WAM Capital has reported a $91.5 million operating loss after tax for the six months to December, 2018, as the investment portfolio went down 9.3 per cent and led to a reduction of $132 million in assets.
The company said in a statement issued to the Australian Securities Exchange (ASX) that its investment portfolio cash level was currently 35 per cent lower compared to 43.9 per cent on 31 December, 2018, as it reflected the change in the outlook.
WAM Capital’s chairman and chief investment officer, Geoff Wilson, said the firm’s view at the end of 2018 its market outlook was extremely bearish due to signs that the US Federal Reserve would raise interest rates in 2019 and quantitative tightening (QT) would continue at unprecedented levels while leading economic indicators were pointing to a slowing global economy.
He stressed that the combined impact of these factors on equity markets would have been brutal.
“This did not occur and the major turning point in January was the unexpected about-face of the US Federal Reserve, holding interest rates for the foreseeable future and indicating that QT might be over,” Wilson explained.
“This change in approach provided equity markets with strong support.”
Despite the volatility in the market, WAM Capital declared a fully franked interim dividend of 7.75 cents per share, currently representing an annualised dividend yield of 7.2 per cent, the firm said.