Performance update | May 2016
It was a strong month for all of OC’s portfolios with the flagship OC Premium Small Companies Fund finishing May up 5.4%, ahead of both the S&P/ASX Small Ordinaries Accumulation Index (+4.1%) and the S&P/ASX Small Industrials Accumulation Index (+4.8%). Pleasingly, the Fund remains ahead of both benchmarks for the financial year, despite the sharp rally in speculative resource stocks in the first four months of calendar year 2016, which saw the Fund underperform the S&P/ASX Smalls Ordinaries Accumulation Index for a few consecutive months.
Domestically, during the past month, a raft of economic data has been released which paints a somewhat confusing picture of the Australian economy heading into the July Federal Election. At a headline level, Australia’s economy is growing at a robust annual rate of 3.1% according to recent ABS data. Prima facie, this is great news given that it exceeds consensus forecasts (of around 2.75 - 3.0% growth) and it also represents a growth rate typically considered sufficient to prevent the unemployment rate rising. However, other economic measures paint a less rosy picture of the domestic environment including data which shows Australia remaining in a so-called ‘income recession’, whereby the amount of disposable income we have to pay for our day-to-day living expenses continues to shrink because of falling company profits, lower government revenues and flat wages.
New investment opportunities and company visits
OC continues to travel the country looking for new investment opportunities, to conduct site visits and to undertake due diligence on existing holdings to reaffirm its views ahead of the August reporting season. The team remains confident OC’s portfolios are well-positioned to continue to deliver investors strong returns over the coming years.
View the May performance reports: