In a recent ASX announcement, Clime Capital described the current equity market environment as “erratic, volatile and fluid”, prompting its investment managers to reassess the fund’s exposure in light of the ongoing uncertainty.
“Given our managers’ heightened concern for the unfolding events in the US regarding tariffs and international trade adjustments, they undertook a restructure of the portfolio,” Clime said.
While “low conviction trading positions were exited”, Clime said “a purposeful direction into yield stocks” – including into Telstra and the Lottery Corporation – and an allocation to high yielding first mortgage securities were undertaken.
The firm said a more detailed update will be made next week with its March quarter review.
Interestingly, year-to-date Telstra’s share price has gained some 7 per cent, while the Lottery Corporation has lost some 2 per cent amid a broader ASX sell-off.
In its FY24 results, the Lottery Corporation reported a 16 per cent increase in underlying profit despite a cost-of-living crisis.
Historically, Australia’s largest lottery operator’s earnings have exhibited defensive characteristics, showing resilience during economic recessions. This stability is attributed to the essential nature of lottery products and their consistent demand, even during financial downturns.
Earlier this year, Clime Investment Management reported a return to operating profit of $406,000 for the first half of FY2024–25.
This was preceded by considerable shareholder backlash to financial losses that caused the firm to embark on an aggressive cost-cutting program and corrective action, led by managing director Michael Baragwanath, who joined following the exit of CEO Annick Donat.
This program included the disposal of advice business Madison to Infocus for $2 million, an IT systems review, improved middle office and advice technology, and a review of its fund management software solution.
Baragwanath said at the time: “I am currently focused on enhancing our competitive advantages. Our streamlined management structure, dedicated teams, and lower operating costs set us apart from many of our competitors.
“These strengths, coupled with our extensive range of products and services, enable us to capture and manage a larger share of our clients’ capital with improved margins. This combination allows us to deliver exceptional value in ways that are difficult for others to replicate.
“I believe our complexity as a business with private client advice and sector-specific and multi-asset product offerings is a strength we can leverage to the benefit of both our shareholders and our highly valued clients.”
