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The CC Sage Capital Absolute Return Fund returned -0.19% in June (after fees), and over the past quarter returned -2.78% (after fees), versus the RBA Cash Rate of 0.33% and 1.00%, respectively.*
The CC Sage Capital Equity Plus Fund returned 1.12% in June (after fees), and 7.24% over the quarter (after fees), underperforming the S&P/ASX 200 Accumulation Index by -0.29% and -2.26%, respectively.*
April was a wild month for markets globally and a tough month for the Sage Capital funds. Even though the market only finished down slightly, there was significant underperformance of the Sage Groups^ Cyclicals and Resources relative to Defensives, REITs and Gold. Additionally, there was significant cross-sectional dispersion amongst groups with investor positioning having a bigger impact on performance than fundamental economic exposure.
The underperformance coincided with incredibly volatile global markets in the June quarter. This began with a sharp sell off at the beginning of April triggered by the announcement of higher-than-expected tariffs by the Trump administration. Tariffs were subsequently paused a week later which drove a sharp risk-on rally in equity markets with the ASX200 ending the quarter up 9.5%. A range of other US government policy announcements led to further big stock moves across different sectors domestically.
The portfolio wasn’t materially exposed overall to companies that were directly impacted by the tariff announcements, though there were some winners and losers. For example, a long position in South32 (ASX: S32 -10%), whose stock price fell after the announcement of tariffs on aluminium.
Financials were strong generally, and the Yield Sage Group^ was up 15% across the market. US banking regulation and fiscal stimulus, along with the flow-on effects drove the Yield group higher. Sage Capital’s net alpha in the Yield group of -0.58%, was largely attributable to a short position in the Commonwealth Bank of Australia (ASX: CBA +22%). This more than offset the gains made in Q1, as CBA’s share price multiple rebounded back beyond previous record highs. Macquarie Group (ASX: MQG +19%) was another strong performer during the period. However, the underweight position was a modest drag on the portfolio, as “buy-the-dip” trading activity supported the stock, and expectations of US bank deregulation provided a tailwind for its capital markets business.
Elsewhere, insurers generally acted as a decent hedge in the space led by Insurance Australia Group (ASX: IAG +17%), while a long position in Challenger (ASX: CGF +34%), which is set to benefit from local financial deregulation remained positive. Going forward, we see the share price of CBA as unsustainable in the long run given the lack of earnings growth, and we’re acutely aware there is a long list of other fund managers (and even super funds) waiting for a potential turning point.
Another area of US policy changes and announcements that were floated were related to the Food and Drug Administration agency cuts and pricing. Local sentiment was already tough after the failure of the Opthea Limited Stage 3 trial in March, and US policy announcements added to the uncertainty. Telix Pharmaceuticals (ASX: TLX -6%) has been one of our stronger portfolio successes for a number of years now but was caught up in the very weak performance of the healthcare sector over the quarter, contributing to a drag on portfolio performance.
Other positions that impacted performance negatively included a long position in lithium producer Pilbara Minerals (ASX: PLS -21%) which significantly underperformed other lithium names with no negative stock specific news, and Amcor (ASX: AMC -6%) which reported its third quarter 2025 results, revealing softer volumes and consumers trading down to private label products which are lower margin.
On the positive side, a key contributor was a long position in Life360 (ASX:360 +62%), which continues to deliver strong platform growth and has a very large installed user base. We are particularly excited about its future revenue opportunities in both location-based advertising and, beyond this, a potential eventual entry into elderly care. In advertising, Life360 has unrivalled location-based data, with over 90% of the user base locations tracked continuously. This enables advertising to be tailored to microscale geographic areas (such as a local coffee shop), a unique and potentially highly valuable characteristic.
Elsewhere, positive contributions on the long side came from WiseTech Global (ASX: WTC +35%), which announced a strategic acquisition that was well received by the market, and Goodman Group (ASX: GMG +21%), whose data centre development pipeline continues to expand, attracting strong funding support from third-party capital, while market momentum once again bolstered the AI trade. Other positive contributors were a short position in Reece Limited (ASX: REH -8%), which was downgraded amidst a challenging building environment and signs of a stronger competitive environment in the US, and IDP Education (ASX: IEL -61%), which was punished after a major downgrade driven by lower student enrolment numbers and continued uncertainty around immigration policies.
There has been a significant level of macroeconomic uncertainty across markets of late. From intensifying geopolitical tensions in the Middle East to a barrage of US policy shifts with direct impacts on global trade, inflation, and growth, uncertainty is undeniably elevated. The April announcement of sweeping new US tariffs—dubbed “Liberation Day”—initially rattled investors, triggering concerns about a US recession and renewed inflationary pressures. But just weeks later, those fears seem to have faded. The S&P 500 has staged a V-shaped rebound, and the ASX 200 has surged to record levels.
In Australia, part of the market rally can be explained by increased inflows from offshore investors looking for exposure outside the US. Australia stands out as a relatively safe, stable economy with low direct exposure to global trade tensions and an attractive valuation given the current Australian dollar/US dollar exchange rate. Recent data show flows from offshore have increased particularly in passive money buying the index which would explain why stocks such as CBA, which are a large part of the ASX 200 index, continue to defy gravity and all sensible measures of value.
The US market’s V-shaped recovery since Liberation Day is harder to explain. The impact to the economy from tariffs standalone is significant and yet the market is higher now than before they were announced. From a short-term perspective, it appears investors found reassurance in a reasonably robust US Q1 earnings season and continued resilience of the US consumer.
Another driver may be the deepening conviction around the transformative potential of AI. AI was a dominant theme during earnings season—not just in technology, but increasingly across sectors like retail, financials, healthcare, and travel.
Several CEOs have spoken with growing confidence about using AI not only to cut costs but to unlock innovation and efficiency gains across their businesses. Used effectively, AI could shift the productivity frontier. By reducing the amount of time people spend on repetitive, low-value tasks, it opens the door for more strategic, creative, and value-accretive work. If this plays out at scale, it could drive a structural uplift in GDP growth over the medium term. Complementing this optimism is a renewed policy focus in the US on deregulation, re-shoring of manufacturing, and faster approvals for business formation and infrastructure. These thematics will take time to play out but do provide potential to set the stage for a new investment cycle.
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