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WAM ACTIVE LIMITED — Net Asset Value 2012
Jun 7, 2012
66032_rns_2012-06-07_8234e31a-a566-40b1-b161-b627cb7ca14c.pdf
Net Asset Value
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WAM ACTIVE LIMITED (WAA) ABN 49 126 420 719 INVESTMENT UPDATE & NET TANGIBLE ASSETS REPORT MAY 2012
WAM Active Limited (WAA) offers investors exposure to an active trading style with the aim of achieving a sound return with a low correlation to traditional markets. The investment objectives are to deliver investors a growing income stream in the form of fully franked dividends and to preserve capital in both the short term and long term.
Outperformance against sharemarket
Since inception, the WAA Investment Portfolio has outperformed the overall sharemarket – its strong performance against the S&P/ASX All Ordinaries Accumulation Index is set out in the table below. The performance relates to the investments and excludes expenses and taxes.
| Performance as at 31 May 2012 |
1 Mth % |
6 Mths % |
Fin Ytd % |
1 Year % |
2 Yrs %pa |
3 Yrs %pa |
Since Inception (Jan-08) %pa |
|---|---|---|---|---|---|---|---|
| WAA Investment Portfolio S&P/ASX All Ordinaries Accumulation Index Outperformance |
-1.6% -6.9% +5.3% |
+3.1% +1.0% +2.1% |
+4.4% -7.3% +11.7% |
+2.0% -9.5% +11.5% |
+7.4% +0.6% +6.8% |
+14.9% +7.1% +7.8% |
+11.2% -5.4% +16.6% |
NTA figures
The following NTA figures are after the payment of a fully franked interim dividend of 4.5 cents per share paid on the 24 April 2012.
| NTA before tax | 105.76c |
|---|---|
| NTA after tax and before tax on unrealised gains | 107.40c* |
| NTA after tax |
106.08c** |
- Includes tax assets of 1.64 cents per share.
**Includes the net effect of 1.64 cents of tax assets and 1.32 cents of deferred tax liabilities.
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Wilson Active Limited| ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Market outlook
May was a torrid month for the Australian equity market with the S&P/ASX All Ordinaries Accumulation Index down 6.9%. This came after a relatively good start to 2012 and erased much of this years gain. The European sovereign debt crisis continued as a constant theme. The crisis weighed heavily on equity markets following a brief respite due to liquidity measures adopted by the ECB from December to March. Greece is now seemingly edging closer to a Euro exit and Spain to a bailout of its banking system.
However more worrying for Australian investors were signs of a slowdown in China and the mining majors making noises about the high cost and low productivity of Australian projects. This lead to resources, and particularly the small resources sector, being sold off aggressively during May. Adding to the Chinese slowdown was the worsening macroeconomic data from US. This suggests the US recovery is starting to wane leaving no economic powerhouse to drive global growth.
Following a ferocious pace of earnings downgrades in April, the trend continued in May with downgrades from Myer and Toll Holdings. We are expecting further earnings downgrades from companies in the coming weeks. The Australian Bureau of Statistics reported drops in retail sales, house prices and building approvals, which provides further evidence of the worsening economic environment.
Despite the Reserve Bank cutting interest rates by 0.5% in early May, Australian equities continued their falls. The RBA cut rates by 0.25% in June but traders are still pricing in further possible rate cuts in 2013. We believe a series of rate cuts will ultimately be a positive for industrial companies as they will stimulate the non-mining economy.
Government bond yields have tumbled globally over recent weeks with short terms bond yields even turning negative in some instances. The German 2 year notes saw yields of -0.12% at one point. Government bond yields are now hitting multi-decade lows and in some case all time historic lows across many different countries including the US, Australia, Germany and the Netherlands. UK 10 year government bond rates are at their lowest levels since 1715. Australian 10 year bond yields have fallen from 4.08% at the 31st March to 3.07% at the time of writing a fall of 25%. These steep falls in yields have been greater then the decline seen in equity markets and the current gap between the two suggest a significant dislocation to the normalised relationship between the two asset classes. Both the speed and the size of the declines recorded suggest the bond market at least is pricing in a significant global downturn. If this is the case it would then infer a further drop in equity markets in the coming months in order to remove the current dislocations we are seeing.
