A large proportion of the portfolio’s large cap companies’ earnings come from the United States and the weakened Australian dollar should provide a benefit for the companies who generate income from the USA; Billabong, Cochlear and Brambles are prime examples. Reduced liquidity in the capital markets is not a major issue for the portfolio as most companies in the portfolio have very little net debt. The expectation that interest rates will be cut in the coming months should benefit the Australian consumer, which also makes a substantial contribution to the performance of our portfolio.

The investment team retains the belief that the companies held within the portfolio should be substantially re-rated as the market identifies the strength of the underlying businesses and applies the premium reflective of high quality companies.