Insights

The Alpha Plus fund fell 1.15% in September, underperforming the ASX200 Accumulation Index, which fell 0.78%, by 37bps. This represented a bit of payback / consolidation after an exceptional August, although not enough to dent 3Q returns which saw the fund rise 5.67% (outperforming the ASX200 by 96bps). September was a bit of a nothing month for the Australian market which was down despite US equities posting a solid 3%+ return and the tech heavy Nasdaq up nearly 6%. For the most part, there was no strong macro and/or directional drivers other than a winding back of RBA cash rate support post a very hot monthly inflation print and despite a pro-cyclical tilt to performance, it wasn’t enough to lift the bourse into positive territory. ‍

Elevated valuations are the entry price for equity market participation. If you don't want to pay the entry price, then don't invest or look for cheaper pockets within the market. We don't like that valuations are unappealing, but we are pragmatic and we think the cost of not being invested (as an equity fund manager) outweighs the discomfort that high valuations create. Despite valuation concerns, we believe the bull market remains intact. The prospect of policy rate cuts alongside improving consumer spending and should be enough to offset a patchy earnings backdrop. In fact, we think the next few years will see Australia post above average equity market returns - a view we admit is more optimistic than consensus - but not inconsistent with an improving macro backdrop and a strong desire to buy into risk assets.

It was an tough month for active managers with the August reporting season the most volatile on record. Navigating this backdrop required flexibility alongside strong portfolio and risk management. We were not immune to stock specific disappointment – we suspect very few were, but a strong fundamental process and conviction in our positions underpinned what was a very strong month for the portfolio. The Alpha Plus fund returned 4.01%, managing to outperform the ASX200 by 91bps. We benefited from exposure to both domestic and global cyclicals as well as rate sensitives (including property). We remain positioned for lower interest rates and an improving growth backdrop while we are balancing this with high-quality structural growers where we see durable earnings power.

The bull market that began in March 2020 is neither old or exhausted. The ASX200 is now up around 100% from this date, and at first glance while this might appear a lot, when viewed in the context of historical bull markets the rally is neither large nor is it old. In fact, we would not be surprised if it continues for the next few years with equities posting above average returns during this phase. We know we are more bullish than consensus, but we have maintained this view throughout the year and markets have rewarded us with a very strong bounce back. Fear is high, but we think the bull market will roll on.

The Alpha Plus Fund delivered a strong result, rising 4.01% and outperforming the ASX200 Accumulation Index, which rose 3.10% by 91bps. This brings our YTD return to 6.90%, marking a very strong start to the financial year. The August reporting season was the most volatile on record, demanding agility and disciplined risk management. Despite some stock-specific disappointments, our conviction-led approach and robust fundamentals helped us navigate the turbulence effectively. While stocks jumped all over the place, the broad conclusions form the reporting season were not far from our expectations when you are in a rate cut cycle and economic growth is bouncing at trough levels. We stay positive and positioned to take advantage of lower rates, a stronger consumer and improving macro conditions.

It has been a strong start to the new financial year with the Alpha Plus Fund rising 2.8%. While market leadership remains volatile, we think cyclicals will begin to show more consistent performance as RBA rate cuts help put a floor in domestic activity and boost confidence in a recovery. While there are counteracting forces at a global level, we are also more constructive on the resource sector given appealing valuations and potential upside in commodity prices. We think the reporting season will confirm that the domestic backdrop has held in despite inflation, interest rate and economic growth concerns. Looking ahead, the backdrop requires a flexible and pragmatic approach but we are optimistic that solid earnings, rate cuts and diminishing global risks are catalysts for further market upside.

For the past 5 months the consensus narrative has been to push back on the equity market rally. First it was because trade risks were unknown. Second it was because growth risks were underestimated. Third it was because the (all important) Fed would not ease due to sticky (stag)flation and now it’s because valuations are high. To date, all of these fears have all proven to be overly pessimistic. In time, they may not, but these are not "buy and hold" markets and while there are downside risks, there are also positive tailwinds that we think will keep the rally going.

We have been bullish since early April and have maintained this view despite elevated valuations and macro uncertainties. We push back on the view that markets are complacent. While there are risks to the outlook, we think strong corporate fundamentals, policy rate cuts and a shallow growth slowdown are enough to push equity markets to fresh highs through 2H25. We doubt the August reporting season will derail positive market momentum and recommend leaning into into domestic cyclicals and small-to-mid caps while avoiding crowded and overvalued trades.

The Alpha Plus fund delivered a 2.79% returnin July, outperforming the ASX200 Accumulation Index, which rose 2.36%, resulting in 43bps of outperformance. This marks a robust start to FY26, with the fund benefiting from strategic sector rotation and solid macro tailwinds. The fund capitalised on renewed investor interest in sectors like consumer discretionary and industrials, which are sensitive to domestic economic conditions. Firmer commodity prices and signs of policy easing in China supported a rebound inr esource stocks, contributing positively to the portfolio.

