2020 a ‘tough’ year for performance: IML
The past 12 months have been rough for Investors Mutual Limited (IML) and the firm admits “there is no point in pretending” it saw great performance, but it is still optimistic for the future.
Hugh Giddy, IML co-manager of the Australian Share fund and portfolio manager of the Concentrated Australian Share fund, said there were a number of factors behind the underperformance.
According to FE Analytics, over the previous 12 months to 28 February, 2021, the Australian Share fund had returned 1.6%, while the Australian Concentrated Share fund had lost 2.72%, while the Australian equity sector returned 10.17%.
“With the large caps and small caps we’ve had a bit of a tough year and there’s no point in pretending that we’ve had great performance… we have made some mistakes,” Giddy said.
“Some of our holdings have been disappointing for various reasons; we don’t always get everything right and of course it really hurts to get a few things wrong with the style we were employing, the quality of value is not doing that well.
“We had some sectors going against us that we would never hold or be reluctant to hold unless we have a lot of conviction.
“And then there are some speculative sectors that just doesn’t suit us that well, particularly some tech stocks.”
Some of the trends the firm said it had missed out on included milk and powdered milk formula sales to China, and the buy now/pay later sector.
“We missed out on iron ore trade, we didn’t expect that during a downturn on the global steel production that iron ore would double,” Giddy said.
Giddy said a lot of the money “sloshing around the system” had led to some quite speculative outcomes for stocks like Tesla and Afterpay.
“Then there were the big stimulus programs that I supposed we thought would just maintain incomes, but a lot of people got a higher income, particularly part-time workers, and they went out and spent it,” Giddy said.
“That really boosted electronics and furniture retailers, and you got a lot of hot air into stocks like Temple and Webster, Kogan and so on.
“The frustrating thing for a quality/value manager is good quality companies – which we think are in better shape than they were before the COVID-crisis – you look back at the share price and it’s done nothing for three years.”
As for the other IML funds, the Small Caps fund returned 17.73, followed by Australian Small Companies (13.22%), Future Leaders (9.14%), Industrial Share (-1.49%) and Equity Income (-3.34%).
Performance of IML funds over 12 months to 28 February 2021
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
