Category Archives: Perspectives

Paradice Australian Equities Fund May 2025 Commentary

20 June 2025 11:31 am ⋅ Leave a Comment ⋅ Kathryn Wenborn ⋅ Featured

May, 2025

Monthly Commentary

Paradice Australian Equities Team

Paradice Australian Equities Fund May 2025 Commentary

Market Review

The S&P/ASX 300 Total Return Index rebounded 4.2% over May 2025, supported by easing trade tensions. The S&P500 Total Return Index meanwhile rose 6.3% (in USD) during the month.

Global trade relationships and tariffs remain a moving target as the USA attempts to reset trade relations with all major trading partners simultaneously. The USD failed to recover and was flat over the month, as concerns mounted that Trump’s erratic policy decisions may have damaged the U.S. dollar’s reserve status. Gold was also flat over the month as investors sought safe-haven assets.

Across the ASX200, Information Technology was the best performing sector +19.8%, underpinned by stocks such as Life 360, Technology One and Xero. Utilities, Consumer Staples and Health Care were laggards.

In Australia the RBA cut rates by 25bps to 3.85% noting that inflation is within the target range whilst citing weaker global growth as a potential risk. Three more rate cuts are anticipated before the end of 2025 by the bond market. The 2025 Australian federal election reaffirmed the Australian Labour Party in a landslide victory. Overall government policies are modestly stimulatory and reflect Labour’s continued push towards lowering cost of living (e.g. extending energy rebates, bulk billing expansion). The Fair Work Commission also announced a 3.5% increase in the national minimum wage effective 1 July 2025. This covers approximately 20% of the Australian work force and importantly ensures real wage growth above inflation.

Performance

The Paradice Australian Equities Fund was down 39ps net of fees vs the benchmark¹ for the month of May 2025. Top 3 contributors were Catapult, Seek and Qantas (all overweight position). Top 3 detractors were Treasury Wine Estate, Newmont and Block (all overweight).

Noteworthy industry / macro developments

#1. USD under pressure, safe haven status challenged

Despite a sharp rebound in global equities, with the S&P500 rising to within 3% of all-time high (reached in Feb-25), the USD has persistently faced downward pressure.

The following chart shows the relationship between the US 10-year government bond yield (blue line) and the USD (white line). Whilst there has been somewhat of a loose correlation historically, there has been a clear divergence to date in 2025.

Several reasons likely drive this:

Fiscal concerns around US debt: The national debt surpassed US$35 trillion, just as cUS$9 trillion will be refinanced in 2025 against a backdrop of higher US interest rates. US interest payments are likely to rise to cUS$1 trillion in 2025, amplifying an already sizeable fiscal gap. This is exacerbated as foreign investors reduce holdings of Treasury bonds, forcing issuances at possibly higher rates.
Weakening investor confidence due to political instability and trade uncertainty: Inconsistent and unpredictable trade policies are creating market unpredictability. We note Moody’s Ratings became the third and final credit rating to downgrade the S. government’s debt from its top rating by one notch from Aaa to Aa1.
Rising share of alternatives to the USD: The dollar’s share of global foreign exchange reserves has been declining from over 70% in 2000 to 58% as at the end of 2024², reflecting a gradual shift towards alternatives like the euro, yuan and gold. Geopolitical shifts such as sanctions on Russia, and US-China tensions have accelerated efforts by nations to diversify away from dollar dependency, undermining its dominance. A lower USD makes imports more expensive and possibly exacerbates inflationary pressures in the US.

#2. Possible reallocation of capital flow away from US to Rest of the World

According to a recent report, which cited EPFR data, there have been cUS$2.5 trillion inflows to US assets (treasuries, corporate bonds), and US$1.3 trillion inflows into US stocks alone since 2020. The Fed Flow of Funds showed foreign investors owning sizeable levels of US stocks . This may mean that a small reallocation away from US stocks could have a positive impact on other global markets including Australia. Anecdotally this could be a factor driving up share prices of large, liquid Australian companies such as Commonwealth Bank and Wesfarmers.

#3. Troughing office market?

The Australian office market has been confronted with a valuation declines of up to 25% since their peak in 2022, reflecting factors such as high interest rates, low occupancy due to work from home and oversupply.

We are cautiously optimistic the office market has broadly troughed, with most listed REITs reporting an office cap rate of 6.0-6.5%, c200-250bps above the Australian 10-year government bond yield, in line with the historical premium.

However, as the following chart from CBRE shows, there is extreme bifurcation in net effective rent growth depending on whether the building is super prime (key streets of the CBD), A grade or B grade. Positively, whilst incentives and refurbishment costs remain high, the bid ask spread for office transactions have narrowed and we expect to see the return of transaction activity.

As such we remain selective in picking office REITs, with a focus on asset quality and sustainable cashflow.

For further details on fund positioning please refer to the Paradice Australian Equities Quarterly Fact Sheet.

¹Benchmark is the S&P/ASX 200 Total Return Index

²IMF Foreign Exchange Holdings in US Dollars (Not Seasonally Adjusted)

Disclaimer:

This material is prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619 AFSL No 224158) (Paradice, we or us) to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.

This material is not intended to constitute advertising or advice (including investment advice or security, market or sector recommendations) of any kind. In addition, this material represents only the views of the Paradice Australian Equities team as at the time of release and is not intended, and may not, represent the views of Paradice or any of the other investment teams at Paradice.

Equity Trustees Limited (ABN 46 004 031 298, AFSL No. 240975) (Equity Trustees) is the responsible entity of, and issuer of units in, the Paradice Australian Equities Fund (Fund). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX:EQT).

It may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions, opinions and judgments, you should not place undue reliance on these forward looking statements. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. You should perform your own research and due diligence, consult your own financial, legal, and tax advisors before making any investment decision with respect to transacting in any securities covered herein. Specific securities identified herein are not representative of all securities purchased, sold, or recommended by the Fund previously or in the future. Following publication of this material, the investment teams at Paradice may transact or continue to transact in any of the securities covered herein, and may be positive, negative or neutral at any time hereafter regardless of our initial conclusions, or opinions.

