The portfolio invests in smaller Australian companies by selecting and weighting companies based on fundamental measures of company size.
Realindex Australian Small Companies Value returned -1.93% (net of fees) during August, versus the S&P/ASX Small Ordinaries benchmark which returned – 1.31%.
Value stocks outperformed Growth stocks by 0.1% over the month (S&P Australia Small Cap Value -1.7% vs. Growth -1.8%). Over the past year, Value has beaten Growth outperforming by 4.6%, while on a five-year basis Value outperformed by 2.1%.
Small caps traded marginally lower in August, however remained up by 2.2% over a 3 month look-back period. The economy showed resilience, with GDP expanding roughly in line with expectations at 0.4% QoQ for the 3 months to June. However, sluggish growth, weak consumer sentiment and a mixed housing market remain as significant headwinds. The Reserve Bank of Australia (RBA) left the cash rate unchanged in August at 4.1%, although it hinted at the possibility of future rate hikes. Despite the fact that monthly CPI shows declines, inflation is still significantly higher than the target rate, with the RBA expecting it to take at least to late 2025 to reach normalcy. Sector performance for the month was mixed with strong gains in Energy (+4.6%) and Consumer Discretionary (+3.0%) %) while Health Care (-4.8%) and Financials (-4.4%) posted negative returns.
Fund performance was lower than the benchmark over the month, largely due to sector allocation. Specifically, our underweight to Energy and overweight to Financials detracted approximately 28bps and 16bps, respectively. However, stock selection within sectors added around 12bps, mainly driven by stock selection within Consumer Staples, Health Care and Materials. From a stock level perspective, the largest detractor was our overweight to Seven West Media resulting in a 22bps detraction to performance. The largest contributors were our overweight to Inghams Group and underweight to Chalice mining.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (32.0% discount), price-to-cashflow (22.8% discount), and price-to-book (13.9% discount), as well as a dividend yield higher than the benchmark (48.9% premium).
Note: Percentage figures in parenthesis show total return in Australian dollars for the month ending 31 August 2023 unless otherwise noted.
What is Realindex Aus Small Co-Class A Realindex Aus Small Co-Class A is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Small 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 Realindex Aus Small Co-Class A has Assets Under Management of 58.68 M with a management fee of 0.59%, a performance fee of 0.00% and a buy/sell spread fee of 0.1%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Realindex Aus Small Co-Class A has returned 8.31% in the last month. The previous three years have returned 5.13% annualised and 16.99% each year since inception, which is when the Realindex Aus Small Co-Class A 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 Realindex Aus Small Co-Class A first started, the Sharpe ratio is 0.53 with an annualised volatility of 16.99%. The maximum drawdown of the investment product in the last 12 months is -11.07% and -32.45% 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 Realindex Aus Small Co-Class A has a 12-month excess return when compared to the Domestic Equity - Small Cap Index of -1.15% and 0.1% 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. Realindex Aus Small Co-Class A has produced Alpha over the Domestic Equity - Small Cap Index of -0.22% in the last 12 months and -0.04% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Small Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Realindex Aus Small Co-Class A provide?
Realindex Aus Small Co-Class A has a correlation coefficient of 0.95 and a beta of 1.2 when compared to the Domestic Equity - Small 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 Realindex Aus Small Co-Class A and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Realindex Aus Small Co-Class A with the ASX Index Small Ordinaries Index?
For a full quantitative report on Realindex Aus Small Co-Class A compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Realindex Aus Small Co-Class A to do my own analysis?
To sort and compare the Realindex Aus Small Co-Class A financial metrics, please refer to the table above.
Has the Realindex Aus Small Co-Class A 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 Realindex Aus Small Co-Class A?
If you or your self managed super fund would like to invest in the Realindex Aus Small Co-Class A please contact Tower 1, Ground Floor, 201 Sussex St,Sydney, NSW, 2000 via phone +61 2 93782000 or via email -.
How do I get in contact with the Realindex Aus Small Co-Class A?
If you would like to get in contact with the Realindex Aus Small Co-Class A manager, please call +61 2 93782000.
