April 1, 2021

In the Frame – Issue 3, A message from Hue
Managing Director

A message from Hue: What I saw in March 21

March could only be described as the month of rotation. There was large divergence between the performance of the Dow Jones (DJIA) and the NASDAQ. At one stage the DJIA was up 6.9% while the Nasdaq was down 1.11%. The rotation we saw during February continued and in some companies accelerated. The Australian share market was still range bound, however did finish up 1.76%. Much of this strong performance was attributed to the big four banks with ANZ, CBA, NAB and WBC. They rose +7.04%, +3.94%, +4.06% and +1.42% respectively.

Profit taking & Consolidation

The long short Australian equity strategy finished the month up 0.1% which was a good result, all things considered. The strategy thrives in markets that are trending as opposed to those that are range bound, which is what we saw in March. I expect this strategy to excel when the Australian share market breaks through the key 7000 level.

The Global Macro strategy had a challenging month, declining by -6.48%. The portfolio of listed investments experienced profit taking across the board. Businesses that had contributed significantly to the strategy’s performance over the last 12 months were sold down, as they were included in the rotation mentioned above. Although unpleasant to experience, these periods of profit-taking and consolidation are a healthy part of the investment cycle.

Even with this sell off, the 6 & 12-month performance figures for the Frame Futures Fund are strong at +12.28% and +33.76% respectively. The 3 & 6-monthperformance figures for the Frame Long Short Australian Equity Fund are +5.53% and +15.40% respectively.

Yields, yields, yields, again…

In February, we saw 10-year US Treasury yields gradually climb from 1.07% to 1.41%. During March, they continued to rise, however at a slightly more gradual pace (closing at 1.74%). Economic data released from the US continued to improve. The unemployment rate dropped to 6.2% and Final GDP q/q came in at a strong 4.3% vs 4.1% expected. As data continues to improve, we expect yields will either trade sideways or continue to move higher.


April is the start of the quarterly reporting & guidance season. Companies will provide updates on how well they have gone over the last quarter, as well as attempt to ‘guide’ the market as to how they are looking for the full financial year. This time of the year presents the opportunity to increase our investments in companies that have beat expectations, while reducing investments in businesses that appear to be falling short of guidance.

Our outlook remains positive on the Australian share market and we expect new highs will be around the corner on a break-out of the current trading range.

If you would like to discuss any of the points in this newsletter, please email me at hue@framefunds.com.au or call our office on 02 8668 4877.

Hue Frame
Managing Director

Past performance is not an indicator for future performance. This is not intended to be financial advice and does not take into account any particular person’s circumstances. Before relying on this information, please speak to an independent financial adviser.


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