The Fund’s portfolio delivered a grossed-up income return of 1.68% during the month and 6.55% over the past 12 months, outperforming the Benchmark’s grossed-up income returns of 0.01% and 4.53%, respectively.
The Energy sector led the market higher as crude oil prices rebounded sharply during July, lifting the major oil and gas producers. The banks also extended their advance, with the major lenders supported by defensive sector rotation. These gains were partially offset by relative softness across rate-sensitive segments of the Real Estate and Consumer sectors, where the earlier re-rating stalled as bond yields firmed.
Within the Fund, the strongest contributors were Stockland Corporation Ltd (SGP) and BlueScope Steel Ltd (BSL). SGP contributed positively despite a rising bond yield backdrop. The stock recovered from earlier weakness, having been oversold while trading at a 10% discount to net tangible assets (NTA) with a 6% distribution yield. BSL was a strong performer, extending a sustained re-rating to a multi-year high on continued takeover optionality, with the SGH-Steel Dynamics consortium’s earlier proposal keeping a floor under the share price. In our view, BSL’s underlying investment case remains supported by strong fundamentals driven by the strengthening US industrial cycle.
Conversely, the Fund’s lack of ownership in the strong-performing energy majors, Woodside Energy Group Ltd (WDS) and Santos Ltd (STO), and its underweight position in Commonwealth Bank of Australia (CBA), despite CBA being the second largest position in the portfolio, detracted from relative performance, as all three rallied during the month. WDS and STO climbed as global oil prices rose when Middle East tensions flared, which re-rated the broader Energy sector. CBA, along with the other major banks, advanced as the market rotated toward defensive positioning, reinforcing its status as a perceived haven despite widely held overvaluation concerns.
Australia’s economy showed signs of easing inflation. The Australian Bureau of Statistics reported that annual CPI inflation slowed to 3.8% in the year to June, down from 4.0% in May. The RBA left the cash rate unchanged at 4.35% at its August meeting.
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.
DISCLAIMER: AGP Investment Management Limited (AGP IM) (ABN 26 123 611 978, AFSL 312247) is a wholly owned subsidiary of Associate Global Partners Limited (AGP) (ABN 56 080 277 998), a financial institution listed on the ASX (APL). AGP IM is the Responsible Entity and Vertium Asset Management Pty Ltd is the investment manager of Switzer Dividend Growth Fund - Active ETF (ARSN 614 066 849) (the Fund).
Any references to ‘We’, ‘Our’, ‘Us’, or the ‘Team’ used in the context of the portfolio commentary, is in reference to Vertium Asset Management Pty Ltd, as investment manager for the Fund.
This material has been prepared for general information only. It does not contain investment recommendations nor provide investment advice. It does not take into account the objectives, financial situation or needs of any particular individual. Investors must, before acting on this material, consider the appropriateness of the material.
Neither AGP IM, AGP, their related bodies corporate, entities, directors or officers guarantees the performance of, or the timing or amount of repayment of capital or income invested in the Fund or that the Fund will achieve its investment objectives. Past performance is not indicative of future performance.
Any economic or market forecasts are not guaranteed. Any references to particular securities or sectors are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities or sectors and no warranty or guarantee is provided that the positions will remain within the portfolio of the Fund.
Investors should seek professional investment, financial or other advice to assist the investor determine the individual tolerance to risk and needs to attain a particular return on investment. In no way should the investor rely on information contained in this material.
Investors should read the Fund’s Product Disclosure Statement (PDS) and consider any relevant offer document in full before making a decision to invest in the Fund. The Fund’s Target Market Determination and other relevant information can be obtained by visiting www.associateglobal.com.