The content of this publication is current as at the date of its publication and is subject to change at any time. It does not reflect any events or changes in circumstances occurring after the date of publication.

You should consider your own needs and objectives and consult with a licensed financial adviser when deciding whether the Fund is suitable for you. Past performance should not be taken as an indicator of future performance. You should also read the current Product Disclosure Statement before making a decision about whether to invest in this product and the Target Market Determination available at www.paradice.com . A Target Market Determination is a document which describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. This material is not to be copied, reproduced or published at any time without the prior written consent of Paradice. Neither Paradice, Equity Trustees, nor any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material.

The information and opinions contained herein, including information obtained from third party sources which are considered to be reliable, are not necessarily all-inclusive and, as such, no representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained herein and no responsibility arising for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Paradice, its officers, employees or agents.

Contributors:

Julia Weng

Further Information

Download this report as a PDF here

Meet Our Investment Teams

Investor Centre

Posted in: Perspectives

Paradice Australian Equities Fund April 2025 Commentary

9 May 2025 3:39 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn ⋅ Featured

April, 2025

Monthly Commentary

Paradice Australian Equities Team

Paradice Australian Equities Fund April 2025 Commentary

Market Review

The S&P/ASX 300 Total Return Index fell 6.4% over the first five days of April following tariff announcements by President Trump, only to rally 10.7% and end the month up 3.6%. As markets initially reacted negatively, Trump softened his stance, suspending the implementation of tariffs for 90 days and offering concessions. This shift gave investors’ confidence that Trump may reverse course if sustained market declines occur.

Despite this, the USD failed to fully recover and declined 4.6% over the month, as concerns mounted that Trump’s erratic policy decisions may have damaged the U.S. dollar’s reserve status. Gold rose 5.3% (in USD) over the month as investors sought safe-haven assets. Unwinding this trade may prove more challenging.

The Federal Reserve may eventually offer some policy offset. However, with business pricing responses still uncertain and inflation unclear, any rate cut may be delayed in the near term. Our view remains that tariffs are ultimately a tax on consumers and pushes up prices of goods whilst dampening the growth outlook. Even if corporates relocated manufacturing to the US, it is not clear where the labour force would come from given c90% of the labour force is engaged in services, and whether the output could be priced competitively.

In Australia, the equity market impact of the Labor Party’s election victory is expected to be minor. Australia’s Q1 Trimmed Mean CPI was 0.7% q/q, placing annual inflation within the RBA’s 2–3% target band. Combined with tariff-related risks, this has led futures markets to price in a 25bp RBA rate cut in May.

Performance

The Paradice Australian Equities Fund was down 143bps net of fees vs the benchmark. Top 3 contributors were Woodside Energy (not owned), with overweight positions in Coles and Newmont. Top 3 detractors were Commonwealth Bank (underweight), Alcoa and Treasury Wine Estates (both overweight).

Noteworthy industry / macro developments

#1 Downward EPS revisions in US are starting to emerge

US corporates are starting to withdraw guidance or downgrade earnings as weaker consumer and business confidence is manifesting into lower spending. A few prominent examples include:

Fast moving consumer goods – Procter & Gamble, Conagra Brands, Kraft Heinz adjusted volume outlook lower citing a volatile consumer environment.
Food services – McDonalds, Chipotle lowered sales growth guidance noting consumers are reducing restaurant visits.
Air travel – e.g. Delta Airlines, American Airlines, Southwest withdrew guidance for 2025 earnings due to macroeconomic uncertainty
Automotives – Ford, General Motors lowered or withdrew guidance citing tariff cost impost.
Payments – Block citing reduced gross profit outlook partly due to reduced consumer spending.

Some Australian corporates exposed to the US have also started to soften the outlook e.g. Reliance Worldwide Corporation, Flight Centre, Corporate Travel.

#2 Field trips to US and China

The team undertook field trips to the US and China during the month.

Meetings in Washington underscored the increasingly troubling state of the U.S. fiscal position.

The federal government is currently running an annual deficit of approximately US$2 trillion, driven by revenues of around US$5 trillion and expenditures near US$7 trillion. Of the total expenditure, only cUS$1 trillion encompasses some discretionary areas that may offer some scope for trimming. Trump, in collaboration with Elon Musk and the Department of Government Efficiency (DOGE), initially targeted US$2 trillion in spending cuts. That goal was quickly revised down to US$1 trillion, and then again to US$450 billion. As of May 7, with most of the DOGE-led activity seemingly concluded, the initiative has publicly claimed US$165 billion in savings—representing only about 8% of the current deficit.

Looking ahead, the fiscal picture has another challenge. The U.S. has approximately US$36 trillion in total debt, with around US$9 trillion maturing in 2025. This debt currently carries an average interest rate of 3.35%, but if it were to be refinanced at the prevailing 5-year Treasury rate of 3.9%, the resulting increase in interest costs would be roughly US$50 billion—effectively eliminating nearly one-third of the DOGE-reported savings.

This precarious fiscal outlook poses growing risks to the U.S. dollar’s status as the world’s reserve currency, providing further support for gold and our positions in Newmont and Northern Star.

Our trip to China suggests sentiment has improved post-stimulus despite geopolitical uncertainties. The government is shifting subsidies from traditional sectors to high-tech and green industries, while tightening control over private firms and prioritising employment at the expense of productivity. Consumers are trading down in luxury, favouring sportswear and mid-range Penfolds, while high-end malls struggle. Domestic travel is booming, and younger people are returning to smaller cities, boosting local growth. Property shows strength in Tier-1 and select Tier-2 cities, but lower-tier markets remain weak. EV sales have remained strong, led by low-end demand and rising premiumisation, with BYD expecting market consolidation.

Disclaimer:

Contributors:

Julia Weng

Further Information

Download this report as a PDF here

Meet Our Investment Teams

Investor Centre

Posted in: Perspectives

Paradice Australian Equities Fund March 2025 Commentary

28 April 2025 1:53 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn ⋅ Featured

March, 2025

Monthly Commentary

Paradice Australian Equities Team

Paradice Australian Equities Fund March 2025 Commentary

Market Review

The S&P 500 Total Return Index and Nasdaq Total Return Index fell 4.3% and 10.3% (in USD) respectively on 1) global growth uncertainty as the Trump administration began implementing significant tariffs on key trading partners, and 2) the emergence of DeepSeek triggered growing concerns around US hyperscalers’ substantial data centre build outs.

