JUNE 2024 QUARTER REPORT
The fund recorded a negative quarter with the unit price down 2.2% while the market also fell a modest 1.2% for the same period. For the past year the fund has delivered a return of 24.4%, outperforming the broader market return of 11.9% by 12.5%
Over the longer term the fund has provided a return of 10.7% per annum for the past 20 years and 11.8% per annum since inception in 2002. The fund has
outperformed the market by 2.8% per annum after all fees and expenses since inception. A $10,000 investment made at inception is now worth $111,843 against $65,054 for the ASX300 benchmark.
The fund has enjoyed a second strong year of performance with the unit price up 24.4% following on from last year’s 26.2%. The fund has also outperformed the market in 4 of the last 5 years. This should not be considered normal.
There hasn’t been any change to our top 10 holdings since the last quarter, although we have trimmed our holdings in Altium and PSC Insurance. Both companies are currently subject to takeover offers and as such act as proxies for cash.
These funds were used to establish a new position which we will add to materially in the coming weeks and months as further funds become available. I
expect the two new positions established in the past few months will become top 10 holdings in due course.
Our cash weighting is 3.1% at the end of June.
A distribution of 6.42c will be paid shortly to unitholders that have elected to receive their distribution in cash.
While the table on the first page shows the performance of the fund over various time frames the graph above provides a visual representation of the fund against the ASX300 Accumulation Index benchmark since inception highlighting the benefits that accrue to compounding over the long term.
Portfolio Performance
The main contributors to fund performance during the quarter were AUB Group, Altium and PSC Insurance with two of these companies, namely Altium and PSC Insurance the subject of takeover offers. While these bids offer shortterm gains, they are no reason for doing celebration laps. It removes two of the better performing businesses within the portfolio comprising slightly more than 10% of the fund and will not be easily replaced.
The main detractors for the quarter were a 10% fall in the Reece share price and PWR Holdings which fell modestly. For the full year, by far our biggest winner was Lovisa which rose 70% and at one point in May was briefly our largest holding. Other large contributors were PWR Holdings up 26%, Altium up 85%, and MFF Capital up more than 40%. As highlighted in the March update MFF Capital enjoyed a strong year as its international portfolio rose strongly after a few years of modest returns.
We only had two companies that detracted from portfolio performance, Domino’s Pizza and Smartpay. Smartpay was one our biggest winners last year when its share price rose 180% so it’s not surprising to give up some of those gains. The business itself continues to grow with good growth prospects. While repeated profit downgrades and a lacklustre investor day has seen investors lose confidence in management at Domino’s.