Contact Australian Ex-50 (EVO4741AU) Report & Performance

What is the Contact Australian Ex-50 fund?

Contact Australian Ex-50 Fund balances growth and income to provide access to a concentrated portfolio of quality Australian companies that sit outside the S&P/ASX 50 Index. This strategy seeks to find long term investments in tomorrow’s leaders.

  • Derivatives, short selling and gearing will not be used.
  • The strategy applies Contact’s long term focused investment philosophy.
  • The Fund seeks to achieve strong relative returns in excess of the benchmark, through a concentrated portfolio of high quality small to medium sized ASX listed companies.
  • Typical stock numbers is 20-40 stocks.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Contact Australian Ex-50

Contact Australian Ex-50 Fund Commentary September 30, 2023

Volatility returned in September as bond market gyrations flowed through to equity markets. With reporting season behind us, the intense focus on macroeconomic drivers was again a feature. Most developed markets closed the month lower, with the biggest drawdowns occurring in the United States (down approximately 5%). The Contact Australian Ex-50 Fund continued its recent history of strong relative performance in September. The Fund declined by 2.8%, however this fared far better than both the S&P/ASX Small Ordinaries Index (-4.0%) and the S&P/ASX Mid-cap 50 Accumulation Index (-4.6%).

We added to our highest conviction positions in September amid negative market sentiment, which allowed us to buy at (what we consider) attractive prices. We have discussed Ampol Ltd in recent months and discuss other key positions below.

We encourage our investorsto read the latest BKI Investment Company Quarterly Report, whereby we discuss the power of recurring revenue streams. In the note, we undertake a deeper dive into IPH Limited (IPH). IPH is a leading intellectual property (“IP”) services firm, specializing in patents and trademarks. IPH operates in over 10 IP jurisdictions and employs over 1,300 people. In FY23, IPH generated almost $500 million in revenue and $170 million EBITDA.

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.
Contact Australian Ex-50EVO4741AUManaged FundsDomestic EquityAustralian Mid CapDomestic Equity - Mid Cap IndexASX Index MidCap 50 Index0.00 M0.75%0.00%0.5%

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.
Contact Australian Ex-50-4.92%-7.04%-0.09%1.4%6.22%11.79%14.27%13.83%-7.62%-20.15%-20.15%

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.
Contact Australian Ex-50Domestic Equity - Mid Cap Index4.73%-6.83%0.38%-0.19%-0.19%0.984.31%9.78%0.940.85

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Contact Australian Ex-50Yes---

Product Due Diligence

What is Contact Australian Ex-50

Contact Australian Ex-50 is an Managed Funds investment product that is benchmarked against ASX Index MidCap 50 Index and sits inside the Domestic Equity - Mid Cap 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 Contact Australian Ex-50 has Assets Under Management of 0.00 M with a management fee of 0.75%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Contact Australian Ex-50 has returned -4.92% in the last month. The previous three years have returned 1.4% annualised and 13.83% each year since inception, which is when the Contact Australian Ex-50 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 Contact Australian Ex-50 first started, the Sharpe ratio is 0.41 with an annualised volatility of 13.83%. The maximum drawdown of the investment product in the last 12 months is -7.62% and -20.15% 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 Contact Australian Ex-50 has a 12-month excess return when compared to the Domestic Equity - Mid Cap Index of 4.73% and -6.83% 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. Contact Australian Ex-50 has produced Alpha over the Domestic Equity - Mid Cap Index of 0.38% in the last 12 months and -0.19% since inception.

What are similar investment products?

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

What level of diversification will Contact Australian Ex-50 provide?

Contact Australian Ex-50 has a correlation coefficient of 0.85 and a beta of 0.98 when compared to the Domestic Equity - Mid Cap 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 Contact Australian Ex-50 and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Contact Australian Ex-50 with the ASX Index MidCap 50 Index?

For a full quantitative report on Contact Australian Ex-50 compared to the ASX Index MidCap 50 Index, you can click here.

Can I sort and compare the Contact Australian Ex-50 to do my own analysis?