The S&P/ASX 200 Total Return Index weakened 2.8%. Information Technology dropped 17.5% as WiseTech fell on governance issues. Healthcare eased 9.1% as CSL’s February result missed expectations. REITS weakened 6.8% as Goodman fell post a $4b capital raise and growing concerns around capex intensity of data centre builds. Financials fell by 2.6% and NAB fell on a higher-than-expected loan loss charge at 14bp vs peers at around 5bp in its quarterly. There were good results elsewhere from other Financials in February, including QBE and Computershare. Utilities, Staples, and Telecoms outperformed the market due to relatively more stable results in February. Materials rose 0.7%, aided by strong performance from gold companies. James Hardie dropped 23.2% on the back of the Azek acquisition. Industrials performed best, rising 2.6%, due to good results in February from the likes of BlueScope Steel, SGH, and Brambles.

The Bloomberg Commodities index rose 8.9% (in USD). Gold leapt 19.0% as a safety trade against economic uncertainty and on central bank demand, and Copper followed, rising 11.1% (both in USD). Iron Ore, Brent Oil and the Lithium spectrum were relatively stable.

Uncertainty around President Trump’s tariff policy began to emerge in weakening confidence and consumer spending data, as well as a higher Personal Consumption Expenditure (PCE) price index. The US Federal Reserve maintained rates and in March emphasised a more cautious approach as it awaits further clarity surrounding announced tariffs. The futures were pricing ~90bp of cuts by 2025 year-end as at 31 March, which increased over the quarter from 60bp.

In Australia, the monthly Consumer Price Inflation (Trimmed to exclude the volatiles of travel and ‘government subsidised’ electricity) was 2.7% in February, which is flat versus December, and gave the RBA comfort to ease the cash rate 25bp in February. The futures as at 31 March assumed another 50bp of cuts in by year-end, which is broadly similar to December.

Performance

The portfolio outperformed by 30bp over the quarter.

Contributors/Detractors

Key contributors include:

Newmont (NEM) – Overweight – Newmont advanced on a higher gold price.
QBE Insurance (QBE) – Overweight – QBE rose on strong earnings and an improved outlook due to better North American profitability.
Goodman (GMG) – Underweight – Goodman dropped following a $4b capital raising and uncertainty around economics of data centre builds.
a2 Milk (A2M) – Overweight – a2 Milk jumped on a strong earnings result as it continued to take market share in China.
WiseTech (WTC) – Underweight – WiseTech fell on governance issues including board exodus and an earnings downgrade.

Key detractors include:

Block (XYZ) – Overweight – Block fell after earnings missed expectations on weaker consumer spending trends and a lower margin. The impact Trump’s tariffs may have on consumer spending also weighed on sentiment.
Alcoa (AAI) – Overweight – Alcoa dropped after Trump announced tariffs on Canada, and on expectation of slower economic activity in the US leading to reduced aluminium demand.
Treasury Wine (TWE) – Overweight – Treasury weakened after earnings missed on softening US wine demand. The impact Trump’s tariffs may have on consumer spending also weighed on sentiment.
Evolution Mining (EVN) – Underweight – Evolution leapt on the higher gold price.
Commonwealth Bank (CBA) – Underweight – CBA outperformed modestly as its Net Interest Margin (NIM) held up better than peers.

Portfolio Changes

Purchases

Telstra (TLS) – Telstra was purchased on steady earnings and potential for capital management.
Coles (COL) – Coles was purchased on solid supermarket sales and execution.
Vicinity (VCX) – Vicinity was increased as retail rents remain resilient and pending completion of redevelopments provide a tangible pathway to growth.
Newmont (NEM) – Newmont was increased on a more positive outlook for the gold price.
Sigma Healthcare (SIG) – Sigma was bought post a strong trading update showing evidence of margin expansion.

Sales

Macquarie Group (MQG) – Macquarie was reduced on deteriorating earnings outlook, as policy uncertainty likely weigh on investment decisions and realisations.
Block (XYZ) – The Block overweight was reduced post the earnings miss, deteriorating consumer outlook and reducing portfolio beta.
Aristocrat (ALL) – Aristocrat was reduced following growth concerns due to deteriorating consumer outlook.
Alcoa (AAI) – Alcoa was reduced on concerns Trump’s tariffs will impact its earnings potential directly through the tariffs on its Canadian output, and indirectly through weaker aluminium demand.
Brambles (BXB) – Brambles was trimmed post recent outperformance.

Environmental, Social, Governance Issues (ESG) – Engagement

During the quarter we undertook a total of 28 engagements in which we discussed ESG matters, with 18 companies relevant to the strategy. As reporting season occurred during the quarter, most meetings were held with either the CEO or CFO, with some also held with the Chair. The engagements covered a range of issues and most covered multiple ESG matters. In addition to climate change, human capital management and governance issues were notable topics of interest for the team.

We held multiple engagements with Santos (STO) as well as visited the recently commissioned Moomba carbon capture and storage (CCS) project in South Australia. With its second Climate Transition Action Plan being put to vote at the upcoming AGM, a key focus was Santos’ climate response. The commissioning of Moomba CCS is a big milestone, a first step in proving up the company’s plan to develop a carbon storage management business. We also engaged on reducing operational emissions and enhancing aspects of its climate disclosures.

We also met with South32 (S32), continuing our ongoing engagement on its prospects of securing long term green energy supply essential for the viability of its Hillside and Mozal assets in Africa and for which the company is seeking to work with the South African and Mozambique governments. Beyond decarbonisation, we also discussed environmental approvals at Worsley (WA), managing civil unrest and strikes in Mozambique, and navigating an aging workforce in some parts of the business which has implications as experienced workers retire. Finally, we covered some of the environmental challenges in restarting GEMCO operations as there are large volumes of wastewater to appropriately manage.

