Prime SMA Performance Summary – September 2021

The indomitable optimism that has fuelled risk assets to be priced to perfection was punctuated by more sober expectations in September.

Notably, after 11 sequential months of positive returns the ASX 200 contracted in September by concerns of slowing earnings growth and the Federal Reserve signalling they are ready to tighten monetary policy.

Investors have enjoyed a long stretch of share price gains bolstered by an extraordinarily recovery in company earnings and highly accommodative policy settings, underpinned by government spending and record low interest rates. The combination of both factors has led the markets to recent record highs.

Principally, five key risks are currently weighing on stock market sentiment and trajectory of corporate profits: (1) A slowdown in China’s economic activity particularly evident in their commodity intensive infrastructure & property sectors, (2) rising energy costs and supply disruptions, (3) ongoing global supply chain bottlenecks, (4) the deleterious impact of the NSW & Vic lockdowns, & (5) signalled tightening by the US Federal Reserve leading to rising bond yields weighing on risk asset valuations.

On an attribution front, the Financials and Energy sectors provided the greatest contribution to overall index returns for September, whilst Materials were the worst performing sector. The PRIME Australian Equity Growth portfolio finished the month of September down -0.25% compared to the ASX 200 Accumulation Index down -1.85%.

Positive contribution for the portfolio was driven by Santos (STO), News Corp (NWS), and Macquarie Group (MQG). Whereas BHP Group (BHP), CSL Limited (CSL), and Marley Spoon (MMM) weighed on attribution.

We firmly believe that our equity portfolios’ weighting tilted toward the attributes of Quality (earnings resilience & industry leadership) and Value (margin of safety) are warranted.

A cash weighting of ~7% also provides us the flexibility to invest counter cyclically as investment opportunities emerge. We can deploy our cash to existing stocks in the portfolio and/or stocks on our active watchlist.

Portfolio Performance Figures

Risk Profile Portfolio Performance Figures as at 30 September 2021

Post-Franking Credits

Prime SMA – Model Portfolio Performance Figures as at 30 September 2021

Post-Franking Credits

About the Portfolio

Portfolio Objective
To achieve capital growth with moderate tax-effective income via franked dividends through investment in listed Australian securities.

Model Portfolio
The Model Portfolio is managed by selecting primarily those securities with moderate growth potential but robust cash-generating capacity. These securities are expected to deliver an above-market average income yield, together with a relatively moderate level of capital growth. The portfolio benchmark is the S&P/ASX200 Accumulation Index.

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.


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