Given the recent movements in the bond market and deteriorating global and local macroeconomic picture we have become more conservative in our outlook for equity markets in 2013.
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Wilson Active Limited| ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Dividends – 4.5 cents per share fully franked interim
On 24 April 2012, the Company paid a fully franked interim dividend of 4.5 cents per share. This is a 12.5% increase on the previous year’s interim dividend.
The Board is committed to paying an increasing stream of fully franked dividends to shareholders provided the Company has sufficient franking credits and it is within prudent business practices. It must also comply with Government legislation and the ATO’s interpretation of a company’s ability to pay franked dividends. Dividends are paid on a six-monthly basis.
Providing the Company is deemed solvent by the Board, the Company should always be in a position to pay dividends.
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* Annualised interim dividend
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Option issue – 1 for 1 bonus issue
On 4 May 2012, the Board announced a 1 for 1 bonus issue of options to acquire ordinary shares in the capital of the Company. The options will have an exercise price of $1.08 per share and they will expire 12 December 2013. The options will trade on the ASX under the code WAAO.
The ex date for the bonus option issue is 14 June 2012. The record date for participation is 20 June 2012.
Further details of the bonus option issue will be provided in the Prospectus to be sent to shareholders of the Company in late June.
The Board of WAM Active is focused on creating shareholder value and growing the Company and believes this bonus option issue will promote this endeavour.
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Wilson Active Limited| ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Portfolio structure
| As at 30 Apr 2012 | As at 30 Apr 2012 | As at 31 May 2012 | As at 31 May 2012 | ||
|---|---|---|---|---|---|
| Investment Type | **$m ** | % | $m % |
||
| Listed Equities | 7.8 | 42.6% | 9.2 | 51.6% | |
| Fixed Interest and Cash | 10.5 | 57.4% | 8.7 | 48.4% | |
| Total Long Portfolio | 18.3 | 100.0% | 17.9 | 100.0% | |
| Total Short Portfolio | (0.5) | (0.4) | |||
| Total Fund Size | $17.8m | $17.5m | |||
| No. | No. | ||||
| Total ordinary shares on issue | 16,309,945 | 16,309,945 |
At 31 May 2012 the major securities held in the portfolio were as follows:
| Code | Company | Market Value $ |
Market Value as % Gross Assets |
|---|---|---|---|
| LDW | Ludowici Limited | 567,366 | 3.2% |
| CCQ | Contango Capital Partners Limited | 545,006 | 3.0% |
| SDG | Sunland Group Limited | 497,868 | 2.8% |
| EPX | Ethane Pipeline Income Fund | 449,860 | 2.5% |
| AIX | Australian Infrastructure Fund | 404,905 | 2.3% |
| TLS | Telstra Corporation Limited | 371,046 | 2.1% |
| CBAPB | CBA Perpetual Exc Resale Listed Sec-PERLS IV | 367,799 | 2.1% |
| ILF | ING Real Estate Community Living Group | 365,502 | 2.0% |
| IIN | iiNet Limited | 362,694 | 2.0% |
| SUN | Suncorp Group Limited | 351,062 | 2.0% |
| CYG | Coventry Group Limited | 348,759 | 1.9% |
| CLO | Clough Limited | 343,213 | 1.9% |
| RHG | RHG Limited | 315,669 | 1.8% |
| PRV | Premium Investors Limited | 295,535 | 1.6% |
| PMC | Platinum Capital Limited | 292,694 | 1.6% |
| MMX | Murchison Metals Limited | 288,426 | 1.6% |
| CMIPC | CMI Limited Conv Pref Class A | 257,259 | 1.4% |
| CND | Clarius Group Limited | 201,282 | 1.1% |
| CDD | Cardno Limited | 184,526 | 1.0% |
| SPL | Starpharma Holdings Limited | 181,736 | 1.0% |
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Wilson Active Limited| ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Portfolio structure – sector allocation
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Performance – yearly comparison to All Ordinaries Accumulation index
Set out below is the performance of WAA’s investment portfolio since listing to 31 May 2012 on a financial year basis. The performance data is before all expenses, fees and taxes and is used as a guide to how the Company’s investment portfolio has performed against the S&P/ASX All Ordinaries Accumulation Index which is also a before tax and expenses measure.
