October Fund Performance
Started from the bottom now we here
Hi Everyone,
Little late this month and things have moved on since 31 Oct with Trump victory.
See below month end fund performance data ranked by monthly performance. 1 Year and 3 Year data ranked by:
Best performing funds highlighted in grey
Worst performing funds highlighted in yellow
HOUSEKEEPING
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Fixed Income
Flippening has happened, hope you had your steepeners on because the inverted yield curve in the US is over. 10yr bonds trade higher than 2yr again – doomsayers will have you know recession inbound
US NFP number was the scary part – noisy data but it is cause for concern if it stays anywhere near the last print
Duration killed, credit wins – credit spreads super narrow however so the room for error is thin
FI LICs
Returns are highly influenced by movements in share price rather than movements in the underlying portfolio value.
Impressive returns over the last 1 & 3 years
Many new products coming in the next year – cycle starts again!
Domestic Large Cap
The bad months have dropped out and nothing but good times reflected in the 1 year number now
1yr ASX200 performance driven by Goodman, Aristocrat, the banks, and Wesfarmers – how many funds were benchmark weight to these companies? Very very few.
Only 1/3 of funds outperformed the benchmark over 1 & 3 years.
Domestic Mid/Small Cap
Small and mid caps generating similar returns to large caps, yet way more funds able to outperform – excellent relative and absolute returns all around
High fee loads but the ends justify the means? Outcomes matter, shouldn’t we all worry more about net returns?
Domestic Micro-Cap
Same comments are above down here too
ECM activity rising in this part of the market – great signs for the year ahead
International Equities
So hard to keep up with markets – how much alpha are you getting for those fees and who really has an edge here? I just need to hear another manager talk to me about quality stocks while they pile into the same names as everyone else…
Lets use Semiconductors as an example – most funds I speak to have exactly the same view of buying ASML because NVDA is expensive and its better to buy the picks and shovels. How many have mentioned interconnects or networking? How many elucidate a proper view on NVDA other than “its expensive and hard to forecast earnings”? What in the world are you getting paid for?
Infra + REITS
Tough month as duration got a walloping – but interesting to see the dispersion over the return over the month.
Other
Gold over 3 yrs is insane – how long can this continue? See the Gold Miners ETF (GDX) has significantly underperformed the price of gold over 3 years.
Anyone with double digit returns over 3 years is doing very well
GICS Sectors
Check out the % of sectors that beat the ASX200 – need to get your sectors right as the winners are not evenly distributed.
Rates are up over 3 years yet financial and utilities the best performing after gold – who would have thought?
Markets bottomed around 12 months ago for everything except energy stocks – how does Trump (drill baby, drill) encourage the
There is a LOT riding on Santos’ delivering that FCF target that they’ve been touting in all their presentations
Bonus Round
Bitcoin going mad from 1 Oct through to today – remember that options are now tradable on Bitcoin ETFs – ultimate reflexivity
I am also becoming worried that the next sell off will be absolutely brutal, perhaps the worst on record – the ETF makes the emotional decision of selling so much easier and without a natural buyer in market the lack of liquidity in the underlying will act like leverage.
As an aside - anyone who wants to learn about crypto, what markets are like since 2021 and trading in general – you should have a punt at something ridiculous – go buy a single Solana and then buy a meme coin – mega fun. Way more fun than the pokies or horses.
Thoughts of the month
Taken for a Joye ride - Part 14
As a reminder, our favourite bearish commenter let everyone know the S&P500 was set up for a “terrible” decade. It’s now been over 12 months and despite his fund doing incredibly well, he’s been absolutely stomped by equity markets.
From 13 Sep 2023 to 31 October 2024:
The man managed to bottom tick markets.
I’m going to put this one to rest now – unless we get a massive equity sell off expect no further reporting until this time next year.
US Outcomes
No super strong opinions about anything really, stuff that concerns me:
US employment numbers were atrocious earlier this month but completely lost in the noise of the election. I can underwrite a strong market sell-off if the job numbers disappoint. Fed might end up looking like heros if they’ve looked like they’ve moved early in response
Trump victory means some parts of the market working very well – distinct possibility that these same names and sectors keep rallying through to inauguration and markets price in absolute perfection
If US fiscal spending is reigned in a tiny bit, I think it open up the possibility of further monetary stimulus – more rate cuts!
Fees and Active Management
I appreciate it is just easier to index and go long equities – KISS. Best outcomes by just DCA over the long run.
But unfortunately, not everyone has that liquidity requirements and there are sometimes opportunities outside straight large caps.
Hopefully the above tables give you comfort around passive vs active and where you can play so that you’re likelier to win by having an active exposure.
Thanks
Well done for making it this far and it pleases me you are reading this sentence. I thank you for reading the above and I hope it has provoked some thoughts.
Formalities
If you are thinking about starting a new fund, are a new manager or an existing manager, an analyst, or would like your vehicle to be part of the list I track, I’m always keen to chat.
Likewise, if you just want to have a good old chat, I’m always free to do that too :)
Always a great and informative read. Always look forward to the newsletter !
Good impartial opinion….. and far too infrequent !