Outlook and Positioning

Rolling uncertainty around Trump’s tariff intentions and implementations have given way to a significant pause in corporate investment decisions and a weakening consumer backdrop. The case for stagflation in US is building as much higher than anticipated tariffs attempt to unwind decades of globalisation and efficient trade. US tariffs are set to rise to 10-25% on average, with specific levies as high as 54% against China. This marks the largest tariff increase since World War II, reversing decades of declining rates since 1932. Historically, global tariff rates have averaged around 2-3%. If implemented, these tariffs represent a significant structural shift in modern trade policy, disrupting global supply chains and reducing US (and possibly global) GDP. Although some may be negotiated away, the probability of a significant reduction appears low given Trump’s rhetoric. Retaliatory tariffs are likely, further flaming a global trade war. For example, China has promptly announced a 34% tariff on all US imports and restrictions on exports of rare earths.

The purported tax raised from tariffs are estimated to be up to US$600-900b pa, which could in theory fund tax cuts. However, this is likely to be significantly offset by retaliatory tariffs and demand weakness. Economists from JP Morgan forecast the cost to US consumers at ~US$600b or ~2 percent of US GDP. Higher inflation may also make it more difficult for the FED to cut rates despite slower growth. The market’s current 20.0x December 2025 Price/Earnings ratio, therefore looks expensive, making the market performance outlook skewed to the downside (as at US close 3 April).

The Australian direct impact from Trump’s tariffs may be relatively modest, given the 10% rate and beef being a focus. The indirect impact via the ~85% of our export goods that go into Asian countries, which are facing a higher tariff is a tougher issue. Australia is also in an enviable position with capacity for government fiscal and RBA monetary stimulus if necessary.

The portfolio is increasingly positioned defensively, with a reduction in global and US exposed companies, and an increase in domestic, defensive names that are more insulated from tariff regimes. The falling USD (typically an embodiment of safe-haven) suggests increased worries about the credibility of US economic policies and possibly the long-term stability of the dollar as a global reserve currency.

The portfolio is overweight Materials, principally due to an overweight in Gold companies including Newmont. Gold is favoured as a store of value against both inflation and crisis, and a beneficiary of central bank buying.

Financials are underweight, via Banks. Banks have re-rated to 35-year valuation highs yet have minimal growth outside one-off lower loan losses. The portfolio is overweight insurers QBE and IAG as they benefit from an ongoing insurance hardening pricing cycle.

The portfolio is positioned in selective Industrial stocks with growing earnings and attractive valuation. These include Brambles as it continues to grow earnings and generate free cashflow, and SGH where earnings are supported by a sustained equipment replacement cycle.

Within the Consumer sectors, the portfolio is overweight Staples through Coles, Sigma, A2 Milk and Treasury Wine. In our view, Coles is executing admirably with a focus on consumer value, Sigma continues to take share and deliver on margin expansion. A2 Milk is executing commendably in a tough Chinese market and Treasury Wines is attractively priced on its Penfolds growth, albeit the US portfolio is deteriorating.

The portfolio is modestly overweight Healthcare via ResMed and Ansell. ResMed continues to deliver strong earnings with no signs of a GLP1 induced slowdown, and Ansell is delivering on improved growth and margins post a Covid-induced destocking cycle. Ansell is impacted by the recently announced tariff regime given most of its manufacturing is in South East Asia (avg tariff at c30%), however the lack of US competitors provide it with ample price pass through capacity.

The portfolio is overweight Telstra and has increased its weight in Real Estate through Vicinity and Stockland. Telstra is demonstrating resilient earnings, and an improved balance sheet provides capacity for buyback. Vicinity and Stockland are providing a good balance of dividend yield and growth, which are less dependent on RBA rate cuts (albeit helpful).

Noteworthy industry / macro developments

#1 Field trips to Europe and US

The team visited Europe and US taking a pulse on US corporate activity, as well as specific meetings around the MQG investor trip, and ASX-listed financials and data centres.

Overall, consumer and corporate uncertainty ramped up towards the end of February in relation to tariff and DOGE-induced uncertainty. Corporates were generally supportive of tariff related logic but not the method or communication. It would take years to re-shore in USA and this would require certainty from multiple administrations (subsequent to Trump). The outlook for Europe appeared incrementally more positive post successive rate cuts and the German infrastructure stimulus. Energy transition in Europe appear too advanced to be impacted by announced policy changes to date.

Please reach out to distribution@paradice.com for further insights from the field trip.

#2 Central bank’s structural shift in reserve management

Central banks have been diversifying away from US treasuries and increasing buying of gold for the last 3-5 years, potentially undermining its value and safe-haven status. Whilst it is challenging to estimate future behaviour, Emerging Markets central banks could still support Gold for the next 3-6 years to reach similar exposures as Developed Markets, as highlighted by the following chart from Goldman Sachs (dated 26 Mar 2025).

#3 Proposed tariffs and early US indicators

President Trump introduced a new baseline 10% US tariff on goods from all economies and higher than anticipated tariffs for some of US’ largest trading partners. The newly announced 34% tariff against China comes on top of previously announced 20% tariff, bringing the total tariff rate to 54%. Mexico and Canada continue to face a general 25% tariff, albeit the tariff rate is lower for specific Canadian energy products (10%) and there are exemptions under the original USMCA agreement.

Following chart -> The full list of proposed US tariffs

Recent data from US already suggest increasing concerns about US household financial stress and sticky inflation. Consumer spending was weaker than expected in February, while the key inflation metric (PCE) picked up, giving way to increased likelihood of stagflation.

For further details on fund positioning please refer to the Paradice Australian Equities Quarterly Fact Sheet.

Disclaimer:

Contributors:

Julia Weng

Further Information

Download this report as a PDF here

Meet Our Investment Teams

Investor Centre

Posted in: Perspectives

Post Reporting Season Wrap

19 March 2025 4:35 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn ⋅ Featured

19th March, 2025

Reporting Season Wrap

Paradice Portfolio Managers offer their perspectives on the recent reporting season

Disclaimer:

This material is prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619, AFSL No. 224158) (Paradice, we or us) to provide you with general information only. This material (or contribution to it) is not intended to constitute advertising or advice (including legal, tax or investment advice or security recommendation) of any kind. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.