To sort and compare the Contact Australian Ex-50 financial metrics, please refer to the table above.

Has the Contact Australian Ex-50 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 Contact Australian Ex-50?

If you or your self managed super fund would like to invest in the Contact Australian Ex-50 please contact via phone or via email .

How do I get in contact with the Contact Australian Ex-50?

If you would like to get in contact with the Contact Australian Ex-50 manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Contact Australian Ex-50. All data and commentary for this fund is provided free of charge for our readers general information.

Historical Performance Commentary

Performance Commentary - August 31, 2023

The Contact Australian Ex-50 Fund continued its recent history of strong relative performance in August. In a busy month dominated by Reporting Season, the Fund returned +0.6% in a declining market. By comparison, the S&P/ASX Small Ordinaries Index (-1.3%) and the S&P/ASX Mid-cap 50 Accumulation Index (-1.3%) closed lower. The Fund has performed particularly well in recent months as our quality businesses have delivered solid results. In the last three months, the Ex50 Fund has increased by 8.7%, outperforming the Small Ordinaries Index (+2.2%), Mid-cap 50 Accumulation Index (+4.2%) and remain focused in achieving a 10% p.a. total return.

We continue to believe that we are in a stock pickers market and a focus on quality companies remains the most sensible strategy. August 2023 provided clear evidence of our entry into a more challenging phase of the economic cycle. While revenues generally exhibited strength, the driving force behind this upturn often stemmed from price escalations rather than volume expansion. Profit margins came under strain, frequently attributed to rising labour costs, albeit alleviated by declining freight rates and energy costs. A notable development is the escalating cost of debt, as interest payments emerged as a formidable challenge for enterprises grappling with stretched Balance Sheets.

A significant portion of the challenges mentioned above had already been anticipated. Consequently, the reporting period exceeded pessimistic expectations. Even the mere notion that earnings might not plummet triggered a substantial upward revision of share prices in several cyclical industries.

August was important for the Fund for more than just the companies that outperformed. Importantly, our focus on quality meant that we avoided any disastrous results. Generally, the companies that dragged on Fund performance had arguably enjoyed too strong a run into the result (Flight Centre and Smartgroup are two examples).

Ampol Limited (ALD) delivered a strong interim result, signalling strong underlying business momentum. We remain optimistic on long-term refining margins given increasing supply constraints, which is complemented by Convenience retail and a robust Balance Sheet. We expect further capital management initiatives in the near-term.

Performance Commentary - July 31, 2023

The Contact Australian Ex-50 Fund gained 4.9% in July. This was a pleasing performance against both the S&P/ASX Small Ordinaries Index (+3.6%) and the S&P/ASX Mid-cap 50 Accumulation Index (+4.4%). The Fund has performed particularly well over the past six months as many quality businesses have reiterated or increased their earnings guidance. We believe that we are in a stock pickers market and that a focus on quality companies remains the most sensible strategy.Global markets moved higher across the board in July. The consensus view now seems to expect that we are very close to the peak in interest rates. Indeed, we may already be there given the moderation in the rate of growth in inflation. The Reserve Bank of Australia seems eager to take a “wait and see” approach in the near term and monitor consumer behaviour and the unemployment rate.

We added Redox Limited (RDX) to the portfolio in early July as the company listed on the ASX. Redox is a traditional Industrial company – it is a leading supplier of chemicals, ingredients and raw materials to a myriad of industries. It was established in 1965 and is still managed by the founding Coneliano family, which owns 46% of the listed company. RDX generates a high proportion of recurring revenue, strong returns on capital and has significant growth opportunities via market share gains. Over time, we expect RDX to generate steady EPS growth and offer a compelling dividend yield. The IPO was priced just under 14x P/E multiple, which we considered attractive.

We wrote about Flight Centre (FLT) last month and the stock was a standout performer in July, increasing by 23%. The company increased its profit guidance for FY23 by approximately 10% at the EBITDA level. Founder and managing Director, Graham Turner said: “Overall, we are pleased with our continued recover as demand has generally rebounded solidly across both our leisure and corporate travel businesses.”

