31 MAY 2020 MONTHLY REPORT REDPOINT INDUSTRIALS FUND Fund performance as at 1 month 3 months 6 months 1 year 2 years Since Inception 4 31 May 2020 (%) (%) (%) (%) (% pa) 5 (% pa) 5 Fund return (net) 1 2.25 -15.22 -18.07 -9.90 -0.32 -0.55 – Fund cash income 0.18 0.37 1.10 3.12 4.05 4.20 – Fund price return (net) 2.07 -15.59 -19.17 -13.02 -4.37 -4.75 Benchmark return 2 2.95 -13.63 -16.63 -7.79 1.25 0.74 Active return 3 -0.70 -1.59 -1.44 -2.11 -1.57 -1.29 Source: Redpoint Investment Management Past performance is not necessarily indicative of future performance. 1. Redpoint Industrials Fund (Fund) – net performance is before taxes, but after management fees and transaction costs (net return). 2. S&P/ASX 100 Industrials Accumulation Index (Benchmark). 3. Active return is the difference between Fund net return and Benchmark return. 4. The Fund was established on 17 December 2017. 5. Returns are annualised for periods of 12 months or more. INVESTMENT OBJECTIVE SECTOR ACTIVE WEIGHTS The Fund aims to provide a return in line with the S&P/ASX 100 Industrials Accumulation Index (Benchmark), after management fees, over rolling five- year periods. The Fund seeks to deliver the key income and growth Consumer Discretionary 1.33% characteristics of the Benchmark while holding less than half the companies Industrials 0.26% in the Benchmark. The Fund combines long horizon sustainable quality metrics and risk management expertise to exclude or underweight poorer Consumer Staples 0.19% rated companies. The Fund will usually hold 30-40 companies and aims to deliver a portfolio with low active risk relative to the Benchmark, while being Materials 0.18% tilted towards companies with better quality characteristics. Real Estate 0.09% PERFORMANCE COMMENTARY Health Care -0.08% Utilities -0.61% FUND Information Technology -0.71% For the one-month period ending 31 May 2020 the net return of the Fund was +2.25%. The net return of the Fund is comprised of two (2) key components: Financials -1.12% a capital (price) return of +2.07% and an income (dividend) return of +0.18%. Communication Services -1.52% Over the same time period, the total return of the Benchmark was +2.95%. Consequently, the Fund underperformed the Benchmark by -0.70% (active Cash 2.00% return) for the month of May. -4% -2% 0% 2% 4% MARKET The Australian equity market, as represented by the S&P/ASX 200 Index, continued its upward retracement in May rising a further +4.36%. The index TOP 10 HOLDINGS remains approximately 20% below its February highs. This recovery is significantly faster than the recovery from the lows of the Global Financial Company Fund Benchmark Active Crisis (GFC) of 2008 and the drawdown experienced in the final quarter of (%) (%) (%) 2018. This has occurred while the Australian economy is almost certainly in Commonwealth Bank of Australia 10.80 9.96 0.84 recession and jobless claims are at all-time highs. By contrast, the S&P/ASX 100 Industrials Index (Benchmark) rose by +2.25%, CSL Ltd 10.54 11.09 -0.56 highlighting the fact that resources companies performed relatively better than their industrials counterparts over the month. Gold and iron ore producers ANZ Banking Group Ltd 5.36 4.60 0.76 have been performing particularly well over the past few months in the wake Wesfarmers Ltd 5.08 4.06 1.02 of the coronavirus pandemic. With the exception of Consumer Staples and Health Care, which posted total Woolworths Group Ltd 4.76 4.12 0.64 returns of -1.55% and -6.18% respectively for the month, all sectors of the Westpac Banking Corporation 4.33 5.25 -0.92 Benchmark delivered positive total returns, with the most prominent of these being Informaion Technology (+17.43%), continuing on from its strong National Australia Bank Ltd 4.16 5.05 -0.89 performance of +26.16% in April, Communication Services (+9.52%), Real Estate (+7.06%), Financials (+4.96%), Consumer Discretionary (+4.68%) and Macquarie Group Ltd 3.97 3.09 0.89 Materials (+4.44%). Telstra Corporation Ltd 3.76 3.42 0.34 FUND FACTS Transurban Group 2.85 3.31 -0.46 APIR Code ETL7683AU UNIT PRICES AND DISTRIBUTION Fund size ($) 2,946,564 Transaction type Unit price ($) Number of holdings 41 Net asset value 0.9197 Inception date 17 December 2017 Application 0.9211 Buy/sell spread +/- 0.15% Redemption 0.9184 Income distribution Quarterly Distribution Nil 31 MAY 2020 MONTHLY REPORT REDPOINT INDUSTRIALS FUND ATTRIBUTION COMMENTARY LARGEST CONTRIBUTORS The active return for the month (-0.70%) can be decomposed into three (3) Fund Benchmark Contribution elements: Average Average (%) • Benchmark stocks held by the Fund contributed +0.19% to active return; Weight Weight Company (%) (%) • Benchmark stocks not held in the Fund detracted -0.84% from active return; and Ansell Ltd 1.33 0.40 0.16 • management fees and other costs detracted -0.05% from