The Switzer Dividend Growth Fund – Active ETF (SWTZ or the Fund) delivered a grossed-up income return of 0.53% during the month, and 7.30% over the past 12 months, compared with the Benchmark’s grossed-up income returns of 0.00% and 4.55%, respectively. The Energy sector moved higher in January, in line with rising oil prices, while the Resources sector rallied on the strength of copper and aluminium prices. These gains were partially offset by broad-based weakness elsewhere in the market, led by sharp declines in the Information Technology sector.

The Fund’s portfolio delivered a grossed-up income return of 0.53% during the month, and 7.30% over the past 12 months, compared with the Benchmark’s grossed-up income returns of 0.00% and 4.55%, respectively. The Energy sector moved higher in January, in line with rising oil prices, while the Resources sector rallied on the strength of copper and aluminium prices. These gains were partially offset by broad-based weakness elsewhere in the market, led by sharp declines in the Information Technology sector.

Within the Fund, standout contributors included Orica (ORI), BHP Group (BHP) and Sandfire Resources (SFR). ORI’s share price rose despite the absence of company-specific news. Improving commodity prices are supportive of mining activity and are expected to underpin demand for the company’s explosives and premium blasting products. ORI has also been executing a strategic shift toward higher-value offerings, including the rollout of advanced digital blasting solutions, which enhance productivity and safety for mining customers and support margin expansion. BHP and SFR performed strongly as copper prices rallied during the month. Copper contributes approximately 45% of BHP’s earnings, while SFR is a copper pure-play and therefore a direct beneficiary of higher prices. The recent strength in copper reflects the scale of global hyperscaler capital expenditure programs. U.S. data-centre power demand has expanded from around 10 gigawatts at the time of ChatGPT’s launch to an estimated 80 gigawatts of capacity currently in the project pipeline — an eightfold increase in just three years.

Artificial Intelligence (or AI) data centres are exceptionally metal-intensive. Each gigawatt of hyperscale capacity is estimated to require approximately 25,000 tonnes of copper for high-voltage cabling, busbars, transformers, cooling systems and server hardware. Applied across the full 80 gigawatts of projected U.S. developments, this equates to roughly 2 million tonnes of incremental copper demand over the next five years – around 9% of current annual global copper mine production of approximately 22 million tonnes. By comparison, the global electric-vehicle sector, which produced around 17 million vehicles in 2024, is estimated to have consumed about 1.4 million tonnes of copper.

The Fund has taken profits by selling down several resource stocks, resulting in a higher level of cash. The accumulated cash is expected to be deployed into new attractive stock opportunities as we enter the February company reporting season.

Australia’s economy entered 2026 with steady growth but renewed inflation pressures, with the Consumer Price Index rising 3.8% in the year to December 2025. The economy grew 2.1% annually in the September 2025 quarter, supported by private investment and household spending. In response, the Reserve Bank of Australia lifted the official cash rate by 25 basis points to 3.85% in early February, signalling a more restrictive policy stance and tightening financial conditions for borrowers and businesses nationwide.

Looking ahead, the broader market remains vulnerable to elevated volatility, with pockets of significant overvaluation persisting across certain sectors and securities. The Fund continues to apply a disciplined investment approach, focusing on high-quality, undervalued businesses with strong fundamentals. By maintaining a diversified portfolio and emphasising income-generating investments, the Fund is positioned to deliver attractive income and sustainable long-term returns, while targeting lower volatility than the Benchmark in an uncertain market environment.