July 2021 portfolio updates

Below is a short video giving an overview of performance and the portfolio positioning.

Portfolio reports are available from the downloads section of the website.


Multi-asset market update

Investment markets were positive again in July, with Australian equities, international equities, property and fixed interest all posting positive returns. Australian equities rose by less than the other major asset classes as the prospect of renewed lockdowns weighed on markets. Sentiment remained positive despite the increase in COVID cases around the world.

The defensive positioning of the portfolio reduced returns somewhat, primarily due to our managers avoiding very expensive technology stocks and higher risk cyclical names, both of which were well supported by surging risk appetites. However, the underweight to emerging markets added value as Chinese stocks fell.  

Our direct Australian equities portfolio performed well as M&A activity provoked a revaluation of quality companies with reasonable valuations.

Multi-asset portfolio update

The expectations for growth are strong, given the roll out of vaccines and unprecedented economic stimulus. But risks remain: there is the risk of higher inflation and expectations of higher interest rates, and COVID is far from contained in all countries. The high valuations in risky assets globally leave little margin of safety for investors if growth disappoints, so we remain defensively positioned and are reducing our exposures to investments with equity and bond market risk. 

The strong returns in investment markets mean that even with the defensive tilt our portfolios are comfortably above their strategic return targets.

Equities market update

In July quality equities again outperformed other styles globally, although the renewed COVID lockdowns meant that Australian stocks rose less than those overseas. In a reversal of previous months, defensive stocks took the lead, but there were also strong returns to mining stocks. In the financials sector, banks fell and fintech stocks were marked down significantly, but the insurers rose.

Our portfolio performed well in this environment, in particular due to offers to acquire Sydney Airports and Spark Infrastructure. Our positioning in financials and taking profits in IT names previously has also proven to be beneficial as valuations for those stocks normalised.  

Equities portfolio update

We see the surge in iron ore prices and bank lending as unsustainable and have positioned the portfolio in more defensive assets and cyclicals that stand to benefit from the return to normal post-COVID but have reasonable valuations.

In June we took profits on the bid for Sydney airports, which we felt realised most of the value in the stock, and reinvested the proceeds in Monadelphous, whose share price remains at depressed levels despite the increased volume of work resulting from the normalisation of activity in the economy.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

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