Given the state of the global bond market with yield curves indicating a minor uplift to rates in the US at the next FOMC, it’s plausible that the extended tilt away from small companies segments both domestically and abroad has been overdone.
The Fund returned -7.6% for the month of September vs -4.7% for the benchmark. An underperformance of -2.1% for Q3 of 2023, the first underperforming quarter for the Fund in the last 6 quarters.
Key holding and trade figures for the month are as follows:
- Traded a total of $5,584,310.93;
- Completed 106 trades;
- Sold 13 companies;
- Acquired 15 new companies;
taking the total number of companies as at the end of September to 32 holdings.
In this month’s newsletter, we reflect on how both low and high interest rates have affected equity markets and importantly, what it has meant for the Spatium Small Companies Fund.
- Read the September Newsletter
Given the state of the global bond market with yield curves indicating a minor uplift to rates in the US at the next FOMC, it’s plausible that the extended tilt away from small companies segments both domestically and abroad has been overdone. Put another way, it appears that the correction in this segment has anticipated an even higher terminal rate than currently on offer, and with inflation rates cooling in most developed economies, we remain resolute that this climate may be nearing a conclusive pivot.
Additionally, considering the current compressed valuation of the AUD, it seems increasingly likely that international investors will look to further exploit the weak AUD and either fully or partially acquire stakes in these businesses. Naturally, we’ve seen this occurring in the mining and resources segment of the ASX markets recently, albeit the M&A activity has been flying under the radar.
We continue to remain active at the terminal, rebalancing the portfolio regularly and positioning the Fund into the most attractive short-term price dislocations.
As always, should you have any queries or questions please do not hesitate to contact us,
Nick & Jesse
Co-Portfolio Managers
+61 422 040 119
www.spatiumcapital.com