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Insights

Portfolio positioning in turbulent times

Market Insight
March 25, 2020

Both the CC Sage Capital Absolute Return Fund and the CC Sage Capital Equity Plus Fund have outperformed their respective benchmarks in the current environment.

As at 23 March 2020, the CC Sage Capital Absolute Return Fund has returned +6.98%* month to date and +8.35%* since its inception in 20 August 2019, delivering significant positive returns, uncorrelated with equity markets. This has been achieved by moving quickly to a defensive positioning in the portfolio with an early recognition of the spread of COVID-19 outside of China and the economic and financial impact of shutdown measures that were likely to be used to combat it.

We have been broadly underweight stocks with direct travel and tourism exposure as well as those with financial leverage or exposure to falling cash rates. We have maintained overweights across healthcare, consumer staples and telecommunications where we have some confidence in the ability of companies to maintain or grow profitability.

This strategy has been very successful to date, but there is now an extreme divergence in relative performance as well as an explosion in underlying volatility in the market. We’re focused on controlling this risk and have been steadily cutting gross exposure and locking in some profits in the portfolios.

While we remain defensively positioned, we are also thinking about the shape of the recovery when it comes and see a lot of opportunity to benefit from this. We are currently in the grips of panic and there are likely some dark days ahead, but we have complete confidence in the ability of the human species to adapt and persevere. These challenges will eventually be overcome and another bull market lies ahead of us.

If you want to learn more about the Funds, subscribe to our insights or contact our investment manager partner, Channel Capital.

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* Performance is based on the unit price as at 23 March 2020 and is after tax. Past performance is not indicative of future performance.
This information is for professional and wholesale investors only and has been prepared by Sage Capital Pty Ltd ACN 632 839 877 AR No. 001276472 (‘Sage Capital’). Channel Investment Management Limited ACN 163 234 240 AFSL 439007 (‘CIML’) is the responsible entity and issuer of units in the CC Sage Capital Equity Plus Fund ARSN 634 148 913 and the CC Sage Capital Absolute Return Fund ARSN 634 149 287 (collectively ‘the Funds’). Channel Capital Pty Ltd ACN 162 591 568 AR No. 001274413 (‘Channel’) provides investment infrastructure services for Sage Capital and is the holding company of CIML. This information is supplied on the following conditions which are expressly accepted and agreed to by each interested party (‘Recipient’).
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This information contains general financial product advice only and has been prepared without taking into account the objectives, financial situation or needs of any particular person. It is intended solely for wholesale clients (including sophisticated investors) as defined under sections 761G and 761GA of the Corporations Act 2001 (Cth).

The information provided should not be considered personal advice, a recommendation, or an offer to invest in the Funds. Recipients should not rely on this information in making investment decisions. A Recipient should, before making any investment decisions, consider the appropriateness of the information, and seek professional advice.

Neither Sage Capital, Channel, CIML or their representatives and respective employees or officers (collectively, ‘the Beneficiaries’) make any representation or warranty, express or implied, as to accuracy, reliability or completeness of this information or subsequently provided to the Recipient or its advisers by any of the Beneficiaries, including, without limitation, any historical financial information, the estimates and projections and any other financial information derived there from, and nothing contained in this information is, or shall be relied upon, as a promise or representation, whether as to the past or the future. All investments contain risk. Past performance is not a reliable indicator of future performance.

For further information and before investing, please read the Product Disclosure Statement and Target Market Determination which is available from www.channelcapital.com.au
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