In December, the HNW Australian Equity Portfolio gained +5.66% but trailed the ASX200 TR return of +7.26% in a high beta Christmas rally to end the year. There was close to no company-specific news with companies in blackout before the release of their results in February.
Over the month some of our higher beta positions in Mineral Resources (+14%), Lend Lease (+13%), JB Hi-Fi (+11%) and Sonic Healthcare (+10%) unsurprisingly added value. Additionally, it was pleasing to see portfolio heavyweights CSL (+9%) and Macquarie (+9%) finish the year on a good note.
On the negative side of the ledger our insurance positions QBE (-4%) and Suncorp (-1%) dragged on performance on market concerns that interest rates may fall in 2024. Notwithstanding these concerns both of these companies are performing well at the moment, premium rates are increasing, underwriting looks good, and both have already revealed that cat claims for 2023 were around expectations (= few nasty surprises next month). QBE in particular looks to report a stellar result in February, increasing profits from US$664M in 2022 to our estimate of US$1,350 million for 2023. Suncorp is expected to deliver +21% profit growth and a special dividend in 1H CY 2024.
The HNW Equity Income Portfolio had a solid month up +5.5% and ahead of the blended benchmark’s return of +3.9%. Positions in Charter hall Retail (+13%), Mineral Resources (+13%) and Arena REIT (+9%) added value. Performance was similarly hurt by owning QBE and Suncorp. Pleasingly December was a good month for income with dividends being declared by CQR, TCL, RGN, IPL & ARF. These will hit HNW client’s bank accounts in the first two weeks of February.
Full Reports in to follow shortly.
