The Level 18 Fund increased by +1.8 net of fees in April.

Commentary

The Level 18 Fund increased by +2.2 per cent gross in April and?+1.8 per cent net of fees for the month.?April delivered a rally post a decision by the RBA to pause interest rate increases earlier in the month.??The RBA’s decision to increase interest rates again in May is likely to negatively impact the market in the short term.

Reflecting an increased appetite for investment risk, the small cap sector outperformed large caps during April.?The S&P/ASX Small Ordinaries Accumulation Index?rallied 2.8 per cent?compared to the All Ordinaries Accumulation Index at 1.8 percent.?

Rate sensitive sectors such as Real Estate, Healthcare and Information technology outperformed.?In contrast, the Materials sector underperformed and declined by -2.6 per cent in the month.?

Contributing to the market’s performance in the month was confirmation that inflation in Australia appears to have peaked.?Headline annual inflation slowed to 7.0 per cent in the first quarter compared to 7.8 per cent in the fourth quarter last year.?The lower result was due to lower price rises in the food, transport and housing sectors.??

Regarding the outlook for Australian equities, we believe markets have begun a sustainable recovery.?Central banks are getting to the end of the current rate increasing cycle as economies slow and inflation declines.?Importantly for us, the small company sector is trading well below its long-term price earnings average compared to large companies.?We see a range of good investment opportunities within the Australian market especially among small companies.?Importantly, investors remain bearish and cash holdings are above average. History has taught us that a non-consensus view normally delivers long-term outperformance.?With a number of factors suggesting to us the next bull market has already begun, we believe it is time to add equity exposure to the portfolio.?

Positive contributors to the Fund in April include engineering and project delivery services group Lycopodium (LYL) following an operational and earnings update regarding the outlook for the company.??Travel distribution services group Helloworld (HLO) delivered a strong performance in the month following a market update that confirmed a robust trading environment and increased forecast earnings.?Building and construction materials group Boral (BLD) also performed well as the market anticipates an improvement in operating margins and profitability for the diversified group.?

Mining services and drilling optimisation group Imdex (IMD), insurance service provider PSC Insurance Group (PSI)?and leisure and entertainment operator group Ardent Leisure Group (ALG) made negative contributions to performance in the month.?

We have added the Level 18 Fund Information Memorandum (IM) and application form to the Centennial Asset Management website.?Please note existing unit holders are only required to compete a one-page additional application form.?The following link?www.centennialfunds.com.au provides access to the IM and application documents.

Thank you as always for your continued support and please contact Michael Carmody ([email protected]?or +61 2 8071-9215) if you would like any?further details.

The Centennial Team