In an webcast, portfolio manager Hugh Giddy said a negative contributor to performance was Orica which was affected by a coal import ban from China and foreign exchange effects.
Coal was one of several items banned for import into China at the end of last year as trade tensions escalated between China and Australia.
Giddy said: “A negative for us was Orica which said profits would be below expectations as coal mining was weak with China banning imports of Australian coal. They are one of many customers but it did cause interruptions to coal mining volumes in the period. It was also hurt by foreign exchange translation as the Australian dollar has been quite strong against the US dollar”.
However, the firm said it felt comfortable with its level of resources exposure given the elevated levels of commodity prices and had added to Orica on share price weakness in its Concentrated Australian Share fund.
Shares in Orica were down 15% since the start of the year to 12 March, 2021 compared to returns of 3.8% by the ASX 200 over the same period.
Meanwhile, the firm said positive performance had come from Nine Entertainment and Newscorp due to the two firms’ real estate arms. Since the start of the year, Newscorp was up 40.8% while Nine had risen 31%.
Share price of Orica, Newscorp and Nine versus ASX 200 since start of the year to 12 March
“They are doing well because people are interested in the news, people want to know what is happening with COVID which is a major interest. They are also benefitting from the rebound in housing which is doing a lot better, who would have thought we would have another housing boom but the low interest rates and much higher employment than people thought means people are out buying houses and house prices are going up,” Giddy said.
“Newscorp and Nine both have online classified ads, Nine has Domain and Newscorp has realestate.com and those are significant portions of those two businesses.”
The IML Concentrated Australian Share fund had lost 2.7% over one year to 28 February, 2021, according to FE Analytics, versus returns of the 10.1% by the Australian equities sector within the Australian Core Strategies universe.
Performance of IML Concentrated Australian Share fund versus Australian equity sector over one year to 28 February 2021
