Page 4 - Private Wealth Specialist Income Moderate PDF Factsheet

The clear winner for the quarter was unhedged global equities, significantly currency enhanced as the AUD/USD fell to 61c, with an admirable showing
from both unhedged global infrastructure and global emerging market equities.

Portfolio Update
The Portfolio’s return for the December quarter was strong, but softer than seen in recent quarters as investors digested declining US rate cut
expectations resulting in rising bond yields, a surging US dollar, and a US election result that likely makes for a very interesting 2025.

Individual asset classes were affected by rising bond yields and/or a rising US dollar (falling Australian dollar). Australian equities and currency hedged
global equities both fell in the period as investors pared back expectations for US rate cuts in 2025 which could weaken the economic backdrop and
put lofty earnings expectations at risk. The currency moves were so severe that global equities unhedged saw exceptionally strong returns for the
quarter whilst emerging markets were also boosted by the surge in Chinese equities early in the period. Australian listed property fell sharply in
contrast to unhedged global listed property and infrastructure which had a healthy quarter, with infrastructure the pick over property.

On an absolute basis, the best and worst performing investments were as follows:

Top 3:

iShares Core S&P 500 ETF

iShares Global 100 ETF

Transurban Group

Bottom 3:

Ventia Services Group

BHP Group Limited

Metcash Limited

Portfolio changes during the quarter:
There were three changes to the portfolio in the period as previously communicated.

The Vanguard MSCI Australian Small Companies Index ETF was sold. The investment served the portfolio well since its inclusion, but developments in
product design meant that we identified a more preferred exposure via the VanEck Small Companies Masters ETF. This ETF has been listed for some
time but the underlying approach was changed, following consultation and engagement, which made it more robust and better suited to meeting its
stated objectives in Australian small companies.

A review of the Australian direct stocks held in the portfolio resulted in two changes. Aurizon Holdings Ltd and Suncorp Group Ltd were sold, and
Origin Energy Ltd and Telstra Group Ltd were purchased. We lost conviction in Aurizon, and some patience, seeking better yield opportunities
elsewhere. Suncorp traded well above our valuation target and also saw their yield diminish following the sale of Suncorp bank to ANZ. Origin Energy
and Telstra were stocks we’d been monitoring for some time and saw attractive entry points on both income and potential capital upside.

Market Outlook
The consensus outlook remains rather positive for now, with recession averted in 2024 and renewed optimism regarding a potential US economic
renaissance. However, investors will need to deal with the implications of tariffs, particularly any inflationary effects, and a gargantuan US government
debt position, a significant part of which needs refinancing in 2025 whilst another US$2 trillion is added to the pile this year!

With less rate cuts on the table in 2025 than previously expected, company earnings will be closely watched as lofty valuations create increasing room
for disappointment. Whilst all-in yields on bonds remain very attractive, the absence of significant rate cuts will mean less impetus for capital gains with
the likelihood of heightened bond volatility remaining.

Unassailable US dollar strength remains problematic, particularly for emerging markets where valuations remain somewhat supportive, whilst the
macro outlook for Europe looks increasingly dire and investors eagerly await action on Chinese stimulus announcements.

Considering this, we remain cautious and well diversified in our approach for now. But also stand ready to take advantage of market mispricings as
they arise.