Equity Trustees Limited (ABN 46 004 031 298, AFSL No. 240975) (Equity Trustees) is the responsible entity of, and issuer of units in, the Paradice Funds (Fund(s)). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX:EQT). In deciding whether to acquire, or to continue to hold, units in the Funds please read the current product disclosure statement which is available by visiting www.paradice.com and the Target Market Determination (TMD) which is available at www.paradice.com/au/investor-centre/. A TMD describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors.

Past performance of the Funds is not a reliable indicator of future performance. The value of an investment in the Funds may rise or fall. Returns are not guaranteed by any person. Paradice may have a relevant interest, in their capacity as investment manager, in the securities mentioned in this interview. In addition, this material represents only the views of each specific investment team as at the time of release and is not intended, and may not, represent the views of Paradice or any of the other investment teams at Paradice.

This material may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions and judgments, you should not place undue reliance on these forward looking statements, nor should you regard the inclusion of these statements as a representation by Paradice that the strategy objectives will be achieved. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. The information and opinions contained in this material have been and any third party data contained herein is obtained from sources considered to be reliable, but neither Paradice, nor any of its related parties, directors or employees make any representations or guarantees with regard to the accuracy of such data. The content of this publication is current as at the date of its publication and is subject to change at any time. It does not reflect any events or changes in circumstances occurring after the date of publication.

This material is not to be copied, reproduced or published at any time without the prior written consent of Paradice. Neither Paradice, Equity Trustees, nor any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material.

Contributors:

Jovana Gagic

Tom Richardson

Julia Weng

Sam Theodore

Further Information

Meet Our Investment Teams

Our Funds

Posted in: Perspectives

Report: Observations from Paris Trip

23 October 2024 3:20 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn

September, 2024

Report: Observations from Paris Trip

Paradice Global Equities Team

In September, Toby Shute, an analyst on the Global equities team, attended a pan-European equities conference hosted by Kepler Cheuvreux in Paris. He participated in 17 group and one-on-one company meetings over the course of three days. This provided a good opportunity to check in with firms that the Global team either owns or has studied in the past, in addition to meeting several others for the first time. The conference setting also provided an opportunity to compare notes and trade war stories with other Global and European-specialist investors.

Read the report here.

Disclaimer:

Not for onward distribution.
This material is prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619 AFSL No 224158) (Paradice, we or us). This material is not intended to constitute advertising or advice (including investment advice or security, market or sector recommendations) of any kind. In addition, this material represents only the views of the Paradice Global Equities team as at the time of release and is not intended, and may not, represent the views of Paradice or any of the other investment teams at Paradice. It does not reflect any events or changes in circumstances occurring after the date of publication.
It may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions, opinions and judgments, you should not place undue reliance on these forward looking statements. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. You should perform your own research and due diligence, consult your own financial, legal, and tax advisors before making any investment decision with respect to transacting in any securities covered herein. Following publication of this material, the investment teams at Paradice may transact or continue to transact in any of the securities covered herein, and may be positive, negative or neutral at any time hereafter regardless of our initial conclusions, or opinions.
This material is not to be copied, reproduced or published at any time without the prior written consent of Paradice. Paradice or any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material.
The information and opinions contained herein, including information obtained from third party sources which are considered to be reliable, are not necessarily all inclusive and, as such, no representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained herein and no responsibility arising for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Paradice, its officers, employees or agents.
Copyright© 2024 Paradice

Contributors:

Toby Shute

Further Information

Meet Our Investment Teams

Posted in: Perspectives

Report: Observations from China and USA Trip – Paradice Australian Equities Strategy

21 October 2024 3:05 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn

October, 2024

Report: Observations from China and USA Trip

Paradice Australian Equities Strategy

Recently David Feng, a portfolio manager/analyst from the Australian equities team, undertook a three-week trip to China and the US. Below is an update on the local economy and a view of in-trend topics from those locations. The trip comprised of company visits, interviews with industry contacts and experts, meetings with sector analysts, and conferences with participants from both listed and unlisted companies.

Read the report here.

Disclaimer:

This material is prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619 AFSL No 224158) (Paradice, we or us).
This material is not intended to constitute advertising or advice (including investment advice or security, market or sector recommendations) of any kind. In addition, this material represents only the views of the Paradice Australian Equities team as at the time of release and is not intended, and may not, represent the views of Paradice or any of the other investment teams at Paradice. It does not reflect any events or changes in circumstances occurring after the date of publication.
It may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions, opinions and judgments, you should not place undue reliance on these forward looking statements. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. You should perform your own research and due diligence, consult your own financial, legal, and tax advisors before making any investment decision with respect to transacting in any securities covered herein. Following publication of this material, the investment teams at Paradice may transact or continue to transact in any of the securities covered herein, and may be positive, negative or neutral at any time hereafter regardless of our initial conclusions, or opinions.
This material is not to be copied, reproduced or published at any time without the prior written consent of Paradice. Paradice or any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material.
The information and opinions contained herein, including information obtained from third party sources which are considered to be reliable, are not necessarily all inclusive and, as such, no representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained herein and no responsibility arising for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Paradice, its officers, employees or agents.

Contributors:

David Feng

Further Information

Meet Our Investment Teams

Posted in: Perspectives

Report: Is there an opportunity to invest in Australian Small Caps now?

13 August 2024 12:07 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn

August, 2024

Report: Is there an opportunity to invest in Australian Small Caps now?

Paradice Australian Small Cap Opportunities Fund

This thought piece discusses what we are seeing in the small cap space in the US and whether this suggests that there are opportunities within the Australian small cap market.

Are US small cap stocks setting the scene?

There has been a lot of commentary and media recently talking about the great rotation currently underway globally out of large caps and into small caps.

Below is a chart of the Russell 2000 (blue line; representing US Small Caps) vs the S&P 500 (white line; US Large Caps) over the last month, which illustrates close to a 10% performance difference between the two indices.

