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HIGH-INCOME VALUE MICROCAP FUND

MONTHLY PERFORMANCE AS AT 31/08/2021

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Latest unit price

$1.8204

Return since inception (March 2012)

$202.71%

Return 1 month

4.05%

HIMF market update

Projected EPS Growth
1 Year Forward
(on a weighted basis)
+6.4%

Projected EPS Growth
2 Year Forward
(on a weighted basis)
+12.3

Number of companies
38

Top 5 Holdings
% of NAV

31.0%

Top 20 Holdings
% of NAV

78.8%

Top 10 Holdings
% of NAV

52.6%

Cash Position
% of NAV

0.9%

MARKET UPDATE AND COMMENTARY

The US Federal Reserve gave its strongest signal that it is likely to begin tapering its massive bond-buying program after acknowledging it had met two of its key goals required to unwind it. The Federal Reserve chairman recognised the US economy had made clear progress towards achieving full employment, and inflation had gathered pace sufficiently to warrant the removal of bond buying.

The US Federal Reserve has been buying $120b USD of bond securities each month since July 2020, the biggest quantitative easing programme in the history of economics. Whilst there appears to be a clear consensus amongst US Federal Treasury members about the cessation of the bond-buying programme, the exact timeline remains unclear. However, we believe it is likely to happen towards the end of 2021.

Domestically, Australia’s most populated states, NSW and Victoria, remain in a prolonged lockdown that will have distortive economic effects for the 1H22 period; however, we expect a difference of two halves. Unwinding the lockdowns towards the end of October with resultant pent-up demand will resurge economic conditions in the last two months of this half.

Microequities High Income Value Microcap Fund returned 4.05% in August. Our fund managers and investing strategy are responsible for the total return net of fees to 202.71% for the Fund since inception in March 2012.

Of the 38 companies that make up the High Income Value Microcap Fund, 28 reported their FY21 results during the month of August. These 28 companies represented 70.3% of the non-cash assets of the Fund. Some robust earnings growth for some of the largest weighted investee companies like Shaver Shop (ASX SSG) drove the weighted EPS growth of the managed investment Fund to a record +32.2%. Long term investors in this Fund will know that typically the EPS growth profile of the Fund sits between +5% to +14%. Therefore, this shows that we experienced an unusually strong growth year. Our FY22 & FY23 EPS growth forecasts are more commensurate with the historical earnings profile of the investee companies of this Fund.

 

Important information: This information is not intended to be financial advice. Past performance is not indicative of future performance. Microequities Asset Management Pty Ltd is a corporate authorised representative, number 462438, appointed by Microequities Asset Management Group Limited, holder of AFSL number 287526. Application for units in the Fund is limited to wholesale or sophisticated investors within the meaning of Section 761G(7) and 761GA(7) of the Corporations Act 2001.