Page 3 - Private Wealth Best of Breed Moderate

To top it off, Australian inflation significantly disappointed, with the monthly indicator actually ticking up, confirming concerns that the March quarter
print wasn’t an anomaly. There were even calls for both the US and Australian central banks, particularly the latter, to consider further rate hikes, with
pressure on keeping a lid on the inflation genie.

A fairly swift pivot in sentiment and rhetoric in the weeks that followed with US inflation meeting expectations (i.e. no upside surprises), US jobs data
showing further signs of weakening, and the first interest rate cuts in developed economies (Canada, Europe), with the US Federal Reserve also
flagging their expectations for just one rate cut this year but with some dovish undertones (the all-important central bank wordsmithing). As markets
do these days, investors took this as a sign to one-up the US Fed with market expectations implying two US rate cuts for the year, with the first likely in
September. Also, an interesting read-through on the Canadian and European central bank rate cuts, with the former trying to stave off recession in the
Canadian economy whilst the latter seemed to be front-running concerns of a European economic drop-off in the period ahead with inflation within
target.

Adding to the merry-go-round period described above, investors took proper notice of rising political and geopolitical risks. On the political front, we
had UK elections which went as expected (i.e. landslide win for Labour), a shock snap election called by French President Macron following very poor
showing for the left-wing parties in the European parliamentary elections, and Indian Prime Minister Modi winning another term but with a smaller
majority meaning passage of his pro-business policy remit might be harder ahead. The French elections require some explaining in that the “far-right”
party won the first round, but then lost the important second round to the “far left” party following deal-making between this party and President
Macron’s “centre-left” party to ensure he remained in power. Markets clearly didn’t like the first-round results but seem to revel on the news of a likely
hung parliament. We also had new flashpoints on the two-wars front, both US and Europe levying further tariffs on Chinese goods, former President
Trump convicted on charges and awaiting sentencing, plenty of foreign diplomacy with US visiting China / China visiting Europe / China visiting
Australia, and a farcical US presidential debate (as they go of late) with President Biden’s health now a key outcome rolling into the November
elections.

Other considerations in the quarter included some instability in currency markets with the Japanese Yen in freefall, though the Australian dollar did
push higher against the US dollar (impacting unhedged global asset exposures) but not against other currencies. We also had the Australian Federal
Budget, with little to no surprises, but the front-ending of their spending program along with well flagged revised tax cuts didn’t help the RBA’s cause.

Portfolio Update
Portfolio returns for the June quarter were a little weak, as investors took a breather following the very strong December and March quarters.
However, returns over the twelve-month period remain very strong.

Markets struggled to digest the lack of movement on interest rate relief with inflation remaining stubborn, whilst economic weakness became a little
more apparent and easier to see, creating some concern that central banks might not be able to provide the relief to curb any continued weakness. In
addition, markets seemed to struggle to cope with the large number of political events and geopolitical news been thrown at them in a short period of
time.

Highlights in the period continued to be rather narrowly focused, and in some cases fleeting. US technology stocks performed strongly yet again, with
the A.I. thematic firmly in charge. Asian and emerging market equities also performed strongly, somewhat surprisingly led by Chinese equities, though
the rally here was also narrowly led and fell away again at the back end of the quarter. Other highlights were more simple, with floating rate corporate
debt performing well on strong investor flows whilst cash also held up well given the backdrop of higher cash rates.

Weakness in the market was most evident in mid and small sized companies both locally and offshore given concerns regarding more evident
economic weakness and lack of rate relief, whilst interest rate sensitive asset classes such as property and infrastructure came under pressure as
bond yields rose. There was also some weakness in European equity markets due to the first-round election results in France, whilst Japanese and
Latin American equity markets also saw falls.

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

Top 3:

Yarra Enhanced Income

T. Rowe Price Global Equity

GQG Partners Global Equity

Bottom 3:

Bell Global Emerging Companies

Yarra Emerging Leaders

ATLAS Infrastructure Hedged