The main feature of April was the continued rally in commodity prices, which saw crude oil and iron ore prices up over 20%. It was enough to spark a sharp recovery in BHP Billiton and South32, which rose 23% and 13% over the month. This emphasises how important it is to stand firm when negative sentiment latches onto a stock, as BHP has now risen 46% since its January low, while South32 has almost doubled. That brings both back to around their respective purchase prices in June and November last year.
Origin Energy also recovered 8% in April, although that leaves it down more than 50%since our purchase in April 2013. It’s one of the happy truisms of investing, though, that your successes get bigger while your headaches get smaller, and Origin now accounts for only 1.4% of the portfolio. We haven’t topped this up yet, but with its retail business performing strongly and management responding sensibly to the crisis, it remains under active consideration.
The best performance for the month, though, came from Fleetwood, which rose 34%from what we considered to be heavily oversold levels. Other positive performances came from Ansell, which gained 15% in the month and is now up 28% since we purchased the stock in February, and Nanosonics, which added 10% helped by a tripling of quarterly revenues since the same period last year.
Only a handful of stocks went down over the month, with the biggest fall coming from one of the portfolio’s best performers – Hansen Technologies – which succumbed to further profit-taking, falling 11% after hitting a record high in February. Crown also had a bad month, losing 5% thanks to the value of its 34% investment in Melco Crown Entertainment declining due to ongoing concerns over the state of the Chinese economy and the impact of the Chinese government's corruption crackdown on Macau gambling revenues.
Overall, the portfolio managed to sneak ahead of the market for the month, with a return of 4.2% compared to 3.2% for the All Ordinaries total return index. Since 1 July 2015, when the portfolio began accepting money for investment, it has returned 14.6%compared to 1.3% for the All Ords total return index. Since inception in July 2001, the portfolio has returned 10.4% a year compared to 7.7% a year for the All Ords.
The investment objective is to achieve a return of 1% above the All Ordinaries Accumulation Index per annum over three year rolling periods by investing in a diverse mix of Australian equities and cash.
GROWTH OF $10,000
PEFORMANCE SUMMARY TO 30 APRIL 2016
Source: Praemium, RBA. Returns are before expenses and fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 1 July 2015.
|PERFORMANCE TO 30 APRIL 2016||1 MONTH||3 MONTH||6 MONTH||SI* (P.A.)|
|Intelligent Investor Growth Portfolio||4.06%||7.55%||8.35%||13.59%|
|ASX All Ordinaries Accumulation Index||3.24%||6.54%||2.76%||1.26%|
|Excess to Benchmark||0.83%||1.01%||5.59%||11.11%|
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