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Realindex Aus Small Co-Class A. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - July 31, 2023 Realindex Australian Small Companies Value returned +4.04% (net of fees) during July, outperforming the S&P/ASX Small Ordinaries benchmark which returned +3.54%.
Value stocks outperformed Growth stocks by 1.3% over the month (S&P Australia Small Cap Value +4.0% vs. Growth +2.7%). Over the past year, Value has beaten Growth, outperforming by 5.9%, while on a five-year basis Value has beaten growth by 1.8% p.a.
Investor sentiment was markedly more positive during the month as macroeconomic conditions improved both domestically and globally. The latest US inflation read is currently at 3% pa – surprising on the downside, making a soft landing scenario look increasingly possible. In Australia, the labour market remains strong with unemployment at 3.5% in June. Whilst headline inflation hovers at 6%, the Reserve Bank of Australia’s forecast is suggesting 3.25% by the end of 2024. Despite this, consumer sentiment remains pessimistic. However, there are signs of improvement in the housing market with the Reserve Bank of Australia putting a pause on rate hikes. The Australian share market bounced back in July with small capitalization stocks marginally outperforming the broad market. In terms of sectors, Consumer Discretionary (+8.6%) and Communication Staples (+8.2%) led the way, whilst Materials (-0.42%) and Health Care (+0.73%) lagged behind.
We are pleased that fund outperformed the benchmark due to the strong relative performance of the value style in July. Fund stock selection within Metals and Mining added the lion’s share of alpha. In particular, our underweight to several lithium miners such as Core Lithium and Liontown positively contributed to performance. On the other hand, from a sector and stock perspective, the underweight to Health Care and Megaport were the largest detractors.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (26.3% discount), price-to-cashflow (19.1% discount), and price-to-book (21.1% discount), as well as a dividend yield higher than the benchmark (46.3% premium).
Performance Commentary - May 31, 2023 Realindex Australian Small Companies Value returned -4.22% (net of fees) during May, versus the S&P/ASX Small Ordinaries benchmark which returned – 3.26%.
Value stocks underperformed Growth stocks by 1.6% over the month (S&P Australia Small Cap Value -4.0% vs. Growth -2.3%). Over the past year, Value has outperformed Growth by 1.6%, while on a five-year basis Value has outperformed by 0.8% p.a.
The RBA continues to maintain its restrictive monetary policy, navigating its narrow path to the 2-3% target range. Growth in the March quarter was lacklustre, with concerns over rising rents’ impact on inflation while consumer sentiment declined, particularly among renters. On the other hand, job market confidence remains relatively robust.
Australian markets traded lower over the month with disappointing earnings from major banks, mixed economic data, and a surprise increase in local interest rates. Financials and Materials struggled, while retailers reported a slowdown in sales and a deteriorating near-term outlook. In contrast, the Information Technology sector surged. Within the small cap space, semiconductor companies such as Silex and Weebit Nano rallied.
Fund performance struggled due to negative stock selection in both Consumer Discretionary and Information Technology sectors, resulting in a decrease of – 81bps and -33bps, respectively. While, positive stock selection in Financials along with underweights to Materials and Energy cushioned performance. The largest stock level detractor was the overweight to Myer Holdings Limited and the largest contributor was the overweight to NIB holdings Ltd. Overall, the fund slightly underperformed the Value benchmark.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (26.9% discount), price-to-cashflow (16.3% discount), and price-to-book (17.4% discount), as well as a dividend yield higher than the benchmark (46.7% premium).
Performance Commentary - April 30, 2023 Realindex Australian Small Companies Value returned +2.06% (net of fees) during April, versus the S&P/ASX Small Ordinaries benchmark which returned +2.78%..
Value stocks underperformed Growth stocks by 1.5% over the month (S&P Australia Small Cap Value +1.7% vs. Growth +3.3%). Over the past year, Value has lagged Growth, underperforming by 4.1%, but on a five-year basis Value has beaten growth by 0.6% p.a.