(Source: Internal, Bloomberg, as at 1 August 2024)

Why might this rotation be happening and what does it mean in an Australian context?

In our view, AI is an expense at the moment rather than a revenue generator. This goes to the cost of building out the infrastructure for AI and the lag as capacity fills up before returns come.

Concentration risk may be playing out. The 10 largest stocks by market capitalisation in the S&P 500 accounted for 27% of the index at the end of 2023, nearly double the 14% share of a decade earlier (source: Morgan Stanley). This has increased to 37% in 2024 according to FactSet data, with the Magnificent Seven making up 31% of the index. That rate of increase in concentration is the most rapid since 1950, according to Morgan Stanley. In our view the Magnificent Seven will have to keep positively surprising on earnings to maintain that momentum.[1]

The rotation began after the June 2024 CPI. In our view, this will get stronger when interest rate cuts begin to materialise and the move in US small caps over the last month suggests conviction on the rotation growing, a trajectory which could play out similarly in an Australian context as outlined below.

Interestingly, in Australia, we have not yet seen this play out at the index level – with Small Caps (the blue line in the chart below) only slightly ahead vs the ASX100 over the last month.

(Source: Internal, as at 1^st August 2024)

There are probably a number of reasons why this might be the case, but typically what we are seeing transpire in the US could follow here with a lag, depending somewhat on the local interest rate cycle.

And if we do see a catch up here in Australia, the scale is likely to be quite big – given the level of underperformance we have seen over the past 3 years:

(Source: Internal to Paradice, as at 31 July 2024)

Paradice Australian Small Cap Opportunities Fund (“SCOF” or “the Fund”) turned one on 20 July 2024

Why consider an investment in SCOF?

Fund Performance: SCOF has performed strongly in its first 12 months; delivering 29.99% total return, 20.70% above benchmark return of 9.29% (being the S&P/ASX Small Ordinaries Total Return Index. Refer also to table below).[2]
Investment Philosophy/Process: SCOF employs a similar process to the original Paradice Small Cap Fund founded in 2000; which has delivered >14% p.a. total return over this time.[3]
Fund Size: SCOF has a relatively small FUM allowing it to be nimble, take advantage of mispricing while focusing on capital preservation and compounding returns.
Boutique Structure: As a Paradice product, SCOF is able to leverage off the wider Paradice network.
The Australian Small Cap Index[4] has materially underperformed Large Caps[5] by c.25% since interest rates started rising in early 2022. With rates close to a peak; and early signs of a small cap re-rate occurring in the US; now is a good time consider investing in Australian Small Caps in our view.

1) Fund Performance:

SCOF celebrated its one year anniversary on 20 July 2024.

For the year to 31 July 2024 the Fund delivered a c30% total return before tax, after ongoing management costs and accrued performance fees.

Details below:

31 July 2024

Past performance of the Fund is not a reliable indicator of future performance. The value of an investment in the Fund may rise or fall. Returns are not guaranteed by any person. Fund returns are calculated before tax, after ongoing management costs and any accrued performance fees (unless waived). Returns greater than 1 year are annualised.

2) Investment philosophy/process:

As at 30 June 2024, the existing Australian Small Cap Fund has returned 14.9% total gross return and 9.34% alpha per annum over 24 years.[3]

SCOF implements a similar investment philosophy to that implemented successfully by the other Paradice Funds – including the existing Australian Small Cap Fund.

3) Fund size:

SCOF is a capacity constraint product – we will limit FUM to maximise alpha generation.

Further we are at the early stage of SCOF’s life cycle, which has obvious benefits:

– increased nimbleness to trade in and out of stocks; and

– broader investment opportunities.

4) Boutique structure supported by the wider Paradice business:

The investment team behind SCOF are co-investors in the Fund alongside our clients, which creates strong alignment. SCOF can also leverage the wider Paradice funds management network.

5) Time for Australian small caps?

With the Australian Small Cap Index near 15-year lows; and the early stages of a potential re-rate underway in US Small Caps; now could be an opportune time to invest in Australian Small Caps.

[1] Source: How Magnificent 7 affects S&P 500 stock market concentration (cnbc.com))

[2] Past performance of the Fund is not a reliable indicator of future performance. The value of an investment in the Fund may rise or fall. Returns are not guaranteed by any person. Fund returns are calculated before tax, after ongoing management costs and any accrued performance fees (unless waived). Returns greater than 1 year are annualised.

[3]Returns presented on a “gross” basis do not reflect any management fees, and other potential expenses to be borne by the investors. The Australian Small Cap Fund is managed by a separate investment team and is distinct from the Australian Small Cap Opportunities Fund.

[4] The S&P/ASX Australian Small Industrials Index.

[5]The S&P/ASX Australian All Ordinaries Index.

Disclaimer:

This material is prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619 AFSL No 224158) (Paradice, we or us).

This material is not intended to constitute advertising or advice (including investment advice or security, market or sector recommendations) of any kind. In addition, this material represents only the views of the Paradice Australian Small Cap Opportunities team as at the time of release and is not intended, and may not, represent the views of Paradice or any of the other investment teams at Paradice.

Equity Trustees Limited (ABN 46 004 031 298, AFSL No. 240975) (Equity Trustees) is the responsible entity of, and issuer of units in, the Paradice Australian Small Cap Opportunities Fund (Fund). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX:EQT).

You should consider your own needs and objectives and consult with a licensed financial adviser when deciding whether a Paradice Fund is suitable for you. You should also read the current Product Disclosure Statement and Target Market Determination available at www.paradice.com. A Target Market Determination is a document which is required to be made available by 5 October 2021. It will describe who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It will also describe the events or circumstances where the Target Market Determination for this financial product may need to be reviewed.

This material is not to be copied, reproduced or published at any time without the prior written consent of Paradice. Neither Paradice, Equity Trustees, nor any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material.

The information and opinions contained herein, including information obtained from third party sources which are considered to be reliable, are not necessarily all inclusive and, as such, no representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained herein and no responsibility arising for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Paradice, its officers, employees or agents.