Alliance Aviation Limited (AQZ) also generated strong returns in July following an increase in its profit outlook, which surpassed market expectations. The AQZ announcement suggests that earnings will be almost 15% better than expected. It also disclosed the acquisition of four additional E190 aircraft to satisfy increasing demand. The secondhalf profit upgrade indicates increased wet lease flight hours from additional capacity and higher utilisation. AQZ has invested heavily in expanding its fleet in recent years. As demand increases, we believe that the company is well positioned to drive solid earnings growth. There is also corporate activity bubbling away in the background, with a potential takeover by Qantas. The ACCC has expressed concern on competition grounds, however if the deal does progress, there is likely to be a material AQZ share price increase based on the current bid of $4.75.

GQG Partners (MTS) also delivered a strong update regarding both its Funds Under Management growth and investment performance. Unlike many peers, GQG continues to generate solid net inflows, yet it is being priced by the market as a business in decline. We remain positive on the outlook for GQG and are backing the founder-led management team.

Performance Commentary - June 30, 2023

The Australian market (as measured by the S&P/ASX 300 Accumulation Index) increased by 1.7% in June. As has been the case for some time, large caps outperformed small caps. The S&P/ASX 20 increased by 2.3%. The S&P/ASX Small Ordinaries Index was flat. By comparison, the Fund delivered a pleasing 3.0% return for the month.

Given the barrage of negative commentary over the past twelve months, some readers will be surprised by the returns generated by equities markets over fiscal 2023. Notwithstanding an environment of high inflation, a war in Ukraine, wage pressures, slowing earnings growth and unprecedented pace of interest rate rises, the market pushed higher. Quite a bit higher. The S&P/ASX 300 Accumulation Index generated a very robust 14.4% return for the year, yet the Small Ordinaries lagged, delivering 8.4%. The Fund return was 9.4%. The past six months was particularly solid, with a 5.5% return for the Fund against the S&P/ASX Small Ordinaries (+1.3%) and the S&P/ASX Midcap 50 Index (+4.6%). We put this down to a focus on Quality and Valuation.

Metcash Limited (MTS) delivered a solid FY23 result that was ahead of expectations. All pillars (Food, Liquor and Hardware) continued to perform well, with a notably strong performance from the Total Tools business. Revenue increased almost 6% and EBIT up 8% to record levels. The Result Presentation and subsequent Management meeting highlighted the gains that have been made by MTS over the past three years. MTS is now a larger, more diversified and stronger business, which has grown EBIT by 50% (aided by Hardware M&A). Underlying EPS has increased by >40% and Group ROFE exceeds 30%. As we’ve been saying for some time, we find it difficult to comprehend why MTS continues to trade at such a stark PE multiple discount to Coles, Woolworths and Wesfarmers. MTS remains one of our highest conviction positions in the portfolio.

Performance Commentary - May 31, 2023

The Australian market declined in May, with the All Ordinaries down 2.6%. The Fund declined by 2.0% during the month, lagging the S&P/ASX Midcap 50 Index, which was flat, yet outperforming the Small Ordinaries Index, which declined 3.3%. IT was the best sector in May, which has been rising with US technology names. Consumer Discretionary lagged the market on the back of trading updates from many retailers that signalled a weakening in consumer spending.

Consumer names were not helped by the RBA, which increased rates by 25 bps in early May, catching the market offguard. Inflation has persisted throughout the month and at the time of writing, the RBA has increased rates yet again in early June to a decade high 4.10%. Lithium stock Allkem Limited (AKE) increased by 21% in May as it agreed to an all stock merger of equals with US Livent Corporation. A large rationale for the merger is synergies. Both companies have brine operations in Argentina and spodumene projects in Quebec. Following the significant jump in the share price, we took the opportunity to take some profits in AKE.

Our investment case was tied to the growth in the Lithium market that was underpinned by AKE’s strong Balance Sheet and cash flow generation. While those characteristics persist, we thought it appropriate to reduce exposure into recent strength. We still have almost 3% of the portfolio in the stock. We also reduced our holding in IGO Limited following a similarly strong run, which sees the stock trade above our valuation.