The Australian share market ended the month mildly higher. Small caps outperformed large caps. In particular, Health Care (+4.6%) and Consumer Discretionary (+3.9%) sectors performed well. Consumer confidence increased in April due to the RBA’s decision to pause on an interest rate increase, but confidence remains largely weak. The unemployment rate is 3.5%, and the inflation rate is 7.8% as of March 2023.
Poor stock selection within the Industrials, Communication Services and Health Care sectors resulted in a large detraction from performance. In particular, an overweight to Ama Group within Industrials, an automotive aftercare and accessories business, detracted 9bps from performance. An overweight to Seven West Media within Communication Services also detracted 12bps from performance, and an underweight to Telix Pharmaceuticals within Health Care resulted in a 33bps detraction from performance, the largest stock detractor over the month.
On the flip side, the portfolio’s overweight allocation to Financials and strong stock selection within the sector added to performance. Both Helia Group within Financial Services and NIB Holdings within Insurance added 12bps of performance each. Stock selection within the IT sector also added to performance over the month.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (31.5% discount), price-to-cashflow (18.4% discount), and price-to-book (18.3% discount), as well as a dividend yield higher than the benchmark (44.9% premium).
Note: Percentage figures in parenthesis show total return in Australian dollars for the month ending 30 April 2023 unless otherwise noted.
Performance Commentary - February 28, 2023 Realindex Australian Small Companies Value returned -3.42% (net of fees) during February, outperforming the S&P/ASX Small Ordinaries benchmark which returned -3.70%..
Value stocks outperformed Growth stocks by 0.9% over the month (S&P Australia Small Cap Value -3.5% vs. Growth -4.4%). Over the past year, Value has beaten Growth, outperforming by 8.1%, while on a five-year basis Value has beaten growth by 1.0% p.a.
February marked a sharp reversal from the gains in January as investors weighed the possibility of stickier inflation and higher bond yields. The labour market softened as unemployment rose marginally to 3.7% while consumer confidence fell by -6.9% according to the Westpac Consumer Confidence Index. The Reserve Bank of Australia’s hawkishness continued in February with a 25bps increase, with further expectations of rate hikes over the months ahead. Retail sales jumped by 1.9% month-on-month for January with volumes still 12% above pre-pandemic levels, whilst house price declines have levelled off. Most sectors fell for the month, with Materials (-8.2%), Health Care (-6.4%) and Energy (-6.1%) stocks falling the most, while Industrials (-0.1%) and Information Technology (-0.3%) remained relatively flat.
The fund outperformed due to a sector allocation, in particular the underweight in Materials (-6.3%) relative to the benchmark, generating +29bps. Whereas, our underweight in Information Technology (-1.1%) cost the fund -4bps. The largest stock level contributor was the overweight to Helia Group Limited and the largest stock level detractor was the underweight to Eagers Automotive Limited.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (28.8% discount), price-to-cashflow (21.2% discount), and price-to-book (17.7% discount), as well as a dividend yield higher than the benchmark (38.2% premium).
Note: Percentage figures in parenthesis show total return in Australian dollars for the month ending 28 February 2023 unless otherwise noted.
Performance Commentary - January 31, 2023 Realindex Australian Small Companies Value returned +6.49% (net of fees) during January, versus the S&P/ASX Small Ordinaries benchmark which returned +6.56%..
Value stocks underperformed Growth stocks by 1.8% over the month (S&P Australia Small Cap Value +5.8% vs. Growth +7.6%). Over the past year, Value has beaten Growth, outperforming by 13.8%, while on a five-year basis Value has beaten growth by 0.6% p.a.
The Australian share market had a strong start, posting a +6.2% increase for January. This growth was largely due to the positive outlook on China’s reopening. While investors hoped for inflation to remain contained, stronger than expected CPI print (+8.4% year-on-year to December) by the Australian Bureau of Statistics dashed any hopes for a pause in the Reserve Bank of Australia’s rate hikes. Our markets largely mirrored US equities which also rallied in January on the back of positive investor sentiment, easing labour costs and cooling inflation.
