5%. The Fund held investments in 27 LICs (77% of the Fund), 3% in portfolio hedges and 20% in cash.The cut-off for monthly applications and withdrawals is Friday 30 December.
Affluence Small Company Fund
The Affluence Small Company Fund increased by 4.7% in November. Since commencing in 2016, returns have averaged 9.4% per annum.
The Fund held 8 unlisted funds (56% of the portfolio), 8 LICs (15%) and 8 ASX listed Small Companies (26%). The balance 3% was cash and hedges.
Available to wholesale investors only. The cut-off for monthly applications and withdrawals is Friday 23 December.
The LIC Form Guide – all you need to know
November was Melbourne Cup month, and you know what that means. Once again, we rummaged through the LIC bargain bin, and delivered our sixth annual form guide for the Affluence LIC Cup. Our key LIC picks for the next 12 months include a small cap value play, US private equity funds and two debt LITs. You can read all about it by clicking the button below.
Things we found interesting
Chart of the month.
This chart measures Australian consumers’ perceptions of their finances relative to a year ago. It’s not great news. We’re hitting lows last seen in 2008. It’s another reason we think spending will slow dramatically in the new year.
Chart of the month 2.
Renewables are set to become the world’s leading source of electricity generation by 2025, according to a new report from the International Energy Agency.
Quote of the month.
“The 13% gain by the ASX200 over the past two months has been augmented disproportionately by the large financials sector, in the middle of the most significant reversal in housing prices in a generation, with a backdrop of the most aggressive interest rate hiking cycle most mortgage holders have seen in their adult lives.
Commonwealth Bank is up 18.9% over that two month stretch. To be sure, CBA is one of the best banking franchises in the world, but at almost 20x earnings and about 2.5x book value, the valuation does not seem to reflect the current situation of their primary exposure to Australian housing.
“Tony Hansen, EGP Capital November monthly report
Holiday reading.
As many regular readers would know, we are big fans of Oaktree Capital co-founder Howard Marks. He has just released his latest investor memo, which talks about how the investment world is experiencing just the third major secular change in the last 50 years. Higher inflation and higher interest rates have caused a reversal of the market conditions that prevailed for much of the last four decades. It’s a concept we very much agree with. If we’re right, it will provide a much friendlier environment for value investors like us. The full memo can be accessed here.
This month in (financial) history.
On the morning of 10 December 1968, four Nippon Trust Bank employees were transporting almost 300 million yen in a company car. That’s equivalent to about $25 million Aussie in today’s dollars. The metal boxes in the car’s boot contained bonuses for Toshiba’s Fuchu factory employees.
Just 200 metres from their destination, the bank staff were stopped in the street by a young uniformed officer on a police motorcycle. The officer informed them that their branch manager’s house had been blown up, and they had received a warning that dynamite had been planted in the transport car. The four employees exited the vehicle while the officer crawled under the car to locate the bomb.
Moments later, the employees noticed smoke and flames under the car as the officer rolled out, shouting that it was about to explode. When the employees retreated, the police officer hopped into the car and drove away. This would become notorious as Japan’s largest ever heist.
After a seven-year investigation without success, police announced in December 1975 that the statute of limitations on the crime had passed. And in 1988, the thief was also relieved of any civil liabilities, allowing them to tell their story without fear of legal repercussions. So far, no one has come forward, and the case remains unsolved to this day.
Vaguely interesting facts.
- The wood frog can hold off going to the toilet for up to eight months.
- Tsundoku is the act of acquiring books or other reading materials and not reading them.
- Jim Henson made his first Kermit puppet using his mother’s old coat and two halves of a ping pong ball.
- According to Welsh tradition, any infant whose nails are cut before the age of six months will become a thief.
- When he was sworn in as US president in 1789, George Washington had only one tooth remaining in his mouth. *
Source: mentalfloss.com, wikipedia.com.
* This final surviving tooth was finally pulled by Dr. John Greenwood in 1796. Washington allowed his dentist to retain this famous tooth as a momento. Greenwood eventually had the tooth inserted into a small glass display that he hung from his watch chain. Contrary to popular myth, George Washington’s replacement dentures were not made of wood. Instead, throughout his life, Washington employed numerous full and partial dentures constructed of materials including his own and others’ teeth. Other theories as to what was incorporated into Washington’s false teeth include cow and horse teeth, ivory, lead-tin alloy, copper alloy, and silver alloy.
And finally…bonus fact
According to a Japanese study, looking at cute animal pictures can boost your focus.
And so, as is the tradition at this time of year, we give you the annual Wildlife Comedy Awards. You can view all the winners and the finalists here. You’re welcome.
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This information has been prepared by Affluence Funds Management Limited ABN 68 604 406 297 AFS licence no. 475940 (Affluence) as general information only. It does not purport to be complete, and it does not take into account your investment objectives, financial situation or needs. Prospective investors should consider those matters and read the Product Disclosure Statement (PDS) or Information Memorandum (IM) offering units in the relevant Affluence Fund before making an investment decision. The PDS or IM for each Affluence Fund contains important notices and disclaimers and important information about each offer.
As with all investments, an investment in any Affluence Fund is subject to risks. If these risks eventuate, they may result in a reduction in the value of your investment and/or a reduction or cessation of distributions. Distributions are not guaranteed, nor is the return of your capital. Past performance is not indicative of future performance. It is important that you know that the value of your investment will go up and down over time, returns from each Fund will vary over time, future returns may differ from past returns, and returns are not guaranteed. All of this means that you could lose money on an investment in an Affluence Fund. As set out in the PDS or IM for each Affluence Fund, key risks include concentration risk, economic and market risk, legal and regulatory risk, manager and key person risk, liquidity risk, leverage risk and currency risk. Affluence aims, where possible, to actively manage risks. However, some risks are outside our control.
This information and the information in the PDS or IM are not recommendations by Affluence or any of its officers, employees, agents or advisers. Potential investors are encouraged to obtain independent expert advice before making any investment decision.