Welcome to Ten Cap’s “Meet the Expert” series. It is a privilege to have Alex Schuman, CEO of Carla Zampatti join Ten Cap co-founder Jun Bei Liu for an insightful discussion. Carla Zampatti is Australia's most iconic fashion label, founded 60 years ago by his late mother, Carla Zampatti AC. Following her passing in 2021, Alex took over the CEO role and alongside discussing what Carla's legacy means for the brand, women and the Australian fashion industry, he also outlines his vision for taking the brand into a new era.

Equity markets continued to climb through June although alot of the "momentum" stocks began to fade towards month end. This made for a tricky investment backdrop as the winners became losers and losers became winners. An uncertain backdrop means that there will be times when markets move against the trend on a short term basis. Encouragingly, the IPO markets is open again with Virgin leading the charge. Listen as lead porfolio manager Jun Bei Liu provides an update on the quarter, what has been working and where she sees the opporunities as we mook ahead.

We think the tailwinds from offshore will remain relatively favorable (at least not deteriorating to any meaningful degree) while at the same time domestic drivers will gradually strengthen as the RBA eases policy settings. Historically a policy rate-cutting cycle outside of an economic recession is very bullish equity markets. If we are at the start of a cyclical upswing, even if moderate in amplitude versus history, then equities will remain a decent place to be.

Equity markets have had a phenomenal rebound since April 9th. It has left many scratching their heads given macroeconomic and earnings fundamentals have unquestionably weakened. We think alot of the rebound is the result of removing the “bear” case out of the consensus narrative and adding in the potential for policy rate cuts. We know the macro backdrop is set to slow but we think investors should stare down near term risks on the basis that policy support will be available if required and that while slowing, the global economy is still growing. Domestically, Australia remains well insulated from the global trade war and stands to benefit as the RBA ramps up policy support. We pivoted as the rally took hold and we are prepared to stick with it.

It’s been a challenging and at times, stressful environment for equity investors over the past few months. Markets have done a round trip, rising to all-time highs in February, falling to within a whisker of a bear market through March/April before climbing a wall of worry back close to fresh highs by June. These are not normal times, but they are a function of investing in risky assets - where we manage the good and the bad. The Alpha Plus fund led by Jun Bei Liu, has weathered this volatility better than most by being pragmatic, avoiding large risk-on/risk-off rotations and sticking to a well-tested bottom-up fundamental process. Hear how Jun Bei and the team have managed the portfolio through this period and how they are positioned to take advantage of an uncertain environment in her June Market Reflections update.

It was a strong month for the Alpha Plus fund which rose 5.4% to meaningfully outperform the ASX200 Accumulation index which rose 4.2%. This takes annualized net performance since inception to 12.1% against a benchmark return of 9.1% (3.0% p.a. outperformance). Investors chased the market higher as confidence that the US could avoid recession increased and bear case economic and market scenario were reversed. Cyclicals and growth stocks led the charge higher although by late month, even defensive laggards had joined in the upswing. There appeared very little to trouble the equity market through May despite weathering mixed news on the trade side and a reasonably sharp spike in US long bond yields with the RBA helping to inject some confidence with a dovish rate cut in early May.

We think the equity market outlook is constructive despite ongoing uncertainty around trade and growth. Equity investors will need to stare down a multitude of risks including the uncertainty that results from US President Trump running policy via social media. But potential risks are not insurmountable. As long as news flow is better than expected, the US economy escapes recession and policy support gradually ramps up, then we think equities will trade higher. But the beta rally is getting tired and we expect alpha to be the catalyst for upside from hereonin.

Co-founder & lead portfolio manager Jun Bei Liu provides a quick update while on the ground in Hong Kong. Her overriding impressions are that sentiment on China remains weak despite recent policy support, that consumer facing areas are still trading very mixed and that the housing sector has not yet bottomed. Finally, while offshore investors are buyers of Chinese equities, onshore investors are predominantly sellers, highlighting the dichotomy between those looking in and those looking out.

Welcome to Ten Cap’s “Meet the Expert” series. Consistent with the goal of providing clients with market leading insights and views, this will be a regular Q&A series featuring leading experts across economics, markets, and industry. It is a privilege to have Jo Masters, Chief Economist at Barrenjoey Capital Partners as our first guest. Jo discusses her thoughts on the global and domestic economic outlook and where she sees the path for policy rates, the A$ and commodity prices. She also provides some unique thoughts on the demise of US exceptionalism and what that may mean for US and Australian assets.

It was a strong month for the Alpha Plus Fund where we were quick to pivot and add more beta following US President Trump’s announcement of a 90 day pause period for implementing reciprocal tariffs. The fund rose 3.74% in April, outperforming the ASX200 Accumulation Index which rose 3.62% and taking annualized net performance since inception to 11.3% against a benchmark return of 8.5% (2.8% p.aoutperformance). The violent rotation from risk-off to risk-on is a strong reminder of how fluid and uncertain the global backdrop remains and how sensitive it is to changing newsflow. We still don’t know where tariff agreements will land or what damage the trade war has already caused, and this will likely keep markets highly sensitive to political and economic developments.

