The Spheria Opportunities Fund returned 1.8% (after fees) during the month of May, outperforming the S&P/ASX Mid-Small Accumulation Index by 1.5%.
Performance
1 Spheria Opportunities Fund. Returns of the Fund are net of applicable fees, costs and taxes.
2 Benchmark is the S&P/ASX Mid-Small Accumulation Index.
3 Inception date of the current investment strategy is 11th July 2016. The Fund was established in June 2010. Past performance is not a reliable indicator of future performance. All p.a. returns are annualised.
Overall Commentary
Top 5 Holdings
Market Cap Bands
Source: Spheria Asset Management
Active Sector Exposure
Source: Spheria Asset Management
Markets
The “flight to safety” thematic benefited performance due to the fund’s overweight exposure to mid-cap companies. Interestingly, several larger positions that we have owned and that have lagged in recent years have turned around significantly since late last year including A2 Milk (A2M.ASX), Alumina (AWC.ASX) and Whitehaven Coal (WHC.ASX). This has driven a resurgence in the fund’s absolute and relative performance which had been under pressure for most of 2023.
Notable detractors for the month were Iluka Resources (ILU.ASX), Bapcor (BAP.ASX) and Iress (IRE.ASX). The Iluka share price has been volatile due in part to its rare-earth exposure, which we view as a cheapish call option for the company. Bapcor – a smaller position in the fund – downgraded earnings expectations in May, whilst Iress had a cyber security incident which affected sentiment and the share price.
In our opinion, the Australian economy is experiencing “recession like” conditions which though negative for company profits in the shortnterm could paradoxically precipitate an easing of monetary policy in the not-too-distant future. Given the market tends to price in advance of such shifts, we believe there is currently an attractive window to buy cyclically exposed companies that in many cases are plumbing multi-year lows and, in some cases, all-time lows. We have started gradually rotating the fund away from its overweight to mid-caps to reduce the underweight to smaller-caps where earnings and share prices have been under the most pressure.
Platform Availability List
If a fund is not available on your preferred platform, please contact us.
Please check with your platform for minimum investment requirements and fees.
HUB24
Macquarie Wrap
mFund
Netwealth
Praemium
| Spheria Opportunities Fund | value |
|---|---|
| Benchmark | S&P/ASX Mid-Small Accumulation Index |
| Investment Objective | Outperform the S&P/ASX Mid-Small Accumulation Index over the medium to long term |
| Suggested Minimum Investment Timeframe | 5 years or more |
| Investing Universe | Primarily listed companies outside the top ASX 50 listed companies by market capitalisation and companies listed on the New Zealand Stock Exchange with an equivalent market capitalisation |
| Suitable Investor Profile | This product is intended for use as a minor allocation for a consumer who is seeking capital growth and has a very high risk and return profile for that portion of their investment portfolio. It is likely to be consistent with the financial situation and needs of a consumer with a 5-year investment timeframe and who is unlikely to need to withdraw their money on less than one week’s notice. |
| Risk | Vey high |
| Holdings | Generally 20-65 stocks |
| Distributions | Half-Yearly |
| Fees | 0.99% p.a. Management fee & 15% performance fee of the Fund’s excess return versus its benchmark, net of management fee. |
| Portfolio Allocation1 |
80-100% Australian and New Zealand equities 0-20% cash and cash equivalents |
| Expected Turnover | 30% - 40% |
| Style | Long only, risk aware |
| APIR | WHT0025AU |
| Minimum Initial Investment | $25,000 |
Fund Ratings
Further Information
For more information, please contact Pinnacle Investment Management Limited
on 1300 010 311 or email distribution@pinnacleinvestment.com
Disclaimer
This communication is prepared by Spheria Asset Management Pty Limited (‘Spheria’) (ABN 42 611 081 326, Corporate Authorised Representative No. 1240979) as the investment manager of the Spheria Opportunities Fund (ARSN 144 032 431) (the ‘Fund’). Pinnacle Fund Services Limited (‘PFSL’) (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Funds. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.
Link to the Product Disclosure Statement
Link to the Target Market Determination
For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email service@pinnacleinvestment.com
This communication is for general information only. It is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so. Past performance is for illustrative purposes only and is not indicative of future performance. Unless otherwise specified, all amounts are in Australian Dollars (AUD).
Whilst Spheria, PFSL and Pinnacle believe the information contained in this communication is reliable, no warranty is given as to its accuracy, reliability or completeness and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the relevant laws, Spheria, PFSL and Pinnacle disclaim all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information. This disclaimer extends to any entity that may distribute this communication.
Any opinions and forecasts reflect the judgment and assumptions of Spheria and its representatives on the basis of information available as at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this communication is prohibited without obtaining prior written permission from Spheria. Pinnacle and its associates may have interests in financial products and may receive fees from companies referred to during this communication.
This may contain the trade names or trademarks of various third parties, and if so, any such use is solely for illustrative purposes only. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with, endorsement by, or association of any kind between them and Spheria.
Zenith Disclaimer: The Zenith Investment Partners (‘Zenith’) (ABN 27 103 132 672, AFSL 226872) rating (assigned Spheria Opportunities Fund – February 2024) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual, including target markets of financial products, where applicable, and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at Fund Research Regulatory Guidelines.
Lonsec Disclaimer: The Lonsec rating (Spheria Opportunities Fund issued September 2023) presented in this document is published by Lonsec Research Pty Ltd (‘Lonsec’) (ABN 11 151 658 561, AFSL 421445). The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. They are not a recommendation to purchase, sell or hold Affiliate Name products, and you should seek independent financial advice before investing in these products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the Fund Manager for researching the products using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at: https://www.lonsec.com.au/investment-product-ratings/.
