Rudi's View | 5:33 PM
Fundies Selling Resources, Opportunities In Small Caps, Noosa Conference Standouts & December Index Changes.
In this week's edition:
- Anti-AI trade Sees Fundies Selling Resources
- Opportunities In Small Caps And Resources Sell-Off
- 15 Stocks For Post Peak Investor Negativity
- Noosa Conference Standouts
- Anticipating December Index Changes
By Rudi Filapek-Vandyck, Editor
Anti-AI trade Sees Fundies Selling Resources
Morgan Stanley's latest analysis of active fund managers' positioning changes in Australia during September reveals little we didn't already know from observing daily market moves beneath the index -- except for the finer details, of course.
Australian managers further reduced exposure to Materials and Technology in September, plausibly reflecting the global AI trade falling out of fashion.
Materials recorded the largest reduction, taking the average underweight to -2.98 percentage points, with BHP Group ((BHP)) and South32 ((S32)) among the largest cuts at the individual stock level.
Consumer Discretionary attracted the biggest increase, lifting its overweight to 1.83 percentage points, led by gaming exposures including Aristocrat Leisure ((ALL)), Light & Wonder ((LNW)) and The Lottery Corp ((TLC)).
The preference for gaming companies suggests discretionary retailers are not heavily sought after --not yet, anyway-- despite beaten-down share prices. Ongoing disappointing market updates, including those from JB Hi-Fi ((JBH)), Super Retail Group ((SUL)) and Wesfarmers earlier today, no doubt help explain why.
Interestingly, Telstra Group ((TLS)) is again the number one favourite for defensive exposure, having previously lost that position to Coles Group ((COL)). Macquarie Group ((MQG)) has become the second-largest overweight overall, behind CSL ((CSL)).
The core preference for Healthcare over banks remained intact. Healthcare overweights and Resources underweights supported performance in October, but being underweight the banks has had the opposite impact.
Stocks that experienced notable increases in allocations include Telstra, Orica ((ORI)), Macquarie, Dexus ((DXS)) and Ventia Services ((VNT)), while active funds reduced exposure to the likes of Domino's Pizza ((DMP)), National Australia Bank ((NAB)), James Hardie ((JHX)), News Corp ((NWS)) and Steadfast Group ((SDF)).
Interestingly, Ventia Services' growing popularity might be related to upcoming index changes in December. See further below.
The three most overweight sectors are Healthcare, Consumer Discretionary and Communication Services. The largest underweight is Financials, followed --at arm's length-- by Materials and Real Estate.
The five most popular healthcare stocks are CSL, ResMed ((RMD)), Fisher & Paykel Healthcare ((FPH)), Ansell ((ANN)) and Ramsay Health Care ((RHC)).
Within IT, TechnologyOne ((TNE)) is the number one exposure, followed by Xero ((XRO)), Life360 ((360)) and WiseTech Global ((WTC)).
Santos ((STO)) ranks ahead of Woodside Energy ((WDS)) in Energy. Canada's NexGen Energy is the most popular uranium exposure, while Newmont Corp ((NEM)) and Evolution Mining ((EVN)) lead among gold stocks.
Overall, Morgan Stanley's assessment is that positioning changes made in September appear to have benefited average active performance so far in October.
The survey covers 62 actively managed Australian equity funds, all benchmarked to the ASX200, ASX300 or All Ordinaries indices.
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