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Portfolio Performance – July 2018


The Ethical Investment Mid-Cap Portfolio returned 2.66% for the quarter, bringing the total return for the year ending June 30 to 8.42%. This was lower than the return of the Australian share market (as measured by the All Ordinaries Accumulation Index) which returned 13.73% for the year.

The strong return from the Australian share market for the year can be attributed mainly to the resources sector which rose 40.70% for the year. Mining companies performed well, benefiting from higher commodity prices and a weaker Australian dollar. Oil and gas companies also performed well due to rising oil prices. Many other sectors performed poorly, led by telecommunications which fell 32% and Financials which dropped 3%.

Given that the Ethical Investment Mid-Cap Model Portfolio has no exposure to the resources, mining and oil and gas sectors, we believe the performance of 8.65% for the year was quite decent. The Ethical Investment Mid-Cap Portfolio has overweight allocations to sectors of the market which have a positive effect on society or the environment, such as healthcare, education, technology and renewable energy, and no exposure to sectors which harm society or the environment, such as fossil fuels and mining.

Looking long-term, we don’t expect to see continued outperformance from the resources sector. We will see more and more opportunities for investors in the healthcare, education, technology and renewable energy sectors, as this ties in with the macro themes of ageing populations, rising living standards, a 2 degree world, and transitions away from fossil fuels to renewable energy.


New Committee Member

We are pleased to welcome a new member to our investment committee, Mark Forstmann, who will act as an independent member and will assist with financial research, stock selection, and the management of the Ethical Investment Mid-Cap Portfolio.Mark has 27 years’ experience in investment markets including equities, currencies and fixed interest. His career spans investment markets and film and television production. He holds a B.Sc. from Sydney University, a Graduate Diploma from AFTRS, and has studied B.A. Communications at University of Technology.

Mark worked at BankAmerica in Sydney, Banque Indosuez in both Sydney and Paris. He was also a director at Hunter Hall International for 15 years.

Mark served on the Board of the Nature Conservation Trust of NSW between December 2009 and May 2015. He currently works as a portfolio manager at Future Super, which offers an ethical retail superannuation fund, and is also an independent director of Morphic Asset Management.


Portfolio Changes

Four new companies were added to the portfolio during the quarter; Bingo Industries, Gale Pacific, Superloop Limited and Windlab Limited.

Bingo Industries (BIN) is a waste management and recycling company operating predominantly in New South Wales. Bingo place a large emphasis on recycling, and partner with customers to create sustainable value by recovering resources, reducing waste and minimising any additional energy used.

The company does this by tailoring solutions to address customers’ unique challenges that not only deliver cost savings but also reduce emissions and increase recycled waste, which also mitigates resource shortage risks. The company has also designed a free waste education program in collaboration with Planet Ark to promote and enhance sustainable practices and increase knowledge in waste production and recovery.

Gale Pacific (GAP) is a manufacturer of screening and shading products for domestic, commercial and industrial applications with operations in Australia, New Zealand, the USA, Middle East and China. Key products of the company include architectural shade fabrics, exterior window shades, shade sails and an array of specialised commercial fabrics used for crop protection, irrigation, water storage and screening.

The company has a strong focus on reducing their environmental impact, including the recycling of materials. The company is implementing a closed loop recycling program which will not only eliminate landfill but can ultimately convert retired product to new material.

Windlab Limited (WND) is an international renewable energy development company with a distinct competitive advantage in the development of global wind energy projects. Windlab participates in wind generation projects from inception through development, financing, construction and the asset management of operating wind farms. Windlab owns and exclusively utilises this suite of industry best practice tools to identify and efficiently develop, finance, construct and operate high quality wind farms around the world, with considerably greater certainty and substantially less risk.

Superloop Limited (SLC) is a telecommunications infrastructure company established in 2014, with the aim of becoming an independent provider of connectivity services in the Asia Pacific region. SLC invests in fibre optic telecommunications infrastructure between locations of high interconnection density within markets experiencing significant growth in interconnectivity.

Two companies were removed from the portfolio during the quarter, Tox Free Solutions and LifeHealthCare Group, after both companies were taken over at quite attractive prices.


The contents of this newsletter are intended as general advice only.  No specific person’s circumstances, financial situation or objectives have been taken into consideration.  You should not act on the information provided without seeking personal advice from an appropriately qualified financial planner.   Past performance is no indication of future performance. While the data source has been verified as reliable, the actual content has not been checked for accuracy. Consequently, Ethical Investment Advisers does not warrant the accuracy of the information nor accept liability for any errors in the data. Portfolio inception date for performance calculation purposes is 25/05/2015. The returns shown are estimates only. The returns are for the Ethical Investment Mid-Cap Portfolio on the Hub24 platform and are AFTER investment management fees, but BEFORE administration fees, performance based fees and taxes. The performance returns have been calculated on a daily basis taking into account brokerage costs, and are accumulated for the period shown. Returns are shown as annualised if the period is over 1 year, or as total returns otherwise. and may not match your actual return as this can be affected by the timing of additions and withdrawals, as well as fees and customisations.
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