Diversified Portfolios - Intelligent Investor Growth - 31 July 2016

COMMENTARY

PORTFOLIO COMMENTARY

After the fire and fury of Brexit, which handed our Growth Portfolio a loss of 4.1% for June (compared to a loss of 2.3% for the All Ordinaries Index), July was more sedate, with the portfolio and the index making it all back – and more – in almost straight line fashion.

By the end of the month, our portfolio had gained 7.1% compared to 6.3% for the index. Since the portfolio opened for investment on 1 July last year, it has delivered a total return of 20.8%, compared to 7.7% for the index. Since inception in 2001, it has returned 13.5% a year compared to the index’s 7.8%.

Among the best performers for the month were three of the portfolio’s smaller holdings, Nanosonics (up 25%), Hansen Technologies (up 22%) and Amaysim Australia (up 13%), which benefited from a return of risk appetite after the falls in June. South32 was another beneficiary of the improved sentiment, gaining 19% and rising to double its levels back in January.

Our two assisted reproductive services investments, Monash IVF and Virtus Health, gained 19% and 13% as investors continued to be attracted by their combination of yield and growth. Other notable gainers were IOOF Holdings and News Corp – which have both backed up their performances with solid results in early August.

Asian online car classifieds provider iCar Asia was the worst performer for the month, with a loss of 15% as investors digested the company’s weak June quarter sales figures. Since the end of July the company has warned that losses will increase sharply this year as it invests to consolidate its market-leading positions. A capital raising will now be needed and the shares have fallen another 40% since the end of July. The holding is worth less than 2% of the portfolio’s value, however, so the impact is relatively small.

Another notable faller has been Computershare, which lost 3% in July to add to its Brexit-inspired loss of 16% in June. Around a quarter of the company’s profits come from the UK, but it’s the focus for a larger slice of the company’s growth prospects so that proportion is likely to rise. Sterling’s 15% fall against the Aussie dollar since the Brexit vote will reduce the value of these earnings.

GROWTH OF $10,000

Income Reinvested

PEFORMANCE SUMMARY TO 31 JULY 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.

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