Performance summary

The CC Sage Capital Absolute Return Fund returned 0.81% in September versus the RBA Cash Rate return of 0.32%.*

The CC Sage Capital Equity Plus Fund returned -0.63% in September, outperforming the S&P/ASX 200 benchmark by 0.15%, which returned-0.78%.*

Contributors and detractors to performance

The Sage Groups^ that contributed most to performance were Gold, Defensives and Growth, while Resources, Yield and Domestic Cyclicals subtracted. With limited company specific news this month, stock performance was driven partly by macroeconomic and sectoral moves, and partly by ongoing normalisation following the recent reporting season, as investors weighed up the results and repositioned.

Within the Gold Group, Evolution Mining (ASX: EVN +27%), Northern Star Resources (ASX: NST +28%) and Genesis Minerals (ASX: GMD +31%) were the stand-out long positions, and with the sector up +23% the portfolio benefitted from both a moderate gold overweight and good stock selection. The stand-out positions in the Defensives Group included an overweight position in AGL Energy (ASX: AGL +8%) which bounced back after a weak reporting season result and positive news flow from its investment in software provider Kaluza. An underweight position in Cochlear (ASX: COH -7%) also added value as the market focused more on near term earnings downgrades than the expected impact from its new cochlear implant, while an overweight position in Life 360 (ASX: 360 +14%) continued its strong momentum on expected growth in advertising revenue.

In the Resources Group, the biggest detractors came from Lithium underweights in Mineral Resources (ASX: MIN +10%) and Pilbara Minerals (ASX: PLS +3%). Lithium equities continued their strength from the previous month, despite concerns around supply disruption easing. This appears to be connected to the US government taking equity positions in companies supplying critical minerals, largely rare earths to date, but also included a stake in Lithium Americas and its Thacker Pass project. It’s unclear how supporting this increase in supply would benefit the lithium price or other producers, though the market may be anticipating potential offtake agreements with price floors, similar to what occurred in the rare earths sector. Sage Capital considers this unlikely as there is abundant ex-China supply with the major dominance being in refining. On the positive side, a long position in Capstone Copper (ASX: CSC +21%) added value as it moved higher in line with the copper price following a mudslide and force majeure at Grasberg in Indonesia, the world’s second largest copper mine.

The Yield Group was a slight drag on the portfolio, with an overweight position in Insurance Group Limited (ASX: IAG -6%) which detracted as it drifted off on weak sentiment on the premium interest rate cycle. In Domestic Cyclicals, an overweight position in Qantas Airways (ASX: QAN -5%) dragged on performance as the share price followed broader weakness in US airline stocks. An underweight position in Eagers Automative (ASX: APE +7%) was also a headwind as it continued a strong post-reporting run.

Market Review

The S&P/ASX 200 index returned 0.39% in October.

In terms of Sage Groups, Resources and Global Cyclicals were strong while Growth and Domestic Cyclicals were the weakest. Leading into the month, markets globally had been on a strong run driven by enthusiasm on AI, dovish monetary tilts (even as inflation was rising again) and hope that the US tariff policy would either be not too painful or would moderate if it was. Retail investor participation has seen the Russell 2000 Index surge, the ARK Innovation ETF up over 100% in 6 months, the most shorted stocks bouncing hard both in the US and Australia, while retail investors’ favourite stock sectors were Lithium, Uranium, Rare Earths, Drone stocks and select Biotechs, which have all raced higher. Towards the end of the month, a few cracks emerged in investor confidence, a Bitcoin flash crash, concerns over the US fiscal position and challenging market valuations have seen tempered dip buying. Meanwhile, the US Government remains in shutdown and the ability of the government to unilaterally set tariff policy is being questioned by the US Supreme Court.

​​​Read the fund reports for additional commentary.

• CC Sage Capital Absolute Return Fund monthly report
• CC Sage Capital Equity Plus Fund monthly report

* Past performance is not indicative of future performance. ^ Sage Capital uses a custom grouping system for long short positions (Defensives, Domestic Cyclicals, Global Cyclicals, Gold, Growth, REITs, Resources and Yield). With a focus on the principal macro earnings drivers for each stock, Sage Groups allow for comparisons to GICS for selecting stocks within a sector.