BlackRock Advantage Australian Equity (BAR0814AU) Report & Performance

What is the BlackRock Advantage Australian Equity fund?

BlackRock Advantage Australian Equity is an outstanding choice for investors seeking low-tracking-error quantitative equities exposure at a very low price. The Fund aims to achieve superior investment performance through providing returns that exceed those of the S&P/ASX 300 Accumulation Index by 2.20% p.a., after fees, over rolling 3-year periods, while maintaining a similar level of investment risk to the Index.

  • Minimum initial investment is $50,000.
  • Suitable for long-term investors seeking a broad exposure to the Australian stock market.
  • Considered a high risk.
  • Quarterly distribution frequency

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For BlackRock Advantage Australian Equity

BlackRock Advantage Australian Equity Fund Commentary June 30, 2023

The S&P/ASX300 Accumulation Index registered a second positive quarter (+0.99%). April started with a pause in the RBA hiking cycle, which facilitated a strong start. This was soon followed with a surprise resumption of rate rises in May driving markets down, before encouraging inflation data in June saw some cautious optimism return. The end of the quarter saw inflation continuing to decline (+5.6% Y/Y vs +7% Y/Y at the end of March) – giving the market hope that the RBA was winning its fight – although this was tempered somewhat by the observation that the reduction was largely due to volatile items. While unemployment still hovers around low levels (3.6%) there are clear signs the economy is slowing – GDP data came in lower than expected (+0.2% Q/Q), and the latest NAB Business Confidence Survey registered a negative reading (-4 index points). Some retailers have warned of lower volumes and footfall, which has shown somewhat in the monthly retail spending data, except for the May numbers, which surprised to the upside (+0.7% M/M), however this is thought to be because of endof-financial-year sales and discounts. Despite the signs of a slowdown, the RBA has raised concerns over low productivity and wage increases, as well as the rise in house prices, that may put upward pressure on inflation.

Information Technology (+18.4%) led all sectors for the second quarter – driven by two companies: Wisetech Global (+22.5%) and Xero (+33.0%). Xero has been a star performer this year after announcing a cost restructure and delivering a solid update earlier in the quarter. Financials (+3.2%) also contributed significantly to performance. Banks (+1.8%) lost ground in May due to concerns around the effect of increasing funding costs on their net interest margins, however, optimism in June around the inflation outlook saw this clawed back. Insurance (+10.7%) also performed well in the quarter with promising outlooks for inflation and pricing power. Health Care (-3.1%) and Materials (-2.6%) were the worst performers of the month. Health Care was dragged lower by index heavyweight CSL, which gave an update toward the end of the quarter highlighting a slower-than-expected return to pre-covid margins, while Materials was dragged lower by Metals and Mining, which had a disappointing quarter off the back of an underwhelming Chinese recovery.

The strategy underperformed in the June quarter, though still posted a small positive active return over the financial year. After a positive start to the year the strategy pulled back over April and May, before a strong June. Overweights in Utilities added the most, with contribution from underweights in Consumer Staples (beverages) and Health Care (hospitals and biotechnology). However, this was not enough to overcome modest underperformance across a number of sectors; overweights in Consumer Discretionary (specialty retail), and Industrials (airlines), along with underweights in Energy (oil and gas) and Real Estate (industrial and diversified). The main source of detraction was Earnings Quality, notwithstanding the signal group drove the positive June performance, whilst Market insights and Relative Valuation added.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
BlackRock Advantage Australian EquityBAR0814AUManaged FundsDomestic EquityAustralia Large Blend - Core / Style NeutralDomestic Equity - Large Cap Neutral IndexASX Index 200 Index133.96 M0.45%0.00%0.3%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
BlackRock Advantage Australian Equity0.8%1.13%12.57%5.86%8.44%10.84%13.4%13.41%-7.51%-12.55%-50.44%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
BlackRock Advantage Australian EquityDomestic Equity - Large Cap Neutral Index-1.72%-0.31%NA%NA%NA%1.053.97%2.26%0.940.99

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
BlackRock Advantage Australian EquityYesPO Box N43, Grosvenor Place, Sydney NSW 122002 9272 2200https://www.blackrock.com/auishares.australia@blackrock.com

Product Due Diligence

What is BlackRock Advantage Australian Equity

BlackRock Advantage Australian Equity is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Cap Neutral Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The BlackRock Advantage Australian Equity has Assets Under Management of 133.96 M with a management fee of 0.45%, a performance fee of 0.00% and a buy/sell spread fee of 0.3%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the BlackRock Advantage Australian Equity has returned 0.8% in the last month. The previous three years have returned 5.86% annualised and 13.41% each year since inception, which is when the BlackRock Advantage Australian Equity first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since BlackRock Advantage Australian Equity first started, the Sharpe ratio is NA with an annualised volatility of 13.41%. The maximum drawdown of the investment product in the last 12 months is -7.51% and -50.44% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The BlackRock Advantage Australian Equity has a 12-month excess return when compared to the Domestic Equity - Large Cap Neutral Index of -1.72% and -0.31% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. BlackRock Advantage Australian Equity has produced Alpha over the Domestic Equity - Large Cap Neutral Index of NA% in the last 12 months and NA% since inception.

