Here’s where this ASX fund manager is investing right now

The Concentrated Leaders Fund Ltd (ASX:CLF) has just released its latest monthly update. Here’s how it is performing and where it is investing…

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Knowing which shares fund managers are buying and selling can be advantageous for investors.

This is because they have the resources to employ analysts to research companies and identify investment opportunities. Something which simply isn’t feasible for retail investors.

With that in mind, I like to take a look at monthly reports from fund managers to see what they are doing.

The Concentrated Leaders Fund Ltd (ASX: CLF) has just released its latest monthly update and revealed that it is still outperforming the market in the current financial year. This could make it well worthwhile looking at what it is doing.

What is the Concentrated Leaders Fund doing?

During October the fund’s portfolio returned +0.87% on a gross basis versus the benchmark return of 1.93%. This underperformance was largely due to its underweight exposure to the banks and financials.

Its underweight exposure to consumer staples also detracted, while being underweight to materials and energy delivered a positive outcome.

Nevertheless, the fund is still beating the market financial year to date with a return of +2.36% on a gross basis. This compares to the benchmark’s +1.48% return, which represents an outperformance of +0.88%.

Two of the best performers for the fund during the month were TechnologyOne Ltd (ASX: TNE) and Seven Group Holdings Ltd (ASX: SVW).

TechnologyOne recorded its first monthly gain since April with an impressive 13% rise. It notes that this was driven primarily by improving sentiment and expectation that previously delayed IT capex by several corporates would resume.

Whereas Seven Group shares rose 8.4% over the month. This appears to have been driven its push for control over building products company Boral Limited (ASX: BLD).

A key detractor to its performance was Bravura Solutions Ltd (ASX: BVS). Its shares fell 13.8% during the month despite announcing the acquisition of Delta Financial Systems and a contract win with Aware Super. The fund manager believes Bravura is continuing to suffer from negative investor sentiment following its FY 2020 result.

Outlook.

The Concentrated Leaders Fund is continuing to operate with a degree of caution, but is now more actively looking to deploy capital with the improvement in the macro environment and reduced political and virus related risk.

It also notes that value shares appear to be back in favour at the expense of growth shares.

It commented: “Markets have rallied strongly thus far in November, but it has been the major reversion in ‘style’ which has been the most interesting. Since the vaccine has been announced, ‘Value’ has staged a dramatic recovery, while ‘Growth’ has sold off heavily.”

“While it is too early to know how this plays out fully, the recent losers have been the big winners. This makes the rally in equity markets more sustainable as it allows ‘cheap’ companies to normalize and hence drive the market higher. This is what we are currently seeing with the Australian banks – despite their ongoing risks.” It added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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