Welcome to Episode #2 of Ten Cap’s Meet the Expert Series featuring Gerard Minack, CEO & Founder of Minack Advisors. Gerard is one of the world’s most in demand macro strategists and is well known for his honest and straight down the line views. In this episode, Gerard does not disappoint. He thinks equity markets are complacent on growth risks and heading lower; US equity rallies should be sold and not bought; Large asset allocation shifts out of the US are yet to come; And finally, private markets are “marking their own homework” but macro + funding risks raise future liquidation concerns for the asset class. In sum, the world is not where it was pre–Liberation Day but a lot of assets are back at pre–Liberation Day levels and that’s not good risk-reward, its bad risk-reward.

Everyone is trying to work out whether to be “risk-on” or “risk-off” but these are not the only investment settings to take. We think data is supporting a tilt somewhere slightly left or right of center depending whether you are a pessimist or optimist. That’s pretty neutral territory, and to be honest, we don’t think that straddling the middle ground is a particularly bad place to be when outcomes remain binary and the cost of being wrong is high.

It’s only natural when uncertainty rises to become short sighted. But the danger in this is that when things are bad, you only see red, which is how the current backdrop appears. Going against the grain, we think we’re past peak trade uncertainty and that negotiated outcomes will be treated as incremental positives rather than negatives for markets as we move forward.

It was a somewhat disappointing month for the Alpha Plus fund which until the final week of March had been performing well versus a struggling market. However, following a reasonable sell-off across the broader index, we began to hunt for bargains and rotated back into a handful of stocks which had fallen significantly, and which we thought were cheap enough to be insulated from ongoing trade concerns. The fund fell 5.7% (net) to underperform the ASX200 Accumulation Index which was down 3.4%. From inception the fund has returned 10.9% pa versus the ASX200 return of 8.1% pa (annualized outperformance of 282bps pa).

We are confident that the recent equity market sell-off is a stumble. But the damage to equity indices might take some time to repair even if we are already seeing positive days emerge. For equity investors, the question is whether the bounce off lows is sustainable. At this stage, we are doubtful as trade related uncertainty has not yet passed and downside growth risks remain high. If the US economy emerges through recent headwinds with just a modest growth downgrade, then equities will trade meaningfully higher through year end. But until we have this transparency, the path will remain bumpy.

The February reporting season was largely overshadowed by broad macroeconomic developments that unfolded at the same time results were delivered. While difficult to discern, we identified three key takeaways from the reporting season that have long term implications for investors. First, there was a rotation out of (yesterday’s) expensive winners; Second, there was a rotation into (yesterday’s) laggards; and Third, there was broad caution towards any stock / sector that might be collateral damage of Trumps ongoing trade war. Overall, the reporting season gave us confidence the outlook is brightening and that "value" and performance "laggards" are where future gains lie.

Founder and Lead Portfolio Manager Jun Bei Liu, presents Ten Cap's first "Buy, Watch, Sell" stock idea series. In this months update, she outlines the buy thesis for a2 Milk (A2M.AU), why we are selling Endeavour (EDV.AU) and why Cochlear (COH.ASX) remains on watch.

February was a tough month for equity investors and the Alpha Plus fund. After a strong start, a meaningful reversal took place through the last 2 weeks - which dragged the ASX200 down more than 5% from its intra month high. The Alpha Plus fund was caught up in this sell-off, falling 4.3% and underperforming the ASX200 Accumulation Index which was down 3.8%. However, since inception, annualized net performance sits at 12.0% against a benchmark return of 8.7% (3.4% outperformance).‍

We think markets are wedged between rising trade uncertainty and a deteriorating US economic backdrop with elevated valuations and heavy positioning exacerbating price volatility. This is not a good place to be when equities have a razor thin cushion for disappointment or when they are priced for “best-case-outcomes” such as trade related uncertainty. However, we doubt the drivers behind the current sell-off and rotation signals the end of the bull market.

The Alpha Plus fund rose 5.0% in January, substantially outperforming the ASX200 Accumulation Index which rose 4.6% and taking rolling 12-month (net) performance to 20.7% against a benchmark return of 15.2% (5.5% outperformance).

I’ve been bullish on equities for 2 years and we’re not ready to change this call. While equity markets have had a strong run and this makes them vulnerable to tactical corrections, we believe they will emerge through rising uncertainty to trade meaningfully higher as cyclical tailwinds strengthen and structural tailwinds broaden out.

There are numerous benefits of a long short equity strategy versus a traditional long only equity strategy. We discuss these benefits in general and more specifically as they relate to Ten Cap's Alpha Plus Strategy.