Performance Summary
* All Platypus Performance data is provided on an after fees basis.
Past Performance
March 2010
Month in Review
The Platypus flagship portfolio gained 6.3% in March, outperforming the benchmark ASX/S&P300 accumulation index by 0.56%. Positions in Financials, Industrials and the Consumer Staples sectors were the major contributors to performance. Our nil weighting in Telecommunications continued to assist the relative return of the portfolio. Cash and an underweight position in Energy stocks detracted from relative performance during the month. At the stock level contributions were relatively modest, Seek made the largest contribution whilst Chemgenix was the largest detractor to performance.
Turnover in March was just under 7% of the portfolio. The majority of the activity revolved around increasing the weighting of all three banks in the portfolio (CBA, Westpac and ANZ), which was funded with cash. The banks represent a very good risk/reward proposition at the moment in our view, exhibiting unusually strong earnings and dividend growth as bad debts roll off. We also added CSL back to the portfolio early in the month following a good half year result and resolution of our concerns over plasma pricing. The remaining activity on the buy side was adding a number of small cap names to the portfolio. On the sell side we reduced weightings in several names including Woolworths, BHP, Rio Tinto and JB HiFi. We also took some profits in Cochlear and Resmed following strong share price performance following their half year results and sold Chemgenix due to regulatory delays in their drug development program. The cash weighting decreased over the month, ending at 4.1%.
Sector in Review
The equity market had its strongest month since September 2009, closing the month at the top of the trading range that has persisted for the last six months. Partial resolution of the sovereign debt crisis in Greece and consistently better data coming from the US buoyed equity markets in March.
Energy (+9.66%) and Materials (+8.59%) led the Australian market higher as commodity prices rose across the board. The realisation that iron ore prices would settle at close to double last year’s level supported the major miners in particular. Healthcare (+6.33%) also had a strong month as investors reinvested into the sector following strong results from the major companies and the (long awaited) passing of the Health Care Reform Bill in the US. Healthcare has managed to outperform the broader market so far this year despite persistent currency headwinds. Telecommunication Services (0.39%) was once again the worst performing sector due to the combination of a poor result from Telstra and ongoing regulatory uncertainty.
Outlook
Looking forward we are confident that the market will resume its upswing but it is difficult to judge the timing. The S&P/ASX300 recently made a new high that could extend as the short term news flow remains positive. Banks should produce a good set of results over the next four weeks and corporate activity has picked up, most notably in the natural resources sectors. In addition the latest employment report from the US should give investors confidence that the economic data from the States will remain supportive for markets for a while yet. The major concern for equity markets remains potential volatility in interest rate markets; when will short rates in the US start to rise? Will new supply push bond yields to levels that affect equity valuations? How many sovereign bailouts will be required? And so on. We don’t think anyone has the answer to these questions; however equity investors need to keep one eye on these markets until stability returns.
Monthly Performance
*After fees.
Performance These figures represent past performance only. Past performance is no indication of future performance. Neither Platypus Asset Management Pty Limited, nor any of its representatives makes any representation as to the future performance or success of the fund. General Platypus Asset Management Pty Limited believes that the information contained in this document is accurate as at this time and date of issue. However, Platypus Asset Management Pty Limited provides no warranty of accuracy or reliability in relation to any information contained in this document and to the extent permitted by laws accepts no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether expressed or implied (including responsibility to any person by reason of negligence) is accepted by Platypus Asset Management Pty Limited, officer, agent or employee of Platypus Asset Management Pty Limited.