Portfolio Managers Emma Fisher and Joe Wright provide a quarterly update on the Airlie Australian Share Fund. Emma discusses the key performance drivers, including a reversal in the major Australian banks following federal budget impacts on investor lending, strength in diversified miners such as BHP and Rio, and a recovery in USD earners like Aristocrat.
Joe covers the investment cases for James Hardie and BlueScope, including the BlueScope takeover bid, before Emma provides a detailed healthcare sector review covering ResMed and CSL. Joe introduces a new position in Ridley Corporation, and Emma closes with her outlook for the ASX 200 heading into FY27.
Key takeaways
- The fund returned approximately 11% for the quarter, outperforming the S&P/ASX 200 Accumulation Index by 6.5% (net of fees). This performance was driven by a reversal in several headwinds including Australian bank valuations, materials strength and a recovery in USD earners.
- The federal budget materially impaired the outlook for investor lending, which represents approximately 40% of bank loan flows and tends to carry higher margins, creating a meaningful headwind for the major banks.
- BHP and Rio have risen over 60% in the past 12 months on the back of resilient iron ore markets and a positive copper outlook; the fund has taken some profits while remaining overweight materials.
- ResMed is viewed as a quality compounder with a strong earnings growth track record, trading on 16 times earnings with potential for multiple re-rating; CSL has been exited due to ongoing earnings uncertainty around albumin pricing in China and IG oversupply in the US.
- New position Ridley Corporation offers a structural earnings growth opportunity in animal feed and fertiliser distribution, trading on approximately 12 times forward earnings in FY27 with a strong capital allocation track record.
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