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The Montgomery Fund quarterly video March 2022


The Montgomery Fund quarterly video March 2022

The March 2022 quarter has been a challenging environment for The Montgomery Fund’s core philosophy of investing in quality businesses diversified across the growth spectrum. We observed significant divergence in relative share price performance across our holdings despite our investee companies delivering solid financial results in a difficult environment. We remain cautious on recent market moves as volatility remains elevated across all financial markets.


Joseph Kim: 

Hi, I’m Joseph Kim. Today’s video will be a wrap of markets, The Montgomery Fund performance and some key portfolio changes we made this quarter.


The March 2022 quarter will go down as one of the more challenging and complex environments we’ve had to navigate in markets, not just because of the magnitude of events but also the pace and volatility of share price moves. This challenges include:

  • A sharp sell-off in January triggered by a sudden realisation of faster interest rate rises in 2022
  • Our expectations of a difficult reporting season due to supply chain constraints, COVID operating environments and higher costs
  • Inflation taking its toll on consumer sentiment and faster rate rises and finally
  • The war in Ukraine

The war deserves a special mention because it places greater pressure on some supply chains as well as inflation, both of which were already problematic before the war, because of the sanctions on Russia and its status as a globally significant commodity and energy exporter.

One bright spot is that COVID appears to be in the rear-view mirror for many countries, notwithstanding the potential for further variants.


The Montgomery Fund was down 7.6 per cent for the quarter, versus the ASX benchmark up 2.1 per cent. The March quarter has been a challenging environment for The Fund’s philosophy of investing in quality companies diversified across the growth spectrum.

The Fund’s relative performance was also skewed by the large weighting of resources companies in the ASX benchmark. This sector was a strong outperformer in the quarter as a potential beneficiary of the war.

Within the portfolio, there was a lot of divergence in share price performance across The Fund’s holdings despite many of our portfolio companies delivering solid financial results in a difficult operating environment.

Portfolio changes

During the quarter, we exited our position in Westpac. Despite showing some signs of stabilisation in its February update, we believe Westpac remains behind peers in both cultural and operational execution. We invested the proceeds by increasing our positions in National Australia Bank and the Commonwealth Bank of Australia.

We also reduced our exposure to Aristocrat Leisure. While Aristocrat remains well positioned in its core markets, the collapse of the Playtech acquisition removes a key pillar of future investment and earnings growth at a time when its digital division is showing signs of a slowdown.

A new notable position in the portfolio is Computershare. Computershare is a beneficiary of rising interest rates given its significant Fiduciary balance which has generated falling income for most of the past decade. Computershare is our stock in focus in the March quarterly commentary.


We assess our overall positioning to be broadly defensive with select exposures on reopening beneficiaries and quality companies with longer-term growth tailwinds.

The positioning reflects our current relative caution given fluid markets in the broader context of inflation, rising rates and the longer-term fallout from the war in Ukraine.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.


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