What are similar investment products?

For a full list of investment products in the Domestic Equity - Large Cap Neutral Index category, you can click here for the Peer Investment Report.

What level of diversification will BlackRock Advantage Australian Equity provide?

BlackRock Advantage Australian Equity has a correlation coefficient of 0.99 and a beta of 1.05 when compared to the Domestic Equity - Large Cap Neutral Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on BlackRock Advantage Australian Equity and its peer investments, you can click here for the Peer Investment Report.

How do I compare the BlackRock Advantage Australian Equity with the ASX Index 200 Index?

For a full quantitative report on BlackRock Advantage Australian Equity compared to the ASX Index 200 Index, you can click here.

Can I sort and compare the BlackRock Advantage Australian Equity to do my own analysis?

To sort and compare the BlackRock Advantage Australian Equity financial metrics, please refer to the table above.

Has the BlackRock Advantage Australian Equity been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in BlackRock Advantage Australian Equity?

If you or your self managed super fund would like to invest in the BlackRock Advantage Australian Equity please contact PO Box N43, Grosvenor Place, Sydney NSW 1220 via phone 02 9272 2200 or via email ishares.australia@blackrock.com.

How do I get in contact with the BlackRock Advantage Australian Equity?

If you would like to get in contact with the BlackRock Advantage Australian Equity manager, please call 02 9272 2200.

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the BlackRock Advantage Australian Equity. All data and commentary for this fund is provided free of charge for our readers general information.

Historical Performance Commentary

Performance Commentary - May 31, 2023

A surprise RBA rate hike of 0.25% saw the S&P/ASX300 Accumulation Index drop at the start of May and continue to fall throughout the month to register a 2.53% decline.

The RBA caught many people by surprise at the start of the month by raising the target cash rate to 3.85%, citing the need to bring inflation back down to target within a reasonable timeframe. During the month, retail spending came in slightly higher than consensus expectations (+0.4%), although this was driven primarily by food inflation with a pull-back seen in discretionary goods spending. Other signs of a cooling economy were exhibited by a slightly rising unemployment figure (3.7%) from its near five-decade low the previous month. These signs prompted chatter around another rate hike pause on June 6th, however, the increasing monthly inflation print (+6.8% y/y) at the end of the month, along with apprehension around the planned Fair Work Commission wage rises and lagging productivity, have called this line of thought into question.

Losses were posted in Consumer Discretionary (-6.2%) and Consumer Staples (-4.5%) – driven by concerns around the impact of interest rate hikes on retail spending. Materials (-4.4%), driven by Metals & Mining, also saw losses, as did Financials (-3.2%) where concerns around pressures on Net Interest Margins saw banks detract. Information Technology (+10.4%) was the big winner of the month with a broadbased positive performance across the sector with Xero (XRO) a significant contributor after announcing annual results.

The strategy underperformed in May through three main sectors; Financials (underweight insurers), Consumer Discretionary (overweights in specialty retailers, particularly as cost-of-living pressures came to the fore), and Materials (overweights in miners, an underweight in a lithium miner that merged, and underweights in construction materials). Modest outperformance came from a small number of sectors led by Utilities. Earnings Quality was the worst performing insight group, followed by Timing and Earnings Direction.

Performance Commentary - April 30, 2023

The S&P/ASX300 Accumulation Index returned to positive ways (+1.85%) after negative returns in February and March. Encouraging inflation data coupled with the RBA rate hike pause contributed to a more sanguine environment, albeit with caution still in the air.

April began with a pause in the rate hike cycle following a softer inflation print at the end of March and cooling retail spending for February (+0.2% m/m). While there was growth in food-related consumption, the results of discretionary spending in non-food sectors were mixed, with some suggesting higher rates and cost of living pressures are beginning to have a more noticeable effect. Elsewhere 53,000 people found work in March, exceeding expectations, and holding the unemployment rate at a near five-decade low (3.5%). The end of April saw softer inflation data with quarterly CPI to the March quarter coming in at 7% y/y (down from a 30-year high of 7.8% y/y in December) with commentators wondering whether this would be enough for the RBA to hold the Cash Rate in May.

