Performance Summary
* All Platypus Performance data is provided on an after fees basis.
Past Performance
July 2010
Month in Review
The Platypus portfolio increased by 5.7% in July, outperforming the benchmark ASX/S&P300 accumulation index by 1.2%. Financials, Materials and Consumer Staples were the best performing sectors in the portfolio in July, whilst Healthcare and Information Technology were the worst performing sectors.
OZL was the best performing stock in the portfolio in July. Oz Mineral’s share price was boosted by a number of factors including a rising copper price, strong quarterly production numbers and the acquisition of a 20% stake in Sandfire Resources. Other stocks in the portfolio adding to performance were CBA, David Jones and Westpac. A number of stocks not in the portfolio also added significantly to relative performance in the month. These include Woolworths, QBE, Telstra and Newcrest.
Stocks that detracted from performance in July included Computershare, Resmed and Cochlear. Computershare was affected by slowing rates of corporate activity across all markets and the healthcare companies lagged as market participants chased beta in the second half of the month.
Turnover was low in July at about 3% of the portfolio. We raised some cash towards the end of the month reducing positions in Westpac, BHP, OZL, ANZ, and Rio Tinto. We also sold out of ASX and added to Platinum Asset Management.
Sector in Review
Stock markets rallied in July as fears of sovereign debt default in Europe subsided and credit spreads contracted in the second half of the month. Economic data was generally weaker than expected throughout the month, especially in the United States, however robust earnings numbers eventually overwhelmed concerns of renewed economic malaise. The local market snapped back from a 3 month losing streak gaining almost 4.5% in July, though it remains more than 6% below where it started the calendar year.
The Industrials sector was the best performer in July, rising by 7.15% and led by transportation stocks. Financials, led by the banks, and Materials also performed well, rising by 5.57% and 4.92% respectively. Information Technology (-2.77%) and Telecommunications (-0.55%) were the only two sectors that did not participate in the rally in July.
Outlook
Although equity markets are trading in a more positive fashion as the concerns that plagued the market in the June quarter dissipate, little has occurred to materially change the outlook over the last month or so. In the US we will need to see the trend in the economic data reverse for their equity market to hold recent gains despite strong June quarter earnings numbers. Prospects of another round of monetary stimulus to jolt the US economy out of its current soft patch have risen, as has been recently acknowledged by the Federal Reserve.
Europe which has been the source of volatility in global capital markets this year has recently surprised positively on two fronts. First, the ‘European TARP’ announced in early May appears to have had a calming effect on markets much sooner than the TARP in the US did in late 2008. The results on stress tests on the banking system provided additional comfort although some of the assumptions used were criticised for not being harsh enough. Second, the economic data out of Europe has been strong despite the turmoil the sovereign debt market. Germany, it seems, has been thriving on the weaker Euro with strong exports and employment. Anecdotal evidence indicates that austerity measures that have been put in place in Greece are firmly in place despite the discontent of the population which is a positive for the integrity of the economic union and more importantly containing the fears of systematic risk making a comeback.
Domestically the government has mercifully called an early election, and the prospect of
additional interest rate increases have dissolved (at least in the short term) thanks to a good
inflation number for the June quarter and some weaker economic data.
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.