MLC Wholesale Australian Share Fund fund is designed to be a complete portfolio for the Australian shares asset class, and aims to deliver growth by using investment managers that invest and diversify across many companies and securities within that asset class. This fund aims to outperform the S&P/ASX 200 Total Return Index, before fees and tax, over 5 year periods.
The Australian share market posted relatively flat returns over the June 2023 quarter. The S&P/ASX200 Total Return Index (‘market benchmark’) returned 1.01% and the MLC Australian Share Fund returned 1.03% (before fees and tax) outperforming the market benchmark by 0.02%.
The fund over one year returned 15.71% (before fees and tax) to 30 June 2023. This was 0.93% better than the market benchmark’s 14.78% return and was due to the strong outperformance from two of our appointed managers, Northcape and Antares.
The ASX 200 lagged global markets over the quarter as the strong lead from overseas was tempered by somewhat unexpected Reserve Bank of Australia (RBA) interest rate hikes which made investors more cautious. The drivers in the June quarter were similar to those which have played out for most of this year, with Technology and Consumer stocks doing much of the heavy lifting as investors attempt to put a value on ‘Artificial Intelligence’ (AI) and assess any productivity gains this technology might produce. Materials were weaker in line with lower commodity prices and consumer facing sectors also struggled as interest rates continue to bite.
China’s disappointing economic performance continued to weigh on emerging markets and contributed to relative weakness in here given the exposure of our mining sector to China’s tepid growth. There was little joy for the miners, as commodity prices were generally lower over the period. Oil was down 6%, Coal -27%, Iron Ore -11%, Zinc -19%, Nickel -14%, Aluminium -11%.
From a sector perspective, there are few clear winners in the current environment. Consumer-exposed sectors, other than perhaps supermarkets, are seeing broad-based weakening. Banks are facing higher funding costs, slower credit growth and potentially higher credit losses while, for Resources to perform, China would likely need to meaningfully step up its stimulus measures – something its government to date has been unwilling to do.
The upcoming August reporting season should provide further insights into the extent of the economic slowdown the RBA has tried to orchestrate since the current interest rate tightening cycle started in May last year.
What is MLC Wholesale Australian Share MLC Wholesale Australian Share is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Multi-Manager 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 MLC Wholesale Australian Share has Assets Under Management of 103.79 M with a management fee of 0.78%, 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 MLC Wholesale Australian Share has returned 6.85% in the last month. The previous three years have returned 9.58% annualised and 13.14% each year since inception, which is when the MLC Wholesale Australian Share 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 MLC Wholesale Australian Share first started, the Sharpe ratio is 0.37 with an annualised volatility of 13.14%. The maximum drawdown of the investment product in the last 12 months is -7.5% and -45.78% 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 MLC Wholesale Australian Share has a 12-month excess return when compared to the Domestic Equity - Multi-Manager Index of 1.15% and -0.85% 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. MLC Wholesale Australian Share has produced Alpha over the Domestic Equity - Multi-Manager Index of 0.06% in the last 12 months and -0.05% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Multi-Manager Index category, you can click here for the Peer Investment Report.
What level of diversification will MLC Wholesale Australian Share provide?
MLC Wholesale Australian Share has a correlation coefficient of 0.98 and a beta of 1.06 when compared to the Domestic Equity - Multi-Manager 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 MLC Wholesale Australian Share and its peer investments, you can click here for the Peer Investment Report.
How do I compare the MLC Wholesale Australian Share with the ASX Index 200 Index?
For a full quantitative report on MLC Wholesale Australian Share compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the MLC Wholesale Australian Share to do my own analysis?
To sort and compare the MLC Wholesale Australian Share financial metrics, please refer to the table above.
Has the MLC Wholesale Australian Share 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 MLC Wholesale Australian Share?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the MLC Wholesale Australian Share. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - March 31, 2023 The Australian share market posted reasonable returns over the March 2023 quarter. The S&P/ASX200 Total Return Index (market benchmark) returned 3.5% and the MLC Australian Share Fund returned 5.2% (before fees and tax) outperforming the market benchmark by 1.7%.
The fund over one year returned 1.7% (before fees and tax) to 31 March 2023. This was 1.6% better than the market benchmark’s 0.1% return and was due to the strong outperformance from two of our appointed managers, Northcape and Antares.
As mentioned earlier, the Australian share market delivered positive returns, rising alongside both its developed and emerging markets peers. The quarter had a particularly strong start in January as investors focused on easing inflationary fears and hopes that central banks could start slowing their pace of interest rate hikes. Iron ore prices also rebounded in January, rising on the expectation of an improving Chinese economy in 2023 following the removal of COVID restrictions in December, but paused for breath towards the end of the quarter as investors looked for evidence of the strength of China’s economy following its re-opening.
