TiP Group Newsletter, January 2024

TIP Group News

Howard Coleman, Co-founder of TeamInvest Private, imparts investment wisdom gleaned from his journey throughout 2023, as detailed in his financial 2023/24 letter to investors:

Read the full letter here 

Retail Advisory

Acting in the Clients’ Best Interests  

Safeguarding our clients' interests lies at the heart of our retail advisory service. Compliance with Australian Securities and Investments Commission's (ASIC) 'best interests duty' is more than just a legal obligation for our team; it's our professional mantra. Our use of comprehensive and 'scaled' strategies demonstrates how we tailor advice to meet and exceed varied client needs.

Every transaction, every advice, every strategy we discuss is underscored by the constant pursuit of our client’s best interests, aligning with Div 2 of Pt 7.7A’s guiding principles. Our advice, whether broad or limited in scope, is woven with client-specific considerations and circumstances - this is the essence of our 'scaled advice'.

From risk evaluation to providing appropriate advice, our team prioritises transparency. We believe in educating our clients about potential inaccuracies or limitations in information. Such openness ensures that our clients are always well-informed decision makers.

Moreover, our commitment runs deeper than just acting in clients' best interests. By applying a 'scale up' or 'scale down' approach, we adapt our strategies to the fluidity of our client's financial situation. This adaptability and client-centred approach ensure that we consistently deliver the best advice possible, fostering a relationship rooted in trust, reliability and customer satisfaction.

Contact our team today​​

Mortgage Broking

The Reserve Bank of Australia (RBA) has decided to hold the official cash rate at 4.35%.

The decision to maintain the cash rate follows the release of data last week which showed the annual inflation rate has fallen to 4.9% for the year to October 2023. 

Get in touch with our Mortgage Broking team today:  Mortgage Broking

Economic Update

Market Update and Economic Outlook – November 2023 

We have witnessed a noteworthy strengthening in both conservative and growth-oriented investments during November. This surprise reversal is attributed to an unanticipated drop in bond yields, thereby pumping up both bonds and equity numbers.

The downtrend in bond yields mirrors a seeming remission in US inflation along with a growing belief that US Federal Reserve might have put a halt to their interest rate hiking strategy.

The S&P/ASX200 reported a return of 4.5%, while the interest rate-sensitive listed property sector sees a healthy rally at 10.9%. Owing to a robust AUD, global returns for unhedged investors positioned at 4.3%, and behind the hedged return, which soared up at 8.1%.

While the Australian equities rebounded from the 2022 slump and coasted up for a while earlier this year, the recent months saw a somewhat bumpy ride on a sideways slope, thanks in part, to dwindling earnings. Yet, as we know, markets are never a straight line. They ebb and flow, offering opportunities for the sharp-eyed, patient investor.

Remember - time is the friend of a great business and the enemy of the mediocre. Let's maintain our wise investment strategy, focusing on Wealth Winners® and avoiding the Capital Killers™. It's challenging times like these that create the greatest opportunities, as Warren Buffet highlighted, we stand ready to be "greedy when others are fearful" and reap the rewards in the long-run.

In investing, as in most parts of life, opportunities often arise when a risk is triggered, creating an irrational fear in the markets. Let's stay ready to pounce on them and ensure our wealth continues to grow. As always, here's to patient, conscious investing!

AUD

The Australian dollar is enjoying a promising position against the US dollar and recently reached a four month high. The driving force behind this surge? Simply put, the prevalent speculation that the US Federal Reserve has put a full stop to its rate hikes.

Looking ahead for the US, predictions of several rate reductions in 2024 are in the air. These forecasts are acting as a catalyst for the AUD, inflating its potentials and putting a smile on the face of Australian market observers. This uptick trend, it seems, is here for a long haul and should happily extend into the coming year, 2024.

We must look to capitalise on this windfall. With the AUD rising, the field is set for us to increase our involvement in US stocks. Remember, our journey in investments is not a sprint, but a marathon, and timely opportunities like these provide us a chance to bring our Wealth Winners® to the podium.

Stock Highlight

Nick Scali (ASX: NCK)

Nick Scali Limited (ASX: NCK) imports and retails household furniture and related accessories in Australia and New Zealand. The company was established in 1962 and is best known for its lounges and sofas. It also sells dining room and bedroom furniture, as well as rugs and other home decorator items. As of June 2023, Nick Scali operated a network of 107 Nick Scali and Plush stores after the company acquired Plush-Think Sofas in November 2021.

Commentary:

• NCK sells furniture, takes deposits and advance orders.
• How do they make money: sell a lifestyle – home pride – affordable luxury
• It is a mid-range brand.
• Covid was a tailwind – people at home and wanting to replace furniture. Short term, there were mixed opinions on headwinds and tailwinds. Mortgage rate increases were considered a challenge in the short term.
• Long-term, there are tailwinds: going forward will be about people moving and buying new furniture.
• Future growth comes from rolling out new stores—107 current stores – Dec 22 (Australian and NZ).
• Own 9 and in premium locations – on the balance sheet at cost.

• Stores:

• - Plush 44 but want 90 to 100
• - NCK has 63 and wants 86.
• - Opened 2 stores 1H23.

• Addressable market: about 4% of the market.
• Price maker – but a competitive space. Has the advantage of designing their own furniture.
• Debt to Equity - 65% interest bearing rest is lease obligations. Members were happy they were paying off the debt.
• Do not have money tied up in inventory (inventory levels are probably the stock for Plush). It is also low fashion and a need to reinvent themselves. Prepaid deposits are a deferred revenue at approx. $85 million.
• Online is not seen as a material threat to NCK’s business model.
• Acquisition: Plush 2021 for 103mil. Too early to understand how the acquisition is going.