Real Estate (+5.0%) was the biggest performer of the month driven by diversified, and retail REITs. Positive performance was broad across the market with Information Technology (+4.5%), Industrials (+4.3%), Communication Services (+3.6%), and Health Care (+3.6%) also gaining well. The only detractor was Materials (-2.6%) driven by poor Metals & Mining performance with weakness in steel, copper, and diversified metals.

The strategy underperformed over the month of April. Underweights in the strong Real Estate sector detracted, along with poor positioning in Industrials (overweight airlines, underweight transportation infrastructure). Most other sectors also detracted, with only Consumer Discretionary contributing significantly (overweight specialty retail).

After adding over the first quarter, Earnings Quality was the worst performing insight group, followed by the other Fundamental insight; Relative Valuation. Machine Learned Timing insights and Linkages signals within the Market insights group added a small amount over the month.

Performance Commentary - March 31, 2023

The S&P/ASX300 Accumulation Index registered another positive quarter to start 2022 (+3.3%). A strong start to the year gave way to a weaker earnings season in February, with concerns of a potential recession, followed by a flat March where global banking concerns resulted in Australian banks finishing lower for the month.

Inflation ended 2022 peaking at +7.8% for the year, travel (domestic and international) and electricity contributing, though the February monthly indicator showed the rate of inflation had slowed. The wage price index rose over the year (+3.3%), which was the highest gain in over 10 years but was also significantly below inflation. GDP over 2022 was positive at +2.7%, with some slowing in the rate over the last three quarters. Services exports and consumption contributed, though household spending moderated. The latest unemployment data showed the rate had fallen to 3.5%, while the participation rate and hours worked both increased. The Australian dollar rose at the start of the year, then gave it all back as the US dollar strengthened, finishing the quarter at US67.1c.

The Consumer Discretionary sector (+10.7%) led all sectors, helped by retailers and services. Communications (+9.5%) and Consumer Staples (+7.5%) also performed well. Gains in the Materials sector (+7.3%) were driven by the mining sector where gold and steel companies did best. Weakness in the banks, particularly during March, resulted in negative performance from Financials (-2.7%), with Energy (-1.0%) also detracting.

The strategy started 2023 well, posting positive alpha each of the three months in the first quarter. Consumer Discretionary overweights led the sector performance, followed by favourable positioning in the Energy sector. Overweights in Health Care (equipment, technology) and Industrials (airlines, logistics) also added. Detraction came through underweights in a couple of takeover targets in the Materials (mining) sector, as well as underweights across a number of Information Technology names. Earnings Quality insights added the most, with some contribution from Market insights. The other three insight groups detracted modestly.

Performance Commentary - February 28, 2023

The S&P/ASX300 Accumulation Index pulled back in February (-2.5%) after a strong start to 2023. Increasing concerns of a recessionary environment caused by central banks fighting inflation, and forecast earnings from local companies which highlighted slowing demand, contributed to the negative market views.

The month started with the RBA raising rates for the ninth consecutive time, the +0.25% increase taking the rate to 3.35%. The Wage Price Index gained a lower than expected +0.8% over the quarter, or +3.3% over the year, noting the significant drop in real wages when compared to the latest +7.8% inflation print. The unemployment rate was higher at 3.7%, as both the number of employed fell and the number of unemployed gained (seasonally adjusted). Strength in the US dollar, on expectations of potentially higher rates in the US, contributed to the Australian dollar falling over the month to US67.3c.

The main sector that drove the market fall was Materials (-6.7%), as miners generally underperformed – lithium names in particular. The other large part of the market Financials (-3.1%) also detracted, with the banking sector dragging. On the positive side, Utilities (+3.4%) bounced back and Information Technology (+2.3%) gained.

The strategy had another month of small outperformance, even though the broader market reversed over reporting season. Gains came from a number of sectors, including through overweights in Consumer Discretionary (hotels, restaurant and leisure) and Real Estate (office REITs). Overweights in Financials (capital markets, insurance, and services) were also additive. The main sector to detract was Materials, predominantly through positioning in gold miners. Sentiment (Earnings Direction and Market insights) drove the outperformance, whilst Earnings Quality detracted.

Performance Commentary - December 31, 2022

The S&P/ASX300 Accumulation Index finished 2022 with a very positive quarter, gaining +9.1%, even though the month of December was negative (-3.3%). Overall, the Australian market fared relatively well, finishing 2022 only -1.8% lower, helped by resource and larger market capitalisation companies. The year was very volatile, with four months having gains of near 6% or more, and three months with losses of -6% or more. Uncertainty came from many sources including inflation and central banks efforts to fight it, the Russian invasion of Ukraine and impact on supply chain and commodities, the slowdown in China and their covid policy, the broader global and local recovery from covid, and the potential for a global slow down. All of this contributed to a market which oscillated between pessimism and exuberance over the year.

