April 1, 2021

In the Frame – Issue 3, Investor updates
Co-Portfolio Manager

Frame Long Short Australian Equity Fund – Mar 21

Units of the Frame Long Short Australian Equity Fund rose +0.1% in March. Comparatively, the XJO rose +1.76% for the period.

March was a challenging month for the strategy, as the share market continued to be range bound. The strategy performs best in conditions where markets are trending as opposed to ranging. Rising yields continued to be at the forefront of investors’ minds as economic data across the globe continued to strengthen. Investors rotated out of high growth, unprofitable businesses as yields rose, transitioning into value names who traded on more reasonable multiples. Given the ASX 200’s higher weighting of financials, our market enjoyed this rotation with assistance from the big four banks.

Upon conclusion of the month, the five largest holdings within the portfolio were Harvey Norman (ASX:HVN), Fletcher Building (ASX:FBU), Oz Minerals (ASX:OZL), Reece (ASX:REH) and Sims Metal Management (ASX:SGM). The top sector weighting was again Materials at 37.49% down from 57% in February.

Our view is that materials and cyclical businesses should continue to outperform as the global economy recovers from the pandemic.

The top three performers and their approximate contributions were Premier Investments (ASX:PMV), Bank of Queensland (ASX:BOQ) and Bluescope Steel (ASX:BSL). These investments contributed +0.96%, +0.72% and +0.71% respectively.

The bottom three performers and their approximate detractions were Corporate Travel (ASX:CTD), Iluka Resources (ASX:ILU) and Rio Tinto (ASX:RIO). These investments detracted -0.62%, -0.55% and -0.48% respectively.

There was a significant amount of Fund activity at the beginning of the month. We initiated investments in Blackmores (ASX:BKL), Boral (ASX:BLD) and Nine Entertainment (ASX:NEC) among others. We took part in the BOQ placement at a substantial discount. The Fund also exited a number of positions including Fortescue Metals (ASX:FMG), RIO and Seek (ASX:SEK).

At the end of March, the Fund held 19 investments.