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Printed: 18 April 2024 1:44 PM


26 May 2023 - Hedge Clippings | 26 May 2023



Hedge Clippings | 26 May 2023

It seems that much in the World is poised on a knife edge, although Australia would appear to be better positioned than most:

The war in Ukraine has no clear victor at this stage, at least on the battlefield, although one would have to say that Putin has lost in every other way. Putin's miscalculation has helped unleash inflation, which thanks to years of government intervention post GFC, plus COVID, was probably always headed for a breakout.

We presume (hope) that the impasse between Biden and the Republicans who control Congress will be resolved, with current reports suggesting the $31.4 trillion US debt ceiling will be raised for 2 years. If so the sticking point is now over how the extra will be spent - military and defense, or social programs. Either way, Biden's looking a little lame, potentially leaving the way open for the unthinkable - the return of Donald Trump.

The UK's economy (in fact most things in the UK) is a mess, everyone seems to distrust China (including a fair number of Chinese), inflation looks like staying high for longer, both globally and in Australia, and as a result, economists are divided on the RBA's next move. As a result investors and markets can't work out if the worst is over, or a recession is around the corner.

From a perspective of the performance of managed funds, the worst would seem to be over. Most managers, although by no means all, found 2022 one of the most difficult they had experienced, but since the start of this year (4 months to the end of April) just over 90% of managers have provided their investors with positive returns, compared with just 48% who have done so over the past 12 months. Even the unloved and underperforming Equity Small Cap Peer Group has shown some green shoots, returning 3.54% over 6 months to April, and recovering some of the 6.97% negative performance of the past 12 months.

Over the longer term - 7 years - which is generally accepted as the recommended time-frame for investments in most managed funds, ALL peer groups are in positive territory. Over 3 years, including 2022, Australian Equity small cap funds averaged 12.71% pa, and large caps 13.99%. Hidden among the 3 year Small Cap averages, the top 3 were: Altor's Alpha Fund (33.96%), Spheria Micro Cap (30.49%), and Glenmore (26.76%). Large Caps were headed by Ausbil's Geared Equity (35.62%), Datt Capital (21.74%) and Collins St Value Fund (21.0%).

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