September 13, 2022

In the Frame - Issue 19, A message from Hue
Managing Director

A message from Hue: What I saw in August 2022

During August, global equity markets continued to be volatile. As the month drew to a close, sellers were firmly in control. US equity markets all finished down around -4%. The Australian share market was a global outperformer, surprisingly rising +0.60%. 

Central bank watch 

Central Banks continued to take action to contain inflation by increasing interest rates.  During August we saw the Australian, England, Brazilian, Indian, New Zealand and Norwegian Central Banks all increase their cash rates by 0.50%. Korea raised theirs by 0.25%, while Turkey cut theirs to reduce inflation… 

Don’t fight the Fed 

The US Federal Reserve, and their outlook for the path of interest rates, continues to dictate market pricing. After the most recent US Federal Reserve minutes, markets interpreted the commentary in a dovish manner. They thought that they were planning on slowing the rate of interest rates, however at the Jackson Hole symposium, Fed Chairman Powell reiterated that they are not going to stop increasing interest rates for some time. 

Energy price increases 

European gas prices have continued to increase. At one stage during the month, prices were over €1000! On top of dealing with already soaring inflation rates, consumer are now also having to deal with extreme gas prices. The 42% increase in our electricity bill I mentioned in the last In the Frame issue, doesn’t seem so bad now! 

Portfolio performance 

During August, both strategies continued to be defensive. The Global Macro strategy generated a positive return of +0.73%. The Long Short Australian Equity strategy declined by -1.19%. 

Top equity contributors for the Frame Long Short Australian Equity Fund (FLSAEF) were Whitehaven Coal Ltd (ASX: WHC), NIB Holdings Ltd (ASX: NHF) and Atlas Arteria Group (ASX: ALX). They contributed approximately +0.60%, +0.14% and +0.12% respectively. 

Largest detractors for the month were Endeavour Group Ltd (ASX: EDV), Telix Pharmaceuticals Ltd (ASX: TLX) and Steadfast Group (ASX: SDF). 

For the Frame Futures Fund (FFF), Equity investments rose by +0.85%. Fixed Income investments added +0.13%. Currency and Commodity investments were flat. 

Wrapping up 

Like I have mentioned in prior issues, we continue to focus on incoming data, and playing very good defence during periods of extreme volatility. 

Central Banks have continued to reiterate that they will continue to raise rates until they have price stability. We do not want to be in the way of this reduction in liquidity, so will continue to keep nimble, play great defence, and when the time is right, start strategically allocating into medium to long term positions. 

If you would like to discuss any of these points, please email me at or call our office on 02 8668 4877.

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