Rudi's View | Mar 17 2023
A roundup on Model Portfolio changes, investment strategies, Best Ideas and favourite equity exposures.
By Rudi Filapek-Vandyck, Editor
Model Portfolios at stockbroker Morgans have been making slight adjustments as the February reporting season drew to an end.
Exposure to Woodside Petroleum ((WDS)) inside the Core Model Portfolio was scaled back in favour of more shares in Santos ((STO)). More shares were bought in Sonic Healthcare ((SHL)) and in HomeCo Daily Needs REIT ((HDN)).
Worth mentioning: Morgans thought Computershare's ((CPU)) interim result last month disappointing, in particular the underlying core business. The Core Model Portfolio has solely kept its exposure as a quasi-insurance against a longer than anticipated rate hiking cycle, but is now actively on the look-out for better ideas for which the shares will act as a funding source.
Morgans' Growth Model Portfolio has copied the rebalancing between Woodside and Santos, while adding shares in Ventia Services Group ((VNT)) and reducing exposure to Eagers Automotive ((APE)) and Domino's Pizza ((DMP)). The latter action had been taken prior to the release of disappointing financials. The broker's commentary post H1 result is that "faith has been shaken".
Morgans main conclusion from the February results season is that the outlook for discretionary retailers in Australia won't be as bad as the more bearish forecasts expressed elsewhere, with the top three sector favourites consisting of Lovisa Holdings ((LOV)), Super Retail Group ((SUL)) and Universal Store Holdings ((UNI)).
The All-Cap Model Portfolio at Credit Suisse has decided to reduce exposure to GUD Holdings ((GUD)) and lift exposure to Rio Tinto ((RIO)).
This Model Portfolio likes its key holdings of defensives through shares in Coles Group ((COL)), Telstra ((TLS)), CSL ((CSL)) and Blackmores ((BKL)) which Credit Suisse believes all share similar correlation characteristics. More defensive characteristics are seen in gold companies Perseus Mining ((PRU)) and Regis Resources ((RRL)), plus some long-duration assets via Transurban Group ((TCL)) and APA Group ((APA)).
All in all, Credit Suisse's strategy is built around a solid core of defensives complemented with opportunistic growth plays, which also includes increased exposure to metals and mining.
Key contributors to the portfolio outperforming in February included Hub24 ((HUB)), Fortescue Metals ((FMG)), Seven Group Holdings ((SVW)), Aristocrat Leisure ((ALL)), and Brambles ((BXB)).
Judging from the latest strategy update by Morgan Stanley, released while the world is fearing more negative news from banks globally, this team of equity portfolio strategists is preferring a more cautious approach.
Morgan Stanley does advocate an Overweight positioning towards Resources, together with Overweight exposures to healthcare and A-REITs. Underweight positions are reserved for Australian banks, consumer-related stocks, and companies linked to the housing sector.
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