FirstWrap commentary – December 2022 Quarter

The Australian market had a strong quarter with the market finishing up 8.72% for the quarter but down -6.32% for the calendar year. The RBA continued to raise interest rates attempting to control inflation. The Reserve Bank of Australia interest rate finished the year at 3.1%.

During the quarter we looked to deploy some of the built up cash into quality listed ASX companies that have strong growth potential, quality management and pay a dividend.

Actions taken through the quarter:

• We continued to maintained a large cash position and have selectively started adding quality ASX listed investments into the investment strategy.
• This has been coupled with defensive income investments from Metric Credit Partners that provide an attractive yield.
• Establish a holding in Macquarie Group Limited (ASX: MQG)
• Establish a holding in Washington H Soul Pattinson & Co (ASX: SOL)
• Over the quarter we maintained and averaged the entry price on the holding in MA Financial Group (ASX: MAF)

New Investments Summary

Macquarie Group Limited (ASX: MQG)

Macquarie Group is a global provider of banking, financial, advisory, investment and funds management services, headquartered in Sydney. Macquarie is a world leader in infrastructure assets and funds management. This is well diversified global business that has strong management and pays a dividend. The business has robust balance sheet with significant cash in the bank for future opportunities.

We have started building a position in MQG and will look to add to this over time.

Washington H Soul Pattinson & Co (ASX: SOL)

Washington H Soul Pattinson is an investment company with a diversified portfolio of assets across a range of industries. SOL was founded in 1903 and has a long track record of consistent growth and never missed a dividend payment.

• The investment portfolio has holdings in other growth companies such as TPG telecom, New Hope mining corporation, Brickworks which provides building product to the Australian and US markets and a also run a diversified investment portfolio of listed larger cap stocks.

• SOL has provided investors with an average return of 12.2% per annum over the past 20 years with consistently growing dividends.

• We have started building a position and will continue to add to this over time as a long-term holding with in portfolios.

Cash

The portfolios still have a large cash position which will selectively be invested as the opportunity presents. The funds will be added to the existing income assets, listed investments and other opportunities that may present given current market and economic conditions.

Existing Investments Review

Metric Direct Income Fund

• Unlisted managed fund that provides protection against volatility due to not being on the listed market.
• Target return of RBA cash rate + 3.25% (the current yield is now 6.35% p.a.)
• Monthly income payments
• Fund Summary for November attached

Metric Income Opportunities Fund (ASX: MOT)

• MOT is a listed investment managed by Metric Credit partners
• Target return is 7% income with 2-3% growth (Target total return is 8-10% p.a.)
• Fund Summary for November attached

MA Financial Group (ASX: MAF)

• MA Financial Group is a funds management business which is consistently been growing funds under management for 13 years now managing $7.2 billion.
• MAF reconfirmed its FY22 guidance for 30-40% underlying earnings per share on FY21.
• Funds under management continue to have strong inflow over the quarter.