Please access the video via the link below, featuring Andrew Mouchacca, one of the Portfolio Managers of the Flinders Emerging Companies Fund:
Some of the things we talk about in our meetings with clients and the correspondence we send out, are that we remain comfortable and confident with the investments held in our portfolios. Just as we saw towards the end of 2021, during times of ‘excess’ where there is an overwhelming sense of positivity and often ‘greed’, all boats rise with the tide. This is when we see even poor quality and speculative investments increasing in value. On the flip side, the opposite is true, during times of ‘negativity’ and ‘fear’, all investments feel this impact, even the high-quality ones, where fundamentals haven’t changed.
In the Australian share market, we have seen investors selling smaller companies, resulting in share prices dropping. This has been felt by the Flinders Emerging Companies Fund which is held across a number of the Financial Keys model portfolios. However, this Fund continues to hold good quality stocks with potential for long term positive performance.
To provide an insight into this Fund Manager, how they are viewing the current state of play and the types of companies they are investing into, we requested a video update from the Manager.
The Australian equity market started the year with great gusto with key economic metrics broadly supporting the market. This swiftly turned in February and the local bourse continued to fall throughout the remainder of the quarter. The slide was largely due to the uncertainty over US President Trump's tariffs. Fear and speculation finally became reality as the index began its steep decent in early February, falling circa -10.3%; an official correction and potentially heading towards bear territory and global recession. The Australian market reacted sharply and negatively to the Trump tariffs during the March quarter and overall experienced its steepest losses since the onset of the COVID-19 pandemic. The Australian equity market ended the quarter down (-2.8%).
Although we haven’t received any calls, as we suspect most people are quite familiar with market volatility over the years, we thought this update would put some recent market movements into perspective.
It was a nervous start to the quarter for the Australian equity market (ASX 200), as the impact of China stimulus measures and implications of rising bond yields was being digested. The resources sector felt the brunt of this nervy start falling over 5% for the month of October, however the broader market did manage to reach an all-time high on the 15th of October closing above 8,300 for the first time.