Moats:

• Brand and reputation
• Global contract supply partners and relationships
• Exclusive designs
• Store network with key position owner-occupied
• National distribution centres
• Owner manager culture

Potential Future Risks:

• A prolonged significant economic downturn
• Keyman – Anthony Scali
• Sustained supply chain disruption
• Large acquisition fails

• Lose touch with their market.
  

Shareholder updates

Graham Lusty Trailers (GLT)

Teaminvest Access Fund

Welcome to the Teaminvest Access Fund Newsletter. Each edition brings you updates on TIP Group, market trends, and investment opportunities. We aim to provide valuable insights to guide your decisions. We hope you find our content useful and informative.

Unit Pricing for December 2023

Fund Information 

December marked another month of strong returns in the equity market, with the ASX 200 surging by 7.1%. All 11 sectors experienced growth, led by real estate, healthcare, and materials. The Reserve Bank of Australia (RBA) maintained the cash rate at 4.35% in its ongoing effort to reduce inflation to 2-3% per year. 
 

In the same timeframe, the TeamInvest Access Fund saw a commendable rise of 3.85%, albeit lagging behind the ASX 200 index's 7.10% gain. Yet, when viewed from an annual standpoint, the TeamInvest Access Fund is still significantly outpacing the ASX 200, boasting a return of 13.468% compared to the ASX 200's 7.84%. 

The table above shows the comparative rolling results of the TeamInvest Access Fund and the ASX 200 (AXJO) as of December 31, 2023. 

 
In the past 12 months, the TeamInvest Access Fund has significantly outpaced the ASX 200 index. The fund yielded a return of 13.468%, surpassing the ASX 200 index which saw a return of 7.84%. 

 Note: The figures in this example do not include fees.

The TeamInvest Access Fund has shown remarkable growth over the past year compared to the ASX 200.  

The Access Fund's superior performance has been accomplished with less volatility than investing in the ASX 200. This decreased volatility is attributed to the fund's allocation to commercial debt, which offers a steady income. The lower volatility of the fund is clearly demonstrated in the first six months of the graph above. 

For instance, if you had invested $10,000 in each of these funds on December 30, 2022, the current value of your investment in the TeamInvest Access Fund would be $11,346.78, while the ASX-200 investment would be worth $10,784.38. 

The top performers in the TeamInvest Access Fund for December are highlighted above. Credit Corp Group leads the pack with a remarkable return of 28.24% over the month. ARB, Breville, Carsales, and Nick Scali are not far behind, each delivering returns over 12.00%. These stocks have shown their robustness and growth potential within the TeamInvest Access Fund portfolio. 

Distribution 

A distribution for the first half of FY23-24 has been announced. A statement detailing this distribution has been sent to investors, and the actual distribution will be issued at the end of January. For more information, please check the distribution statement in your email. If you haven't received your distribution statement, check your spam folder. 

Investor Portal  

You can access your investor portal at any time using the following link:  https://investors.tipgroup.com.au/py/sys.pyc  

Should you have any problems accessing your Investor Portal please email funds@tipgroup.com.au or call us on 1300 160 803 and our Funds Administration Team will happily assist.  
 

Statements  

All TeamInvest Access Fund Members can expect to receive the following statements via their investor portal:       

• Quarterly Statement for October to December have been issued as of early January 
• Annual Statement will be issued after end of financial year. 
• Distribution Statements have been issued for the first half of FY23-24. 
• Annual Tax Statement was issued in September.   
   

We issued the 2022/2023 End of Financial Year Tax Statements in September.  

If you haven't received your quarterly or distribution statements, please check your spam folder. 

Should you have any questions regarding your statement please contact our Funds Administration Team.

Contact Us 

Our Funds Administration Team are here to assist. 

(P): 1300 160 803 

(E): funds@tipgroup.com.au 

*Past performance is not indicative of future performance

Private Equity Fund

 We have some exciting updates on the way from some of our investments. Stay tuned in the coming months to learn more. 

Corinthian Balanced Fund

Summary

• As of 31 December 2023, the unit price of the CBF was $1.045, with a performance of 1.961% for the month and 4.327% financial year-to-date. 
• The fund currently has a higher allocation to cash than desired, but reducing as we continue to deploy it. 
• The CBF has a total portfolio value of $63,577,814 with growth assets accounting for $19,901,524 and defensive assets accounting for $43,676,290.
•  The fund has continued to make strategic investments in shares, commercial debt, and units in SBS Mortgage Series 1 Trust. 
• Stock markets had another strong month with the ASX200 rising 7.30% and the S&P500 rising 4.42%. The Australian listed property sector continued to rally with a 9.95% gain for month. Unfortunately, this resulted in limited buying opportunities, but we continue to hunt. 
• Overall, the CBF continues to perform well and actively manages its portfolio to achieve its investment objectives.

Unit Price

The Unit price is calculated in accordance with the Constitution and is based on the value of the underlying assets of the Fund with an adjustment for any relevant Transaction Costs. 

• The financial year starting unit price for the CBF was $1.00166 (ex-distribution price) 
• The 31 December unit price is $1.0450. 
• The performance for the month of December is 1.961%. 
• Financial YTD performance is 4.327% (for 6 months)
  

Conscious Investor Fund

In the realm of investments, finding exceptional opportunities can be like finding a needle in a haystack. But what if we told you there's a way to apply Warren Buffett's timeless principles to uncover top-tier companies?

Join us in a captivating video discussion on Ausbiz Australia with experts Mark Moreland and Howard Coleman. They unveil the magic of the Conscious Investor Fund software, which utilizes Buffett's ideals to filter through the market and pinpoint remarkable investment prospects.

Watch the video below and unlock the potential of smarter investments through the wisdom of Warren Buffett.

Conscious Investor Fund

Conscious Investor Fund