Most sectors were positive with Consumer Discretionary performing strongly, up 11.4%, driven by investors’ willingness to take on more risk and some strong individual performances followed by Communication Services (9.4%) off the back of Telstra’s strong performance. Financial Services was the weakest, down 2.7%, on worries about the unfolding banking crisis and mortgage competition. The real estate sector was one of the weaker performing sectors over the quarter. This mirrored the sell-off in property names in other markets including the US and Europe as investors worried that the turmoil in the US banking sector could tighten access to credit and put property prices under further pressure.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
Performance Commentary - January 31, 2023 The Australian equity market posted strong returns over the December 2022 quarter. The S&P/ASX200 Total Return Index (‘market benchmark’) returned 9.4% and the MLC Australian Share Fund returned 8.3% (before fees and tax) underperforming the market benchmark by -1.13%.
The fund over 1 year returned -1.4% (before fees and tax) to 31 December 2022. This was -0.3% worse than the market benchmark’s -1.1% return, and was due to the underperformance from one of our appointed managers, Northcape.
The often mentioned Santa rally failed to materialise in Australian equities and the market fell in December 2022 but still posted gains over the quarter as a whole. For calendar year 2022, the Australian market was one of the best performing equity markets globally, easily outperforming both developed and emerging markets peers. This was not a bad outcome given the current geopolitical environment; credit for which can largely be given to our exposure to energy and resource companies.
Market performance drivers were notably concentrated in energy and utilities this year, that is, only a handful of names drove overall returns. In fact, circa 70% of the ASX 300 companies underperformed the market this year.
The Materials sector rose strongly to finish the quarter up 15% as BHP, Rio and Fortescue all had very strong quarters, rising on a stronger iron ore price in hopes that demand for the commodity will increase rapidly as China continues to reopens its economy, reversing its severe and widespread Covid lockdown policies.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
Performance Commentary - December 31, 2022 The Australian equity market posted strong returns over the December 2022 quarter. The S&P/ASX200 Total Return Index (‘market benchmark’) returned 9.4% and the MLC Australian Share Fund returned 8.3% (before fees and tax) underperforming the market benchmark by -1.13%.
The fund over 1 year returned -1.4% (before fees and tax) to 31 December 2022. This was -0.3% worse than the market benchmark’s -1.1% return, and was due to the underperformance from one of our appointed managers, Northcape.
The often mentioned Santa rally failed to materialise in Australian equities and the market fell in December 2022 but still posted gains over the quarter as a whole. For calendar year 2022, the Australian market was one of the best performing equity markets globally, easily outperforming both developed and emerging markets peers. This was not a bad outcome given the current geopolitical environment; credit for which can largely be given to our exposure to energy and resource companies.
Market performance drivers were notably concentrated in energy and utilities this year, that is, only a handful of names drove overall returns. In fact, circa 70% of the ASX 300 companies underperformed the market this year.
The Materials sector rose strongly to finish the quarter up 15% as BHP, Rio and Fortescue all had very strong quarters, rising on a stronger iron ore price in hopes that demand for the commodity will increase rapidly as China continues to reopens its economy, reversing its severe and widespread Covid lockdown policies.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
Performance Commentary - September 30, 2022 The Australian share market eked out small gains over the September 2022 quarter. The S&P/ASX200 Total Return Index (‘market benchmark’) returned 0.4% and the MLC Australian Share Fund returned 0.6% (before fees and tax) outperforming the market benchmark by 0.2%.
The fund over one year returned -7.3% (before fees and tax) to 30 September 2022. This was 0.4% better than the market benchmark’s -7.7% return and was due to the outperformance from a range of our appointed managers including Alphinity, Antares and Northcape.
During the September quarter, the Australian share market managed to avoid the sharp sell-off that gripped global share markets. The S&P/ASX200 ended the period broadly unchanged, compared with steep declines in many developed and emerging share markets.
Many central banks continued to engage in monetary tightening, raising interest rates to combat high levels of inflation, which in turn heightened investor fears of a global recession.
Continued concerns over a slowing global economy saw oil prices pull back further. Iron ore prices also fell as China’s zero-COVID policy continued to weigh negatively on economic activity and, therefore, demand for iron ore.
While the domestic earnings season was as expected, the Australian share market was negatively impacted by further downward earnings revisions to ’23 and ’24 estimates, negative offshore share markets, as well as exposure to some of the weaker sectors such as the US housing market. Metals, Mining and Energy stocks cash earnings remain strong, with strong global demand, supply constraints and geopolitical instability. Looking forward, the conflict in the Ukraine and expanding geopolitical tensions continue to result in increased risk and some supply chain disruptions.Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
Performance Commentary - June 30, 2022 Performance drivers and positioning of the fund for the recent calendar quarter are explained below. Our investment experts also provide regular investment updates at mlcam.com.au/insights
The Australian share market declined over the June 2022 quarter. The S&P/ASX200 Total Return Index (‘market benchmark’) returned -11.9% and the MLC Australian Share Fund returned -11.2% (before fees and tax) outperforming the market benchmark by 0.7%.
