September 13, 2022

In the Frame - Issue 19, Investor updates
Co-Portfolio Manager

Frame Long Short Australian Equity Fund – August 2022

Units of the Frame Long Short Australian Equity Fund declined -1.19% in August. Comparatively, the S&P/ASX200 advanced +0.60%. 

Global financial markets experienced a choppy month in August. Whipsaw price action occurred across all asset classes as the future of the global economy remains shrouded in doubt. The Reserve Bank of Australia started the month by raising the cash rate another 50 basis points to 1.85%. At the end of the month, fixed income markets indicated an 83% chance of another 50-basis point increase at the Bank’s September meeting. From there on, economists expect the pace of rate increases to slow into the end of the year. 

 Top equity contributors for the month 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. Whitehaven continued to rise in line with alternative energy commodities, as the energy crisis in Europe worsened. With winter around the corner and Russia still holding oil and gas supplies hostage, European energy markets have been sent into meltdown. Both NIB and ALX reported strongly. Atlas Arteria noted a 184% increase in net profit after tax due to increased toll revenue as the world moves past COVID lockdowns. NIB reported strong growth in premium revenue and their health insurance business, which was significant against a weak industry backdrop. 

 Largest detractors were Endeavour Group Ltd (ASX: EDV), Telix Pharmaceuticals Ltd (ASX: TLX) and Steadfast Group (ASX: SDF). They detracted approximately -0.34%, -0.29% and -0.29% respectively. Telix reported a larger than expected loss for the first half, while Endeavour fell off the back of an uncertain outlook for the coming financial year. Steadfast declined after seeking to raise money in order to acquire Insurance Brands Australia.      

 Our longer-term strategies began to re-enter the market in August. The strategies favoured a diverse basket of companies from all sectors. Our risk monitoring remains tight as we believe further downside risk continues to be present.  

 At the conclusion of the month the Fund held 28.10% in cash and the highest weighted sector was financials at 13.76%. 

 The full report can be downloaded by clicking the image below.