active return. Stockland Corporation Ltd 1.38 0.66 0.13 Furthermore, a returns-based attribution shows that active return is comprised The A2 Milk Company Ltd 0.00 1.22 0.07 of two (2) key components: GPT Group 0.00 0.72 0.06 • the sector allocations, which detracted -0.15% from active return; and • stock selection within sectors, which detracted -0.50% from active return. Macquarie Group Ltd 4.07 3.06 0.05 SECTORS Treasury Wine Estates Ltd 0.00 0.65 0.05 From a sector allocation perspective, overweight positions in the Consumer CSL Ltd 12.29 12.65 0.05 Discretionary, Real Estate, Materials and Industrials sectors, which Flight Centre Travel Group Ltd 0.42 0.13 0.04 outperformed the broader market, collectively contributed +0.05% to active return. Wesfarmers Ltd 5.10 4.01 0.04 This positive outcome was more than offset by underweight positions in Scentre Group Ltd 0.58 1.09 0.04 Communication Services, Information Technology and Financials sectors, which outperformed the broader market, and overweight positions in the Note: Contributions shown in the table above are to the active return of the Fund. Health Care and Consumer Staples sectors, which underperformed the Period: 30 April 2020 to 29 May 2020. broader market, and which collectively detracted -0.20% from active return. Underweight positions in the Communication Services and Information StocKlanD Corporation (ASX: SGP) Technology sectors had the largest impact, detracting -0.07% and -0.07% respectively from active return. Stockland Corporation has benefitted from its diversified asset base over recent months. Its retail centres have been robust due to a high exposure to STOCK SELECTION supermarkets. This has resulted in less disruption and a faster rebound in the number of stores reopening for trade as COVID-19 restrictions have been Stock selection was best in the Health Care, Consumer Discretionary, Real lifted. The company remains well capitalised with access to sufficient cash for Estate and Consumer Staples sectors, which collectively contributed +0.35% operations and development. Its land bank remains very much in the money. to active return. Stock selection in the Health Care, Consumer Discretionary Its next dividend is expected at the end of june and there are expectations and Real Estate sectors had the largest impact, contributing +0.13%, +0.09% that this will be cut as a prudent measure to maintain reasonable gearing and +0.08% respectively to active return. levels. Similar to Goodman Group, we are attracted by the consistency of its On the other hand, stock selection was the worst in the Materials, Information diversified property operations. Valuation is also modestly expensive but not Technology, Communication Services, Industrials, Utilities and Financials sufficiently so to be of concern at this time. sectors, which collectively detracted -0.87% from active return. Stock selection in the Materials and Information Technology sectors had the largest DETRACTORS impact, detracting -0.26% and -0.22% respectively from active return. On a relative basis, some of the worst performing stocks for the month were ASSETS underweight positions in Afterpay Ltd (Information Technology), James Hardie Industries Plc (Materials), Ramsay Health Care Ltd (Health Care), Qube CONTRIBUTORS Holdings Ltd (Industrials), Charter Hall Group (Real Estate), ASX Ltd (Financials) and Seek Ltd (Communication Services), which collectively On a relative basis, some of the best performing stocks for the month were detracted -0.80% from active return, and overweight positions in Incitec Pivot overweight positions in Ansell Ltd (Health Care), Stockland Corporation Ltd Ltd (Materials), AGL Energy Ltd (Utilities) and Sydney Airport Holdings Ltd (Real Estate), Macquarie Group Ltd (Financials), Flight Centre Travel Group (Industrials), which collectively detracted -0.21% from active return. The Ltd (Consumer Discretionary) and Wesfarmers Ltd (Consumer Discretionary), underweight position in Afterpay Ltd had by far the largest impact, detracting which collectively contributed +0.42% to active return, and underweight -0.29% from active return. positions in The A2 Milk Company Ltd, GPT Group (Real Estate), Treasury Wine Estates Ltd (Consumer Staples), CSL Ltd (Health Care) and Scentre Afterpay Ltd (ASX: APT) Group Ltd (Real Estate), which collectively contributed +0.27% to active Afterpay Ltd (ASX: APT) was the second-best performer in the S&P/ASX 200 return. The overweight positions in Ansell Ltd and Stockland Corporation Ltd Index in May, rising by +52.0% over the month. This follows a surge of +66.0% had the largest impact, contributing +0.16% and +0.13% respectively to active in April. The stock now rivals accounting software specialist Xero Ltd as the return. largest company in the Information Technology sector.