Equity Trustees nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it

Contributors:

Sam Theodore

Head of the Australian Small Cap Opportunities Fund

Michael Peet

Portfolio Manager of the Australian Small Cap Opportunities Fund

Further Information

Learn more about the Paradice Australian Small Cap Opportunities Fund

Posted in: Perspectives

Julia Weng Speaks to Ausbiz about Rate Hikes and Market Spikes

10 November 2023 2:38 pm ⋅ Leave a Comment ⋅ Kathryn Wenborn

Julia Weng Speaks to Ausbiz about Rate Hikes and Market Spikes

Published November 10, 2023

Portfolio Manager / Analyst from our Australian Equities team, Julia Weng, speaks to AusBiz about the potential RBA rate hikes, the Aussie dollar’s potential rebound and investment strategies.

Watch the video here.

Disclaimer:

This material (or any contribution to it) is not intended to constitute advertising or advice (including legal, tax or investment advice or security recommendation) of any kind. It is of a general nature only and was current only at the time of initial publication. The information and opinions contained herein are not necessarily all-inclusive and, as such, no representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained herein and no responsibility arising for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Paradice, its officers, employees or agents. It may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions, opinions and judgments, you should not place undue reliance on these forward looking statements. You should consider your own needs and objectives and consult with a licensed financial adviser. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. References to securities may or may not represent the holdings of the Paradice Funds. The content of this publication is current as at the date of its publication and is subject to change at any time. It does not reflect any events or changes in circumstances occurring after the date of publication.

Posted in: Perspectives

3 Preferred Materials Exposures and 1 Sector to Avoid

18 July 2022 2:35 pm ⋅ Leave a Comment ⋅ SDDigital

3 preferred materials exposures and 1 sector to avoid

Published July 18, 2022

In a normal cycle, high prices for commodities from high demand would lead to increased supply and finally a drop in prices – but these are far from normal times.

Tom Richardson, Lead Portfolio Manager of the Paradice Equity Alpha Plus Fund, factors like the energy transition, underinvestment in production and ongoing demand from China may see prices rise further, or at least stay higher for longer. He is the first to say this might be a dangerous view and investors should be selective about their commodities investments.

Disclaimer:

This publication is not intended to constitute advertising or advice (including investment advice or security, market or sector recommendations) of any kind. It may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions, opinions and judgments, you should not place undue reliance on these forward looking statements. Equity Trustees Limited (ABN 46 004 031 298, AFSL No. 240975) (Equity Trustees) is the responsible entity of, and issuer of units in, the Paradice Funds (Funds). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX:EQT). You should consider your own needs and objectives and consult with a licensed financial adviser when deciding whether a Paradice Fund is suitable for you. You should also read the current Product Disclosure Statement and Target Market Determination available at www.paradice.com. References to securities may or may not represent the holdings of the Paradice Funds. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. The content of this publication is current as at the date of its publication and is subject to change at any time. It does not reflect any events or changes in circumstances occurring after the date of publication.

Posted in: Perspectives

#MeToo Momentum Continues in Australian Workplaces & Investors Must Take Note

14 February 2022 10:07 pm ⋅ Leave a Comment ⋅ SDDigital

From Parliament to the Pilbara: #MeToo momentum continues in Australian workplaces and investors must take note

Published February 14, 2022

Starting as a viral social media response to revelations of horrific sexual abuse allegations against influential Hollywood producer Harvey Weinstein in 2017, the #MeToo movement made the front pages for months and started serious public conversations. Conversations about everyday sexism, sexual assault and harassment of women, power dynamics in the workplace and fear of retaliation.

While the prominence of #MeToo might have died down in everyday news flow, we can’t underestimate the impact the movement has had in shining the spotlight on these issues and importantly providing a common language for women to demand better. It has also laid the ground for new voices to build upon the movement and continue momentum for change.

In Australia, the mantle has been taken up by the likes of Grace Tame and Brittany Higgins. The former, who just completed her time as Australian of the Year, has advocated for child sexual abuse survivors having been one herself at the hands of her schoolteacher. Grace’s message has also spoken to power dynamics, their role in abusive behaviour and in eliciting fear and silence from victims. Many of the public have seen that same abuse of power occur in so many settings, especially in the workplace.

Brittany Higgins, formerly a staffer in Federal Parliament, became instrumental throughout 2021 in driving community-led activism for women’s rights with the March for Justice. It saw women take to the streets and outside parliaments around Australia to demand the changes necessary so they could feel safe at work and have better legal protections.

Higgins’ advocacy prompted an independent inquiry into parliamentary workplaces led by the Sex Discrimination Commissioner Kate Jenkins, who was tasked with making recommendations on how to ensure parliamentary workplaces are safe and respectful. In November 2021 Jenkins published the report on her findings, ‘Set the Standard’. While some aspects were unique to Parliament, much of the report was applicable to all workplaces and offered insights into everyday experiences for less dominant groups, typically women.

Set the Standard identified drivers of bullying, sexual harassment and sexual assault: power imbalances and the misuse of power; inequality of gender and other non-dominant groups; and insufficient accountability for poor behaviour. This has been amplified and reinforced by unclear and inconsistent application of behavioural standards, poor leadership, negative workplace culture, and ineffectual structures for employment and promotion.

It also revealed that 1 in 3 parliamentary workers had experienced sexual harassment, and that harassment occurs at much higher rates for women compared with men (63% vs 24%). Rates are higher again for people who identify as LGBTIQ+.

Similar rates of sexual harassment have been revealed through submissions and hearings for the WA inquiry into sexual harassment against women in the fly-in/fly-out (FIFO) mining industry which commenced in July 2021. The final report is due in April this year and we expect to see further confirmation of the key drivers and risk factors relating to sexual harassment in the workplace detailed in the Jenkins report.

Despite these rumblings of under-appreciated rates of sexual harassment and bullying in Australian workplaces in recent months, when Rio Tinto this month published a landmark report into its own workplace culture it appeared to catch many by surprise. The review, led by former Sex Discrimination Commissioner Elizabeth Broderick, detailed high rates of bullying, widespread sexual harassment and racism being a common occurrence. Like Jenkins, Broderick was given a mandate to make recommendations for Rio Tinto to improve safety and inclusion in the workplace.

