Airlie Funds Management is banking on a resurgence in technology stocks and resilient iron ore markets as its flagship $1 billion fund aims to recover from a challenging year. The Australian Share Fund, managed by Matt Williams and Emma Fisher, returned 3.2 per cent in 2023, underperforming the S&P/ASX 200 Accumulation Index’s 10.3 per cent gain. This underperformance was attributed to missing the rally in gold stocks and a significant sell-off in blood plasma company CSL. Airlie is among several large-cap managers, including Bennelong, Fidelity, and Platypus, that have underperformed due to pullbacks in former blue-chip stocks. Airlie Funds Management is a money management firm that invests in various asset classes, providing investment solutions to its clients. The firm’s flagship Australian Share Fund focuses on delivering long-term capital growth and income through investments in Australian equities.
Williams and Fisher are doubling down on their conviction that the trend will reverse in the coming years. Airlie has initiated a position in accounting software business Xero, which experienced a 30 per cent decline in the December quarter due to concerns over its acquisition of US payments start-up Melio. Despite this, Airlie believes Xero’s strong user growth and pricing power in Australia and New Zealand present an opportunity. The fund manager has also added family tracking app Life360 to its portfolio, citing its exposure to global growth and potential for margin and user expansion.
While largely avoiding mining stocks since the fund’s inception in 2018, BHP remains the portfolio’s largest position. Airlie also holds Rio Tinto, believing it meets their criteria of quality assets, a solid balance sheet, and a commodity that is out of favour. Despite the market’s concerns that new supply from Rio Tinto’s Simandou mine in West Africa will depress iron ore prices, Airlie anticipates iron ore will trade above US$80 a tonne, driven by periods of tight supply.
The firm has been reducing its position in CSL, citing challenges within the business, particularly in the flu segment where US vaccination rates remain low. Airlie’s reluctance to invest in mining companies also extended into gold stocks, which proved costly last year as the sector doubled as a proportion of the S&P/ASX 200.
