As you will read in the 2017 Performance Report that accompanies this quarterly report, the past financial year was an excellent one. Our original Australian Shares Fund produced another year of 20% plus returns and managed to do so in a period that was generally unfavourable for investors at the smaller end of the market.
The newer International Shares Fund had what was hopefully a defining year, with a number of core investments paying off in a big way and the fund generating a return of more than 30% excluding currency impacts (a strong currency reduced that to 27%). It is still only marginally ahead of its index in the four years since inception but the evidence is increasing that applying the same long term investing approach works as well elsewhere as it does here.
So what should you expect for the future?
Well, you should not extrapolate recent history.
As you know, I don’t have the faintest idea what markets are going to do. But I do know that the past few years have been particularly favourable. Stockmarkets have increased, but not by too much, and the inclining trend has been punctuated by a number of significant retractions that allowed us to put cash to work in both funds. The market falls we have experienced have been in the magnitude of 10-20% and rebounds have been rapid.
That is a friendly backdrop for a contrarian investor.