The Fund’s portfolio delivered a grossed-up income return of 0.53% during the month and 6.85% over the past 12 months, compared with the benchmark’s grossed-up income returns of 0.66% and 5.18%, respectively.

The Resources sector led market gains, buoyed by rising commodity prices following China’s ‘anti-involution’ campaign, which aims to curb excessive competition and foster sustainable economic growth. However, these gains were tempered by losses in the Health Care sector, particularly CSL.

Within the Fund, strong performances from Seek (SEK) and Ampol (ALD) drove positive returns. SEK’s financial year results for 2025 met market expectations, with declining Australia and New Zealand job advertising volumes beginning to stabilise and a conservative 10% yield growth forecast, supported by the launch of its advanced tier product. Easing monetary policy is expected to support economic activity and ad volumes over time. ALD announced the acquisition of EG Australia for $1.1 billion. By consolidating the sector, ALD is set to enhance profitability through greater economies of scale, delivering accretion to earnings per share (EPS) in the high-single digits and to free cash flow per share in the double digits. The deal, pending approval from the Australian Competition & Consumer Commission, is slated for completion by mid-2026. The Fund’s performance was further enhanced by its zero exposure to Commonwealth Bank of Australia, which reported in-line results but saw market rotation into other large-capitalisation stocks, including the three major banks and Wesfarmers.

Conversely, Amcor (AMC) weighed on performance after reporting a weaker-than-expected fourth quarter result, driven by soft volumes and cost challenges in its North America beverage business. AMC is exploring the sale of this division, potentially valued at over $1 billion. Despite the setback, AMC trades at a record-low price to earnings ratio, supported by high single-digit EPS growth from its recent Berry Global acquisition.

The Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to 3.6% in August, its third reduction this year, as economic growth weakened amid persistently low productivity. The RBA signalled further rate easing may be needed to support its inflation and employment goals. The annual inflation rate (Consumer Price Index) eased slightly to 2.1% in the June quarter, down from 2.4% in the March quarter.

The broader market remains susceptible to heightened volatility, with pockets of significant overvaluation persisting across certain sectors and securities. The Fund continues to adopt a disciplined approach, steering clear of overpriced assets and focusing on high-quality, undervalued opportunities with strong fundamentals. By maintaining a diversified portfolio and prioritising income-generating investments, the Fund is strategically positioned to deliver attractive income streams and sustainable long-term returns. This approach also aims to achieve lower volatility than the benchmark, providing investors with a resilient and balanced investment option in an uncertain market environment.