Q42019All data and information as at Portfolio Date: 31/12/2019

Australian Shares IncomeManaged Account PortfolioQuarterly Performance Update

Investment Growth of $10,000

Time Period: 1/08/2001 to 31/12/2019

2004 2007 2010 2013 2016 2019-10,000.0

10,000.0

30,000.0

50,000.0

70,000.0

Portfolio S&P/ASX 200 TR AUD

Returns Relative to Benchmark

As of Date: 31/12/2019

1 month 3 month 1 year 3 years p.a

5 years p.a

Since Incp % p.a

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

-2.2

1.0

16.9

5.3 5.6

10.1

-2.2

0.7

23.4

10.3 9.0 8.5

Portfolio S&P/ASX 200 TR AUD

Retu

rn

Past performance is not a reliable indicator of future performance.Returns over 12 months are annualised.

Top Holdings

Weighting %

Cash Account

Link Administration Holdings Ltd

Pendal Group Ltd

Commonwealth Bank of Australia

Crown Resorts Ltd

Telstra Corp Ltd

Computershare Ltd

AGL Energy Ltd

Sonic Healthcare Ltd

Vicinity Centres

5.6

4.9

4.7

4.5

4.4

4.4

4.3

4.2

4.2

4.2

At a Glance

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Expectations of ‘lower for longer’ interest rates, both domestically and abroad has resulted in an exceptional period for share markets, including Australia.

Understandably, investors are feeling confident, but we must be mindful of behavioural biases that may lead others to look beyond the increasing risk of loss in key markets.

Shares rallied in late 2019 to cement a strong year of gains across major equity markets around the world, including Australia. Looking back over one of the stronger years on record, the common catalyst was the influence of central banks, whose support came in response to sluggish growth (both economically and in terms of corporate profitability). That said, counter to earlier signals, the global economy proved more resilient than many expected as the year wound to a close. This coupled with trade fears subsiding and greater clarity regarding a potential Brexit outcome (following Boris Johnson’s convincing victory in the U.K. election), sent shares to record highs in many parts of the world.

We should not underestimate the significance of the 2019 rally—with both shares and bonds rising quite substantially, fuelling strong portfolio returns. Upon reflection, however, it only seems right to call 2019 the year of contrast. On the one hand, it was a great year for investors. Double-digit returns in share markets will usually put a smile on most faces. But on the other, we’ve endured one of the more unpredictable periods in history, with low interest rates, heightened geopolitical uncertainty and stretching asset prices dominating question time. Indeed, these returns have been achieved with very little regard for risk.

Regardless of how we got here, it is hard to look past the evidence linking expensive valuations to lower future returns. As such, we must be mindful of behavioural biases that paint these recent returns as reasonable and sustainable expectations for the future. With this in mind, we continue to focus on delivering the maximum amount of return, for a given level of risk, as opposed to just generating returns without regard for the risk taken in achieving them. Ultimately, our process looks to identify unloved assets that we think will help deliver investor outcomes over the longer term.

As of 31/12/2019

Average Relative Weights over the Quarter

Software and Services

Health Care Equipment and Services

Diversified Financials

Consumer Services

Utilities

Energy

Telecommunication Services

Media & Entertainment

Real Estate

Commercial Services and Supplies

Insurance

Capital Goods

Retailing

Household and Personal Products

Consumer Durables and Apparel

Automobiles and Components

Food, Beverage and Tobacco

Food and Staples Retailing

Transportation

Banks

Pharmaceuticals and Biotechnology

Materials

-20.0 -10.0 0.0 10.0

6.6

6.1

4.5

4.2

2.2

1.8

1.7

1.6

1.1

1.0

0.9

0.5

0.3

-0.1

-0.1

-0.1

-0.6

-3.9

-4.4

-6.6

-6.6

-15.5

Transactions in the Quarter

ANZAPIBXBCCLCIMCTXPDLRHCSGPSYDWHC

Australia & NZ Banking Group LtdAustralian Pharmaceutical Industries LtdBrambles LimitedCoca-Cola Amatil LtdCIMIC Group LtdCaltex Australia LtdPendal Group LimitedRamsay Health Care LimitedStocklandSydney AirportWhitehaven Coal Limited

