Value Strategy 1st anniversary performance update

The 5th February was the one-year anniversary of the Value strategy so it is a good time to review the performance of this strategy over this year. There is no doubt it was a wild ride for this strategy, so much so that the 5.1% fall we had on the day following the beginning of the strategy turned out to be insignificant compared to the subsequent moves. Overall, the portfolio returned a pleasing result with a one-year gain of 4.2% which compares to the ASX 200 gain of 2.4% over the same period. Based on the back-testing, we would expect at least this level of outperformance in the average year.

After steady performance in the first few months of trading, the strategy really showed its capabilities on 23 August when several of the portfolio companies reported their annual results. These results were so good that five of the ten holdings rose by more than 10% on this day, bringing the portfolio as a whole up to a 23.3% return for the year to date. Unfortunately, as general market sentiment started to turn, the portfolio performance also turned. The drawdown was spurred by worldwide fear as a result of trade wars between the US and China, Brexit, and rising interest rates by the US Federal Reserve. By the end of the year, the Value strategy was sitting on a 9.8% loss, having giving back all of its gains and then some.

While periods of weakness are usually when most investors have the greatest difficulty sticking to their strategy it is actually the time of greatest opportunity. The new year brought good things for Value. In January 2019 the strategy rallied 14.5% which lifted the since inception return back above zero and marked the end of an almost three-month period where the strategy was underwater. Subsequently in February, the strategy rallied a further 16%. Investors who started during the three-month period of weakness would be up substantially from their beginning investment and thus highlights the opportunity afforded by periods of weakness while investors who started at the inception of the strategy would now be up 23%! (before brokerage costs)

While we can't predict how 2019 will play out we are pleased with the progress so far. The strategy is now right at its all-time highs and the year-to-date results shown how quickly the strategy can climb. The current portfolio will remain unchanged at least until 5 March when the next rebalance occurs and now is as good a time as any to start the strategy. Please contact us at or call 1300 748 546 for more information.