Performance Commentary - April 30, 2023

Equity market managed to eke out gains in April. It was a month of mixed signals. The US quarterly earnings season is generating better than expected results and the Chinese reopening continues to gain momentum. On the other hand, segments of the US regional banking system are fragile and inflation remains stubbornly high across the globe. Most developed equity markets closed the month higher, led by India (+4.2%) and the FTSE (+3.4%). The S&P500 increased by 1.4%.

The Australian market performed relatively well, rising 1.8% for the month (based on the S&P/ASX 300 Accumulation Index). Small and mid-cap Australian shares outperformed their larger counterparts. The Small Ordinaries Accumulation Index increased by 2.8%. By comparison, the Fund increased by 2.2% in March.

Despite initial fears following the March disclosure of a cyber security incident. IPH Limited (IPH) was one of the best performers in April, increasing by 10%. An update from management highlighted a relative immaterial impact to date and that revenue would likely be deferred, not lost. IPH is a leading intellectual property services firm, dealing with patents and trademarks. In Australia, it has a 35% market share. IPH has global growth opportunities. It is a defensive business with a high proportion of recurring revenue and strong cash flow generation. We added to the position recently and remain optimistic on the company.

We are frustrated with the ACCC announcement that it would oppose Qantas’ acquisition of Alliance Aviation Services (AQZ) on competition grounds. Qantas announced that it intends to seek more information from the ACCC regarding the decision, requesting a meeting with the ACCC. Qantas remains adamant that the acquisition would not substantially lessen competition in any market and noted that its competitor Rex’s acquisition of National Jet Express from Cobham Aviation was unopposed, receiving ACCC clearance in 11 days. As a reminder, in May 2022, Qantas proposed a scheme of arrangement to fully acquire the remaining 80% of AQZ at $4.75/share. AQZ closed April at $3.10.

Bank of Queensland (BOQ) delivered a soft interim result that highlighted the intensifying competition in the Australian Banking Industry for both mortgages and deposits. Pressure on net interest margin has intensified. While BOQ is only a small position for the Fund, we intend to be patient for now given the discount to book value that the shares are currently trading at. The ME Bank acquisition is integrating well and should deliver on synergies. Chairman-come-CEO Patrick Allaway is eager to reduce the cost base. We expect to see any sign of good news result in a material re-rating of the stock. With mixed signals from a macroeconomic perspective, we believe that this is a stock pickers market and an environment we thrive in – one where fundamentals and quality matters.

We started to see a mean reversion in small stocks versus large stocks in April and believe this could continue given the extent of dispersion over the past two years. The Fund remains invested in high quality companies that are profitable, generate solid returns and offer an income stream. At a P/E multiple of just 12.6x, we believe that there is inherent value available.

Performance Commentary - March 31, 2023

The Fund retracted slightly in March in a more volatile Equities market. At a macro level, the failure of several US regional banks weighed on sentiment early in the month before the US Fed provided liquidity support. As fears of contagion of a run on the banks subsided, investors focused on the likely change in policy action by Central Banks. We witnessed the start of a change in behaviour in early April as the RBA paused on its rate hiking.

The Fund declined by 2.6% in March, which was broadly in line with the S&P/ASX Mid-cap 50 Accumulation Index.

After a busy February reporting season, there was less stock specific news in March. Of note for the Fund, Kelsian Limited (KLS) announced the acquisition of All Aboard America! Holdings, a US based bus business providing contract and charter coach passenger services. The purchase price of almost A$500 million will be funded through a combination of debt and equity. We took up our rights under the nonRenounceable rights issue at $5.55.

The transaction opens the door for significant growth in the US for Kelsian. AAAH is the 4th largest motorcoach operator in the US with 1,069 vehicles. For reference, KLS Australian bus segments has ~3,000 buses. The US market is large (over $30 billion) but very fragmented. The business has a high degree of recurring revenue and solid EBITDA margins of 25%. The majority of the management team (including the founders) will remain with the business.

