• Marcus Bogdan

Portfolio Update - January 2020

“The danger of focusing on maximising current earnings is you systematically underinvest. You really need to make sure you focus on the long term.”  John McFarlane (Chairman-Elect, Westpac)  Equity markets are exhibiting the dualities of light and darkness. Having rallied to record highs in January markets are feeling the confidence that central banks remain overwhelming accommodative to do “whatever it takes” to support risk appetite. Furthermore, recent global supply manager surveys point to a modest recovery in economic activity. Yet, a sense of uneasiness pervades as left-field events (coronavirus) have suddenly emerged threatening and disrupting global trade and population movements.  

Navigating equity portfolios where valuations are near record highs and where risks can emanate from multiple catalysts requires careful craftsmanship. Blackmore Capital’s portfolios remain diversified across industry sectors with an overriding emphasis on earnings quality, balance sheet resilience and management execution. 

Blended Australian Equity Portfolio  |  Australian Equities Income Portfolio

The Blended Australian Equity Portfolio finished the month of January up 4.36% compared to the ASX 200 Accumulation Index up 4.98%. Positive contribution for the Blended Australian Equity Portfolio was driven by Woolworths Group (WOW), CSL Limited (CSL), and Commonwealth Bank (CBA). Whereas, Nearmap (NEA), Event Hospitality & Entertainment (EVT), and Alumina (AWC) weighed on attribution. 

The Australian Income Portfolio finished the month of January up 4.49% compared to the ASX 200 Accumulation Index up 4.98%. Positive contribution for the Australian Income Portfolio was driven by Woolworths Group (WOW), Commonwealth Bank (CBA), and Wesfarmers (WES). Whereas, Event Hospitality & Entertainment (EVT), Alumina (AWC), and Insurance Group Australia (IAG) weighed on attribution. 

Interestingly, the key drivers for the rally in the ASX 200 have been concentrated in the defensive sectors namely, consumer staples, healthcare and gold. By contrast, investors remain cautious towards companies dependent on tourism (Event Hospitality & Entertainment), growth companies that miss optimistic revenue targets (Nearmap), and companies directly exposed to the heightened risk of natural disasters (IAG). 

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Blackmore Capital Pty Ltd (ABN 72 622 402 895) (Blackmore Capital) is a Corporate Authorised Representative (CAR) of Artesian Venture Partners Pty Ltd (AFSL 284492)