The Fund’s portfolio delivered a grossed-up income return of 0.53% during the month and 7.12% over the past 12 months, compared with the benchmark’s grossed-up income returns of 0.01% and 4.82% respectively.

The Resources sector moved higher with iron ore, copper and aluminium prices all posting gains in October 2025. Lithium prices also staged a sharp rally during the month. These positive developments were partially offset by weakness in the Information Technology and Consumer Discretionary sectors.

Within the Fund, standout performers included Qube Holdings (QUB) and Challenger (CGF). QUB, a leading integrated logistics and port operator, appreciated despite the absence of major company-specific news. At current prices, the market is materially undervaluing QUB’s 50% stake in the Patrick Terminals container business. This asset has proven exceptionally successful, having been acquired in 2016 for an enterprise value of $2.9 billion and now valued at $6.6 billion. Remarkably, QUB trades on a PE multiple comparable with its pre-acquisition level, even though the business is now significantly more diversified, higher quality and more resilient.

CGF, a leading provider of annuities and retirement products, saw its share price rise following the Australian Prudential Regulation Authority (APRA) release of proposed capital settings for longevity products. The reforms will reduce the procyclical risks that have historically amplified volatility in insurers’ capital positions during periods of market stress. For CGF, the outcome would be a materially lower capital reserve requirement leading to improved return on equity, greater earnings stability, and potentially the ability to initiate a capital management program. The market’s positive reaction reflects growing recognition of these structural tailwinds. On the other hand, the Fund’s underweight position in Commonwealth Bank of Australia (CBA) detracted from relative performance as the stock rallied during the month in the absence of fundamental news.

The Reserve Bank of Australia (RBA) held the official cash rate steady at 3.60% in October, citing persistent inflationary pressures. The Consumer Price Index (CPI) rose 1.3% for the September 2025 quarter, bringing annual inflation to 3.2%, above the RBA’s 2–3% target range. Electricity costs surged 9%, contributing significantly to the quarterly CPI rise. Despite earlier rate cuts, the RBA remains cautious, noting that inflation has not eased as expected and the labour market remains tight.

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 by 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.