To Rio Tinto’s credit, it published the report in full and at the same time committed to implementing all recommendations, providing unprecedented transparency to stakeholders and importantly offered accountability. It was also an act of leadership, demonstrating an acceptance of what has come up as a common theme in these various inquiries: the role of leaders is vital. “Caring and inclusive leadership” and “setting the tone from the top” remains one of the more impactful means through which to drive meaningful workplace change.

But what now is the role of investors?

For boards and senior executives of listed companies it would be foolish – if not dangerous – to assume their workplace is free from bullying and sexual harassment. The rates at which this occurs amongst the general population would indicate it’s statistically improbable they are unimpacted. Further, the Jenkins parliamentary and the WA FIFO inquiries have demonstrated that certain workplaces face elevated risks. For example, those workplaces where power imbalances may be amplified; are male-dominated; and where socialising outside of work hours is more common (which can blur professional boundaries).

Investors must ensure that the boards and executives of their investee companies are reconsidering how they understand and monitor their workplace cultures. It is the role of an investor to be sceptical of claims that “it’s all in hand”. This is especially the case as all of these inquiries have revealed that victims so often fear speaking up and reporting harmful behaviour. How can a company be so sure, then, that those behaviours aren’t occurring?

This requires a new approach to understanding the workplace, its culture and the barriers to creating safe and inclusive environments for employees. Investors should be challenging companies to not solely rely on voluntary reporting through mistrusted channels and instead ask how companies can innovate to elicit relevant information from staff to get a more accurate ‘sense check’ of the state of play with respect to bullying and harassment.

As the Rio Tinto report highlighted, both formal and informal channels are needed to safely call out poor behaviour. This includes encouraging all staff to be “active bystanders” and, for example, not stay silent should a colleague make a sexist remark. Further, options for reporting should be reinforced by actions which give employees confidence that there are consequences for perpetrators and victims are protected.

Investors should also challenge investee companies’ approach to leadership and encourage training and capability building relating to caring and inclusive leadership styles. At a minimum this should be for the most senior leaders, but preferably middle management as it is this group which is often at the frontline in responding to instances of poor behaviour and “living” the culture of the company.

While many companies won’t be as well-resourced as Rio Tinto to undertake a multi-month review, there are still improvements every company can make to improve safety and inclusion for all their staff. With investors being afforded influence through their shareholding, they should push companies to see what can be done within their operations.

Failure to make safe and inclusive workplaces can not only have serious and long lasting negative impacts upon the victims of the resultant bullying, sexual harassment or assault, it results in poor business outcomes such as loss of productivity or challenges in attracting the best talent. While investors should be morally concerned with any harm caused to individuals, when there is also a clear potential for value destruction, they must act to ensure companies are managing this issue appropriately.

Written by: Maddy Dwyer and Nick Varcoe, Paradice ESG

Disclaimer:

Posted in: Perspectives ⋅ Tagged: Diversity, ESG

Category Archives: Perspectives

Paradice Australian Equities Fund May 2025 Commentary

Monthly Commentary

Further Information

Paradice Australian Equities Fund April 2025 Commentary

Monthly Commentary

Further Information

Paradice Australian Equities Fund March 2025 Commentary

Monthly Commentary

Further Information

Post Reporting Season Wrap

Reporting Season Wrap

Contributors:

Further Information

Report: Observations from Paris Trip

Report: Observations from Paris Trip

Further Information

Report: Observations from China and USA Trip – Paradice Australian Equities Strategy

Report: Observations from China and USA Trip

Further Information

Report: Is there an opportunity to invest in Australian Small Caps now?

Report: Is there an opportunity to invest in Australian Small Caps now?

Are US small cap stocks setting the scene?

[1] Source: How Magnificent 7 affects S&P 500 stock market concentration (cnbc.com))

[3]Returns presented on a “gross” basis do not reflect any management fees, and other potential expenses to be borne by the investors. The Australian Small Cap Fund is managed by a separate investment team and is distinct from the Australian Small Cap Opportunities Fund.

[4] The S&P/ASX Australian Small Industrials Index.

[5]The S&P/ASX Australian All Ordinaries Index.

Further Information

Julia Weng Speaks to Ausbiz about Rate Hikes and Market Spikes

Julia Weng Speaks to Ausbiz about Rate Hikes and Market Spikes

3 Preferred Materials Exposures and 1 Sector to Avoid

3 preferred materials exposures and 1 sector to avoid

#MeToo Momentum Continues in Australian Workplaces & Investors Must Take Note

From Parliament to the Pilbara: #MeToo momentum continues in Australian workplaces and investors must take note

Categories

Search

Comments

Meta

Stay Connected

Category Archives: Perspectives

Monthly Commentary

Further Information

Monthly Commentary

Further Information

Monthly Commentary

Further Information

Reporting Season Wrap

Contributors:

Further Information

Report: Observations from Paris Trip

Further Information

Report: Observations from China and USA Trip

Further Information

Report: Is there an opportunity to invest in Australian Small Caps now?

Are US small cap stocks setting the scene?

[1] Source: How Magnificent 7 affects S&P 500 stock market concentration (cnbc.com))

[3]Returns presented on a “gross” basis do not reflect any management fees, and other potential expenses to be borne by the investors. The Australian Small Cap Fund is managed by a separate investment team and is distinct from the Australian Small Cap Opportunities Fund.

[4] The S&P/ASX Australian Small Industrials Index.

[5]The S&P/ASX Australian All Ordinaries Index.

Further Information

Julia Weng Speaks to Ausbiz about Rate Hikes and Market Spikes

3 preferred materials exposures and 1 sector to avoid

From Parliament to the Pilbara: #MeToo momentum continues in Australian workplaces and investors must take note

Categories

Search

Comments

Tags

Meta

Stay Connected

[3]Returns presented on a “gross” basis do not reflect any management fees, and other potential expenses to be borne by the investors. The Australian Small Cap Fund is managed by a separate investment team and is distinct from the Australian Small Cap Opportunities Fund.