Most sectors rose over the month with Consumer Discretionary (+11.2%) Health Care (+8.5%) and Materials (+8.3%) leading the pack. From a sector perspective, the portfolio’s largest contributor was the overweight to Consumer Discretionary and the largest detractor was the underweight to Health Care.
Australian Value struggled throughout the month, however our portfolio held up due to individual stock selection bets. In particular, our overweight in Myer Holdings (+1.7%) added 0.56% to performance. Furthermore, our overweight in Resolute Mining (+0.7%) added 0.19%. Shipbuilder Austal, declined 20.2% over the month, and cost the portfolio 0.18% in performance.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (27.3% discount), price-to-cashflow (17.5% discount), and price-to-book (19.9% discount), as well as a dividend yield higher than the benchmark (37.4% premium).
Performance Commentary - November 30, 2022 Realindex Australian Small Companies Value returned +3.43% (net of fees) during November, versus the S&P/ASX Small Ordinaries benchmark which returned +4.92%.
Value stocks underperformed Growth stocks by 0.7% over the month (S&P Australia Small Cap Value +4.2% vs. Growth +4.9%). Over the past year, Value has beaten Growth, outperforming by 19.1%, while on a five-year basis Value has beaten growth by 0.6% p.a.
Australian small caps continued to rally in November, although ending up largely flat (-0.81%) over a 3 month horizon. Inflation has shown signs of easing, with the Australian Bureau of Statistics showing a slowdown in CPI from 7.3% to 6.9% in the twelve months to October.
Housing, food and transport exhibited the greatest price movements. This was also reflected globally, with inflation stabilizing in the US and Eurozone.
During the month, we saw strong performance in Materials (+11.7%) and Financials (+4.4%) whilst Consumer Staples (-0.9%) and Communication Services (-0.7%) weakened.
From a sector perspective, the largest detractor was the overweight to Industrials and the largest contributor was the underweight to Consumer Discretionary. Specifically, stock selection in Industrials and Materials contributed to the funds underperformance. The largest stock level detractor was the overweight to Seven West Media Limited which detracted 0.24% and the largest stock level contributor was the inclusion of Myer Holdings Limited.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (31.9% discount), price-to-cashflow (13.7% discount), and price-to-book (24.9% discount), as well as a dividend yield higher than the benchmark (40.5% premium).
Performance Commentary - October 31, 2022 The Realindex Australian Small Companies Fund returned +4.12% (net of fees) during October, versus the S&P/ASX Small Ordinaries benchmark which returned +6.46%..
Value stocks underperformed Growth stocks by 0.8% over the month (S&P Australia Small Cap Value +5.3% vs. Growth +6.1%). Over the past year, Value has beaten Growth, outperforming by 16.1%, while on a five-year basis Value has beaten growth by 0.8% p.a.
The Australian share market rebounded in October after falling significantly in September, and remains largely flat over a 3 month horizon. Inflation continues to be a problem, with the September quarter headline number at 7.3%. Due to this, the Reserve Bank of Australia continues to tighten policy, albeit at lower 25bps increments. Consumer confidence continues to be muted and the property market remains downbeat due to rate hikes. During the month, we saw strong rebound in performance across all sectors led by Health Care (+12.3%) and REITs (+11.7%).
From a sector perspective, the largest detractor was the underweight to Materials. Stock selection was a headwind in the Materials sector, specifically our underweights to stocks within Diversified Metals & Mining. For example, the exclusion of Liontown Resources and Syrah Resources detracted -26bps and – 19bps respectively. On the other hand, the largest contributor was the overweight to Industrials and the largest stock level contributor was the exclusion to BrainChip Holdings Ltd.
The portfolio offers a valuation discount to the market-cap benchmark, as measured by price-to-sales (31.6% discount), price-to-cashflow (11.7% discount), and price-to-book (23.2% discount), as well as a dividend yield higher than the benchmark (39.7% premium). Note: Percentage figures in parenthesis show total return in Australian dollars for the month ending 31 October 2022 unless otherwise noted.
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