At the start of each month of this quarter, the RBA raised rates 25 basis points, moving the cash rate to 3.10%; a rise of 3.0% since they started raising rates in May 2022. The September quarter showed positive GDP +0.6% taking the twelve month gain to +5.9%, with gains in each of the last four quarters. Inflation (CPI) was also higher +1.8% for the quarter, or +7.3% annualised, pushed up by housing, gas and furniture. Wages showed some sign of tightening; the Wages Price Index rising +1.0% over the quarter or +3.1% for the year, as unemployment remained low at just 3.5%. The Australian dollar was stronger over the quarter finishing at US67.8c by year’s end.

Every sector in the market finished higher over the quarter, led by the Utilities sector (+28.0%) which was boosted by a takeover bid for Origin Energy. Materials (+14.7%) did well, underpinned by strong performance of miners particularly those mining gold and iron ore, as well as the large diversified miners. The bank led Financials (+10.8%) and the Real Estate (+10.4%) sectors also posted double digit returns. Consumer Staples (+1.7%) only modestly gained with food retailers lagging. Similarly, Information Technology (+2.0%) was held back by hardware companies, and Health Care (+2.1%) by biotechnology and pharmaceutical names.

Performance Commentary - November 30, 2022

The S&P/ASX300 Accumulation Index had another strong month through November, gaining +6.5%, driven by strong performance by miners. Most global markets were higher on more positive sentiment around central banks potentially moderating the magnitude and pace of rate rises, and signs that China were loosening restrictions around
Covid. This contributed to gains in commodity prices, including iron ore, which helped the rise in the local market.

The RBA continued to raise rates, though at the slower pace of 25 basis points, taking the cash rate to 2.85%. They maintain they will observe the data to assess the impact of the recent raises before making future decisions. One of those metrics, wages, showed some increase, as the wages price index rose +1.0% for the quarter or +3.1% for the year. Unemployment, another key metric, also fell to 3.4% from 3.5% the previous month. However, retail trade was slightly lower (-0.2%) as most sectors were weaker, particularly department stores, with only food retail still higher. At the end of the month the rolling annual inflation print at 6.9% was lower than in previous month; the main contributors being new dwellings, automotive fuel, and fruit and vegetables. The Australian dollar gained consistently over the month finishing at US67.0c by month end.

Every sector in the market finished higher, led by gains in the Utilities sector (+20.8%) though that was boosted by a takeover bid for Origin
Energy. The Materials sector (+16.1%) was also a very strong performer, due to mining companies rallying on better metal prices, and the growing possibility of China reopening. Communications (+2.2%) was the worst performing sector, with Financials (+2.5%) also lagging the other sectors given banks only gained +1.5%.

Performance Commentary - October 31, 2022

The S&P/ASX300 Accumulation Index was higher through October, bouncing back +6.0%, as the Australian market joined a global equity market rally. Investors looking for any signs that the central banks would not cause a global recession in their fight to get inflation under control.

The RBA unexpectedly slowed the rate of increase on the cash rate to 25 basis points, taking it to 2.6%, as they wanted to assess the impact of the rapid rate rise so far on inflation and economic growth. September inflation reached its highest level since 1990, up +1.8% for the quarter, +7.3% for the prior 12 months. Over this period non-discretionary inflation has been the driver, including new dwellings, fuel and food; though automotive fuel prices actually fell -4.3% over the September quarter. Inflation also remains goods driven, as services inflation has remained relatively constant. Exports were lower, led by iron ore and coal, through lower demand from China, whilst gas and minerals contributed. The unemployment data for the month remained constant, the overall level steady at a low 3.5%. The US dollar remained strong, with the Australian dollar weakening slightly to US64.2c by month end.

The Financials sector (+12.1%) led the gains with strong performance from the banks. The Real Estate sector (+9.3%) also did well as specialised and retail related REITs outperformed. Energy (+9.1%) companies continued their positive run, with Consumer Discretionary (+8.8%) also posting solid gains. Slowing demand for iron ore saw those miners lag, dragging down the Materials sector (-0.2%), whilst supermarkets did the same to the Consumer Staples sector (-0.2%).

The strategy was flat over the month, with mostly positive performance dragged down by a stock specific event. Gains were made across the majority sectors, highlighted by Materials and Industrials. However, an overweight in Medibank Private led to underperformance from the Financials sector, after the health insurer reported a significant breach of their customer data. Contribution from Timing and Earnings Direction insights were offset by detraction from Earnings Quality and Market insights over the month.

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