The Australian sharemarket rallied strongly for the first six months of the financial year, but corrected heavily in the last quarter on a growing belief that the global economic recovery would not be as strong as previously forecast.
We had flagged this as a major reason to be cautious in our recent March adviser roadshows and had explained why we had positioned our Fund in defensive stocks such as Metcash and CSL while many other investors were chasing more cyclical stocks such as Boral and Bluescope Steel.
In fact, concerns over European sovereign debts, signs of continued sluggishness in the US economy and evidence that China’s economy was slowing to more sustainable levels emerged in the June quarter and this resulted in a sharp correction in the Australian sharemarket.
Given the continued uncertainties, we continue to position all our portfolios defensively, which is still very different to how many other value fund managers have positioned their funds. Our investment team continues to focus our portfolios on quality, dividend paying stocks and continue to look for companies that we believe can continue to travel well in the future despite our view that we are facing patchy economic conditions. We believe that our view will be further vindicated as the year progresses and we look to the reporting season for further evidence of the appropriateness of our portfolio positioning.
Everybody at IML continues to work hard to deliver upon your clients expectations and to once again position IML as the leading Australian Value Fund Manager.