| Financial Year | Gross Portfolio |
S&P/ASX All Ordinaries Accumulation Index |
Outperformance |
|---|---|---|---|
| 2007/2008 2008/2009 2009/2010 2010/2011 YTD 2011/2012 |
+2.2% +9.6% +22.7% +11.5% +4.4% |
-15.2% -22.2% +13.8% +12.2% -7.3% |
+17.4% +31.8% +8.9% -0.7% +11.7% |
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Wilson Active Limited| ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Performance - monthly comparison
The table below shows the month by month investment performance of WAA against the S&P/ASX All Ordinaries Accumulation index.
| Jan 08 | Feb 08 | Mar 08 | Apr 08 | May 08 | Jun 08 | Jul 08 | |
|---|---|---|---|---|---|---|---|
| Gross Portfolio* | +0.3% | +1.2% | +0.5% | +1.6% | +2.4% | -3.7% | -1.1% |
| All Ords Accum. | -11.2% | +0.3% | -4.1% | +4.6% | +2.5% | -7.3% | -5.2% |
| Aug 08 | Sep 08 | Oct 08 | Nov 08 | Dec 08 | Jan 09 | Feb 09 | |
| Gross Portfolio* | +0.1% | -3.8% | -5.3% | -5.2% | +3.4% | -1.9% | +0.6% |
| All Ords Accum. | +4.0% | -10.6% | -13.9% | -7.2% | -0.1% | -4.9% | -4.3% |
| Mar 09 | Apr 09 | May 09 | Jun 09 | July 09 | Aug 09 | Sep 09 | |
| Gross Portfolio* | +4.5% | +7.6% | +5.0% | +6.2% | +9.6% | +7.5% | +6.2% |
| All Ords Accum. | +8.1% | +6.1% | +2.2% | +3.9% | +7.7% | +6.5% | +6.0% |
| Oct 09 | Nov 09 | Dec 09 | Jan 10 | Feb 10 | Mar 10 | Apr 10 | |
| Gross Portfolio* | +2.1% | +0.3% | +1.0% | -3.6% | +0.0% | +2.9% | +0.4% |
| All Ords Accum. | -1.9% | +1.9% | +3.7% | -5.8% | +1.8% | +5.8% | -1.2% |
| May 10 | Jun 10 | Jul 10 | Aug 10 | Sep 10 | Oct 10 | Nov 10 | |
| Gross Portfolio* | -4.0% | -0.9% | +1.6% | +0.1% | +2.7% | +1.3% | +2.3% |
| All Ords Accum. | -7.6% | -2.6% | +4.2% | -0.7% | +5.0% | +2.2% | -0.7% |
| Dec 10 | Jan 11 | Feb 11 | Mar 11 | Apr 11 | May 11 | Jun 11 | |
| Gross Portfolio* | +3.6% | +0.7% | -0.3% | +0.4% | +2.5% | -1.6% | -2.3% |
| All Ords Accum. | +3.8% | +0.1% | +2.2% | +0.6% | -0.6% | -1.9% | -2.4% |
| Jul 11 | Aug 11 | Sep 11 | Oct 11 | Nov 11 | Dec 11 | Jan 12 | |
| Gross Portfolio* | +0.0% | -1.2% | +0.7% | +2.1% | -0.4% | -1.0% | +1.0% |
| All Ords Accum. | -3.4% | -2.0% | -6.3% | +7.2% | -3.4% | -1.6% | +5.2% |
| Feb 12 | Mar 12 | Apr 12 | May 12 | Since Inception |
|||
| Gross Portfolio* | +3.5% | +1.1% | +0.0% | -1.6% | +59.9% | ||
| All Ords Accum. | +2.4% | +1.2% | +1.1% | -6.9% | -21.9% |
*The change in the portfolio before all expenses, fees and taxes.
For more information
Please contact Geoff Wilson or Chris Stott.
Wilson Asset Management Level 11, 139 Macquarie Street, Sydney NSW 2000 GPO Box 4658 Sydney NSW 2001
Phone 02 9247 6755 Fax 02 9247 6855 [email protected]
www.wamfunds.com.au
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Wilson Active Limited| ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au