Performance Commentary - February 28, 2023

The Fund performed well versus the Australian market as investors focused on fundamentals during the February Reporting Season. Quality prevailed. While the Ex-50 Fund declined by 0.7% in a very volatile month, it was pleasing to see significant outperformance of both the S&P/ASX Small Ordinaries Accumulation Index (down 3.7%) and the S&P/ASX Midcap 50 Accumulation Index (down 3.2%). Reporting Season is always an interesting time for bottom-up stock pickers such as Contact Asset Management. Our investment approach involves a robust process whereby we analyse the individual qualitative and quantitative characteristics of companies. At a high level, we noted consistent themes from company results: tight labour supply, rising interest expense, a cautious consumer and ongoing inflation. Top line momentum was strong; however, this was primarily driven by pricing increases rather than volume growth.

Companies with limited pricing power were treated harshly by the market.Despite the cautious tone that has set into market sentiment, there were several pleasing results that give us cause for optimism. After enduring challenging operating conditions over the past two years, Smartgroup Corporation’s (SIQ) operating momentum is improving. Novated leasing leads have been buoyantwhile supply chain pressures on vehicle availability are only just beginning to abate. As the environment normalises, we expect sales to improve (as orders are converted) and costs to drop (as redundant service expenses are removed ) at a better-than-expected trajectory. Growth in EVs is an unappreciated additional boost to activity as are benefits from the recent investment in digital platforms. SIQ has a strong Balance Sheet with near zero debt forecast.

The better-than-expected dividend highlights management’s confidence in the outlook. A forward-looking P/E of 11-12 times suggests excellent value in Contact’s opinion. As noted last month, both Hub24 (HUB) and Netwealth (NWL) are beneficiaries of rising interest rates, which lifted margins on cash balances. Market share gains from the incumbents continues. We added Flight Centre (FLT) to the portfolio recently. Strong momentum is emerging in the corporate business, which now accounts for over 50% of earnings. Leisure is also recovering, yet still has upside with Australian arrivals at c70% pre-Covid levels. The resumption of Chinese tourismwill help drive growth. FLT’s Balance Sheet is in a sound position following the recent raising.

We expect this founder-led business to return to dividend payments next financial year. Kelsian Group (KLS) was another investment that delivered a pleasing result. The earnings stream from the buses business is particularly resilient and has inflation protection mechanisms in place, which are valuable in the current climate. Similar to FLT, KLS noted strong forward bookings in Marine & Tourism, with scope for further price increases. We continue to believe that the Portfolio is well positioned, with attractive Fund metrics offering an enviable combination of Quality, Value and Growth. We seek to deliver a long-term return of 10% p.a. through a disciplined investment process that avoids unprofitable and high-risk companies.

Kind words from Aussies managing
their own self funded futures

  • SMSF Mate is a unique website because it has ideas about how to approach SMSFs, insurance and other financial topics that come straight from first hand experience. It's much more useful than what you find on all the other financial websites that just offer generic info that you could easily get on the ATO's website. It's also nice to know there's no financial incentive behind the information, it's legitimately there to help people understand self-managed super funds and how to get the most out of them, not to get an affiliate commission from a broker or other financial services provider. The investment product information is also incredibly useful, I've never seen this kind of functionality on any other website that let's you look at such a wide range of products, sort by what info is most interesting or important to you, and subscribe to updates for different funds and financial products all in one place. Definitely worth checking out if you own or are considering an SMSF!

    David G, Self-Employed, SMSF Owner
  • SMSF Mate provides a unique insight into superannuation and financial topics in a way that is easier to understand than conventional websites. The colloquial nature of the site makes it easy to understand and they often speak about complicated topics in lamens terms so I can wrap my head around them. The investment product information is a great way to research funds that I am interested in investing in with my SMSF and there is a lot of helpful information on the site for better structuring my investment portfolio. In comparison to other websites which offer similar information, SMSF Mate excels as the information is free to access whereas many other sites charge a subscription fee for the same thing. Overall, I think SMSF Mate is a great resource for SMSF trustees and is worth looking at for a variety of super-related topics. Thanks.

    Tim B, Business Owner, SMSF Trustee