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24 Aug 2022 - Performance Report: Equitable Investors Dragonfly Fund


Report Date24 August 2022
ManagerEquitable Investors
Fund NameEquitable Investors Dragonfly Fund
StrategyEquity Long
Latest Return DateJuly 2022
Latest Return0.48%
Latest 6 Months-24.00%
Latest 12 Months-28.08%
Latest 24 Months (pa)9.68%
Annualised Since Inception-4.61%
Inception Date01 September 2017
FUM (millions)
Fund OverviewThe Equitable Investors Dragonfly Fund aims to deliver a total return greater than the annual five year government bond rate + 5% pa over the medium-to-long term.

The Fund is an open ended, unlisted unit trust investing predominantly in ASX listed companies. Hybrid, debt & unlisted investments are also considered. The Fund is focused on investing in growing or strategic businesses and generating returns that, to the extent possible, are less dependent on the direction of the broader sharemarket. The Fund may at times change its cash weighting or utilise exchange traded products to manage market risk.

Investments will primarily be made in micro-to-mid cap companies listed on the ASX. Larger listed businesses will also be considered for investment but are not expected to meet the manager's investment criteria as regularly as smaller peers.
Manager CommentsThe Equitable Investors Dragonfly Fund rose by +0.48% in July. Equitable noted things were a little slow-moving relative to the bounce seen in indices for smaller stocks in July, thanks in part to the weighting the Fund has in unlisted investments but also due to Equitable's pursuit of the 'recap' opportunities they have been hunting. At month-end, capital was tied up in commitments to a number of such opportunities that they expect will benefit the Fund in the future.

Equitable noted positive price action in the shares of home security tech company Scout Security (SCT) was reflective of a general bounce back for illiquid micro-caps that appeared to have suffered from tax loss selling in May and June. Marine propulsion and stabilisation systems maker Veem (VEE) was another to recover with the beginning of a new financial year.

On the flip-side, Equitable's holding in NZ-listed trades app developer Geo (GEO:NZ) fell 9% in NZ dollars after cornerstone investor North Ridge Partners distributed some equity in GEO held by its Co-Investor No. 3 PIPE Fund to the underlying investors, as part of the end-of-life wind-up of that fund.

Equitable see continuing opportunities both of the transactional variety (recapitalisations etc) and simply of the attractive pricing variety. They noted that while there has been a bounce back in illiquid stocks in July, that recovery hasn't been as broad-based as they might have imagined, with speculative money having another swing at questionable business models in the Buy Now Pay Later (BNPL) space and 'meme' stocks, leaving shares in a company like expense management software company 8Common (8CO) fractionally lower at the end of July than it was at the end of June.
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