The fund over one year returned -5.3% (before fees and tax) to 30 June 2022. This was 1.1% better than the market benchmark’s -6.4% return and was due to the outperformance from a range of our appointed managers including Alphinity and Northcape.
Australian shares were not immune to the sharp sell-off in global share markets over the course of the second quarter of 2022. Many central banks engaged in monetary tightening, raising interest rates to combat high inflation. This in turn heightened investor fears of a global economic recession. The concerns over a slowing global economy and a reduction in demand saw oil prices pull back as the quarter progressed. Iron ore prices also fell sharply as China’s zero-COVID policy continued to weigh negatively on economic activity and therefore demand for iron ore.
There continued to be a rotation out of growth and higher multiple companies into value stocks, particularly in defensive areas of the market. The Australian share market’s heavy fall over the June quarter saw all sectors finish lower except for the Utilities and Energy sectors which both eked out small gains. Particularly hard hit were the Information Technology, Materials and Consumer Discretionary sectors as investors repositioned their portfolios more defensively for the expected softer economic times ahead.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
Performance Commentary - March 31, 2022 The Australian share market advanced over the March 2022 quarter. The S&P/ASX200 Total Return Index (market benchmark) returned 2.2% and the MLC Australian Share Fund returned 1.9% (before fees and tax) underperforming the market benchmark by 0.3%. The trends we saw in January and February largely carried on into March, with a continued sell-off in growth and higher multiple companies and a rotation to value stocks. The notable exception to this was the bounce in technology stocks.
The February reporting season came and went without too many surprises. In general, Australian companies reported strong operating performance over the December half. Around half of all companies reporting beat earnings expectations, while a quarter were in-line. Notably, retail sales remained resilient and confidence in a post-COVID recovery in mobility was high. The ASXs gain over the quarter was led by the Resource sector which rallied strongly as the prices of many commodities soared following the introduction of sanctions on Russian commodity exports following the invasion of Ukraine.
The major banks also performed well on expectations of interest rate rises and the positive flow on effect this could have on their net interest margins. The recent outperformance of Australian shares reflects a rotation towards markets with higher commodity exposure and strong governance. Iron ore rose 30% during the quarter to finish at US$158 per tonne, along with strength in most other commodity prices. This provided a major boost to the Federal Budget and the government responded with a range of cash handouts to households. The fund over one year returned 15.7% (before fees and tax) to 31 March 2022. This was 0.7% better than the market benchmarks 15.0% return and was due to the outperformance from a range of our appointed managers including Alphinity, Antares and Northcape.
Performance Commentary - June 30, 2021 The fund returned 8.6% (before fees and tax) in the quarter, outperforming the market benchmark by 0.3%. The strong June quarter performance reflects positive returns by the market benchmark in April (3.5%), May (2.3%) and June (2.3%). Australia’s economic recovery and improved earnings growth contributed to the market’s positive return. Since the profit reporting period early in the year which exceeded expectations, the ongoing release of good economic data resulted in upgraded earnings forecasts for the financial year just concluded and 2022. However, these positive market developments occurred before the deterioration in COVID-19 infections with the outbreak of the Delta variant in Sydney requiring an extended lockdown.
On a sector level, Information Technology (12.1%) recorded the highest return, due in part to the performance strength of AfterPay. The Consumer Discretionary index increased by 11.2% as consumer sentiment and retail spending returned to pre-pandemic levels. The favourable response to Telstra’s corporate restructure and intention to return approximately $1.4 billion to shareholders following the sale of 49% of its mobile tower infrastructure business contributed to the 10.6% return of the Communications Services index. The Materials index increased by 8.9% as the 28.6% rise in the iron ore price is expected to benefit BHP, Rio Tinto and Fortescue Metals Group. The Financials ex Australian real estate investment trusts (A-REIT) index increased 8.8% as investors anticipate the economic recovery and stronger demand for credit, particularly housing finance, will result in higher bank profits and dividends. The A-REIT index returned 10.7% as the economic recovery led many REITs to re-affirm or upgrade earnings and distribution forecasts.
A blend of managers with diverse investment styles is responsible for the fund’s stock selection. The fund’s above market benchmark return in the quarter was due to the outperformance of Alphinity, Antares and Vinva which offset Northcape’s underperformance. The fund returned 31.6% (before fees and tax) in the year to 30 June 2021. This was 3.8% better than the market benchmark’s 27.8% return and was due to the outperformance of Alphinity, Antares and Vinva, which offset the underperformance of Northcape.
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