INFINITY MULTI ASSET PORTFOLIOS – UPDATE

INFINITY MULTI ASSET PORTFOLIOS – UPDATE

We have made the decision to exit the Pendal Focus Australian Share Fund across our Moderate, Balanced, Growth and High Growth Portfolios. Pendal will be replaced with a straight switch into the Infinity Core Australian Equity Fund. This move provides us with better look through on the underlying exposures within the Portfolios and delivers this at a lower fee than Pendal. Overall, quality growth remains across the Portfolios.

It is important to note that the Infinity Core and Infinity SMID Australian Equity SMA’s will continue to be held in the Blended Balanced Portfolio. This update therefore does not impact this portfolio, nor does it impact the Infinity Index Plus Portfolio which hadn’t previously held this Pendal Fund.

INFINITY GLOBAL EQUITY PORTFOLIO (SINGE SECTOR) – UPDATE

We are adding slightly to our position in the Royal London Concentrated Global Share Fund (+1.5%) within the Infinity Global Equity Portfolio. This is being funded via a reduction in the portfolios hedged ratio (now 22.5%). This results in a reduction in our position within the JP Morgan Global Research Enhanced Equity Fund (-1.5%). Royal London continues to be our standout Global equity manager in the core space. With the likelihood that US rates will remain higher for longer, there is little downward pressure on the US$ at the moment. In addition, any further economic weakness domestically along with lower commodity prices and weaker Chinese growth will continue to mitigate the ability of the A$ to mover materially higher in the near term, continuing to range trade between 0.64-0.66.

INFINITY CORE AUSTRALIAN EQUITY PORTFOLIO – UPDATE

Additions/Increases

Following a strong half year result which saw Goodman Group (GMG) upgrade their FY24 earnings growth guidance from +9% to +11%, our level of confidence improved, and we increased our position. Despite the recent share price rally, we believe that the upgraded guidance remains conservative, and we continue to see upside risk in the near-term. Additionally, the further push into data centre development provides a large growth pipeline which now represents 37% of GMG’s $12.9b of work in progress and provides long-term growth in our view.

We’ve also increased our position in Wesfarmers (WES) after management delivered a solid half year result driven by a significant improvement in Kmart margins. Despite relatively stretched valuation metrics, we continue to view WES as a high-quality business with diversified revenue streams and long-dated growth options with Bunnings continuing to take share in DIY and Trade, Kmart making a step change in margins, expansion into Health, and exposure to energy transition and agricultural thematic.

Exits/Reductions

Lendlease (LLC) delivered another disappointing result at the half year which saw management downgrade FY24 return on equity expectations to 7% from a previous range of 8-10%. Given the earnings outlook remains unclear and our lack of confidence in management’s ability to meaningfully turn the business around and deliver adequate returns for shareholders over the short to medium term, we exited our position. As disappointing as LLC has been over the past 5 years, the portfolio has delivered strong alpha in the AREIT sector by being broadly underweight over the time period and having a larger exposure to our preferred company in the space being Goodman Group (GMG).

Following the positive news of the Altium (ALU) takeover, we’ve taken some profits and materially reduced our position with limited further upside to the original bid of $68.50 cash per share.

We’ve also reduced our positions in both Woolworths (WOW) and Transurban (TCL) as the businesses move into a softer margin and lower growth environment, respectively.