Airlie Invests in Tech, Predicts Iron Ore Recovery
Airlie Funds Management is optimistic about a recovery in technology stocks and the iron ore market. Their flagship fund, valued at $1 billion, is recovering from a difficult year. The Australian Share Fund, led by Matt Williams and Emma Fisher, achieved a modest 3.2 percent return in 2023. This performance was significantly lower than the S&P/ASX 200 Accumulation Index’s impressive 10.3 percent increase.
Underperformance Issues
The underperformance stemmed from missing opportunities in gold stocks and a major sell-off involving blood plasma company CSL. This trend has affected several large-cap managers, including Bennelong, Fidelity, and Platypus. These firms have seen declines due to pullbacks in what were once blue-chip stocks.
Investment Strategy
Airlie Funds Management specializes in diverse asset classes, providing clients with effective investment solutions. The Australian Share Fund focuses on achieving long-term capital growth and income through investments in Australian equities. Williams and Fisher remain confident that the market trends will switch in their favor.
Key Investments
- Xero: Airlie has invested in this accounting software firm, which faced a 30 percent drop in the December quarter. Concerns arose over its acquisition of US payments start-up Melio. However, Airlie sees potential in Xero’s strong user growth and pricing influence in Australia and New Zealand.
- Life360: The fund has added this family tracking app, highlighting its global growth opportunities and potential for user base and profit margins to expand.
- BHP: While Airlie has generally avoided mining stocks since the fund’s inception in 2018, BHP remains the largest holding due to its solid fundamentals.
- Rio Tinto: Airlie considers this company a quality asset with a robust balance sheet, despite concerns over new supply from its Simandou mine, which could impact iron ore prices.
Iron Ore Market Outlook
Airlie anticipates that iron ore will trade above US$80 per tonne, influenced by anticipated tight supply conditions. This prediction comes amidst worries that Rio Tinto’s new production might lead to lower prices.
Challenges for CSL
The firm has been decreasing its investment in CSL, citing difficulties within the company. They particularly highlighted challenges in the flu segment, where U.S. vaccination rates have not met expectations.
The reluctance to invest in mining stocks extended to the gold sector, which was a costly decision last year, as this sector gained significance in the S&P/ASX 200.