IncreasedRemovedIncreasedDecreasedAddedIncreasedIncreasedDecreasedRemovedRemovedAdded

Equity Region Exposure

Portfolio Date: 31/12/2019

%Australia 100.0Total 100.0

Equity Sectors (GICS)

Portfolio Date: 31/12/2019%

Financials 32.0Consumer Discretionary 10.8Information Technology 9.8Healthcare 9.0Energy 8.8Real Estate 8.3Communication Services 7.4Industrials 6.2Utilities 4.5Materials 2.2Consumer Staples 1.1Total 100.0

Asset Allocation

Portfolio Date: 31/12/2019

%

Stock 94.4

Cash 5.6

Total 100.0

As of 31/12/2019

Risk-Reward

Time Period: Since Common Inception (1/08/2001) to 31/12/2019

Std Dev

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Portfolio Australia Fund Equity Australia Large Blend

Retu

rn

Sector Exposure

Portfolio Date: 31/12/2019

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

Consumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Information Technology

Materials

Real Estate

Telecom Services

Utilities

Portfolio S&P/ASX 200 TR AUD

Risk

Time Period: Since Inception to 31/12/2019

Inv Bmk1

Return % pa

Std Dev

Max Drawdown

10.13

11.12

-46.34

8.46

12.38

-47.18

Market Performance

Time Period: Since Inception to 31/12/2019

Inv Bmk1

Up Period Percent

Down Period Percent

Best Month

Worst Month

Best Quarter

Worst Quarter

62.90

37.10

8.47

-11.51

17.12

-15.78

62.90

37.10

7.98

-12.61

21.50

-18.25

Complete List of Holdings

Portfolio Date: 31/12/2019

Franking (%) (est): 65.7% | Div Yield (%): 4.5% CodeStyle

Box

TotalRet 3Mo

(Qtr-End)

PortfolioWeight

%

Cash AccountLink Administration Holdings LtdPendal Group LtdCommonwealth Bank of AustraliaCrown Resorts LtdTelstra Corp LtdComputershare LtdAGL Energy LtdSonic Healthcare LtdVicinity CentresBrambles LtdCaltex Australia LtdNational Australia Bank LtdScentre GroupAustralia and New Zealand Banking Group LtdWestpac Banking CorpPlatinum Asset Management LtdBapcor LtdAnsell LtdWoodside Petroleum LtdPerpetual LtdMedibank Private LtdCarsales.com LtdInvoCare LtdMineral Resources LtdCIMIC Group LtdQBE Insurance Group LtdWhitehaven Coal LtdCoca-Cola Amatil LtdRamsay Health Care Ltd

5.634LNK Ì 4.898PDL Ê 4.689CBA Ç 4.462CWN Ê 4.393TLS È 4.390CPU Ì 4.338AGL È 4.207SHL É 4.188VCX Ê 4.164BXB É 3.885CTX Ë 3.882NAB Ç 3.665SCG È 3.637ANZ Ç 3.513WBC Ç 3.402PTM Ê 3.360BAP Ï 3.285ANN Ë 3.232WPL È 2.886PPT Í 2.637MPL Ë 2.602CAR Ì 2.600IVC Î 2.534MIN Ë 2.038CIM Ç 1.945QBE È 1.895WHC Ë 1.529CCL Ê 1.081RHC É 1.030

19.621

7.150

0.2352.807

3.9010.855-0.332-1.151

2.496

28.989

6.604

-14.276

4.298

5.910

-15.553-10.835

-0.117

-2.545

-7.059

-13.043

2.548

8.633

9.829

5.374

-15.113

6.177

23.318-4.903

3.85011.808

As of 31/12/2019

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