Institutional Monthly Update

Performance Review

Plato Australian Shares Enhanced Index Composite (gross of fees and expenses) outperformed the S&P/ASX300 Accumulation Index by 0.08% in June. The largest contributors to active performance included overweight positions in Pro Medicus, Aristocrat Leisure and AustBrokers as well as underweight positions in Arcadium Lithium and Liontown Resources. However, overweight positions in Mineral Resources, Pilbara Minerals, Deterra Royalties and Northern Star as well as an underweight position in Commonwealth Bank detracted from relative performance. The strategy has tracked 0.78% p.a. ahead of its benchmark since inception and delivered an information ratio of 0.8.

Plato Australian Shares Tax-Exempt Composite (gross of fees and expenses) underperformed the S&P/ASX200 Accumulation Index (post franking credits) by 0.10% in June whilst achieving greater than 20% lower carbon intensity exposure than the benchmark. The largest contributors to active performance included overweight positions in Suncorp and Macquarie as well as underweight positions in Fortescue, South32 and Arcadium Lithium. However, overweight positions in Mineral Resources, Rio Tinto, BHP and Northern Star as well as an underweight position in Insurance Australia detracted from relative performance. The strategy has tracked 1.45% p.a. ahead of its benchmark since inception and delivered an information ratio of 0.8.

Plato Australian Shares Income Composite (gross of fees and expenses) underperformed the S&P/ASX200 Accumulation Index (post franking credits) by 0.33% in June. The largest contributors to active performance included were overweight positions in Origin Energy and Suncorp as well as underweight positions in Fortescue, South32 and Paladin. However, overweight positions in Rio Tinto, Ampol and BHP as well as underweight positions in Woolworths and Insurance Australia detracted from relative performance. The strategy has tracked 1.70% p.a. ahead of its benchmark since inception, with an information ratio of 0.9.

Plato Australian Shares Low Volatility Income Composite (gross of fees and expenses) outperformed the S&P/ASX300 Accumulation Index (post franking credits) by 0.49% in June. The largest contributors to active performance included an overweight position in Steadfast Group as well as underweight positions in Mineral Resources, BHP, Fortescue and Pilbara Minerals. However, overweight positions in Deterra Royalties, Red 5 and Monadelphous Group as well as underweight positions in Commonwealth Bank and Macquarie detracted from relative performance. The strategy has delivered a 20% higher Sharpe ratio than that of the market since inception and has tracked 0.10% p.a. above its benchmark since inception in March 2013.

Plato Australian Defensive Income Composite (gross of fees and expenses) underperformed the S&P/ASX200 Accumulation Index (post franking credits) by 0.42% in June. The largest contributors to active performance included overweight positions in Pro Medicus and Challenger as well as underweight positions in Mineral Resources, Pilbara Minerals and South32. However, overweight positions in Fortescue, Rio Tinto, Red 5, Deterra Royalties and Northern Star detracted from relative performance. The strategy has outperformed its benchmark by 2.28% over the last 12 months, with an upside/downside capture ratio of 100/83. The strategy has delivered income of 7.48% over the last 12 months, with 2.05% coming from option income.

Plato Global Shares Low Carbon Enhanced Composite (gross of fees and expenses) delivered a significant reduction in carbon exposure, reducing both carbon intensity (-75.1%) and carbon footprint (-75.3%) versus the index. The Fund posted a total return of +1.87% in June, outperforming a positive benchmark. Low carbon intensive names outperformed in the month of June, providing a tailwind for the Fund. The Funds’ largest positive contribution to active return came from exposures in the Utilities and Information Technology sectors. The weakest sector was Industrials.  At the country level, strong stock selection in the United States and Canada offset weakness in the United Kingdom. The main positive stock contributors to performance included an overweight to Japanese electronics business, Hitachi Limited, and underweights to struggling Energy exclusions Exxon Mobil Corp and Chevron Corp.

The Plato Global Shares Income Composite (gross of fees and expenses) returned a positive +1.42% in June, slightly underperforming a strong benchmark. The Fund continued to generate strong excess income. From a country perspective, the drivers were Italy and Austria.  At the sector level, income was driven by Financial and Energy companies. Dividend paying companies trailed non dividend payers, providing a significant headwind to the Fund. Over this period, the Funds’ largest positive contribution to active return came from alpha seeking exposures in IT and Consumer Staples, with the largest detraction coming from Real Estate and Energy.  At the single stock level, significant positive contributions came from a strong IT sector, via names including Broadcom and Adobe Inc. This was offset by weakness from the exposure to French real estate business, Icade SA, and Hong Kong health care company, United Laboratories.

The Plato Global Alpha Strategy (gross of fees and expenses) delivered a return of 1.50% (after fees) in May versus the MSCI World benchmark of 2.00%. The Fund has generated a return of 21.04% p.a. since inception after fees, outperforming the MSCI World benchmark by 12.06% p.a., and beating the benchmark in 90% of rolling quarters. The upside capture is 122% and the downside capture is 76%. The Fund’s return is ranked 2nd out of 318 funds in the Morningstar World Large Cap universe since inception. In May, heavily shorted companies outperformed as did deep cyclical, unprofitable tech, and bitcoin sensitive names. This type of month, where low quality stocks are bouncing is usually challenging for Plato Global Alpha, so it is pleasing that the Fund almost kept pace with the MSCI World index. Key stock contributors over the last twelve months include NVIDIA, Rolls Royce, and Novo Nordisk up 182%, 216% and 66% respectively.

DISCLAIMER

This communication is prepared by by Plato Investment Management Limited (‘Plato’) (ABN 77 120 730 136, AFSL 504616) as the investment manager of the Plato Australian Shares Enhanced Index Strategy, Plato Australian Shares Tax-Exempt Strategy, Plato Australian Shares Income Strategy, Plato Australian Shares Low Volatility Income Strategy, Plato Australian Defensive Income Composite, Plato Global Low Carbon Strategy, Plato Global Shares Income Strategy. The information in this communication is intended for wholesale investors only. This communication is for general information only. It is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so. Past performance is for illustrative purposes only and is not indicative of future performance.

Any opinions and forecasts reflect the judgment and assumptions of Plato and its representatives on the basis of information available as at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future.

Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this communication is prohibited without obtaining prior written permission from Plato. Pinnacle Investment Management Group Limited (‘Pinnacle’) ABN 22 100 325 184 and its associates may have interests in financial products and may receive fees from companies referred to during this communication.