Dear investor

The September 2023 quarter saw a return after fees of +0.6% for Third Link Growth Fund. During the same period, the S&P/ASX 300 Accumulation Index (which measures the largest 300 shares listed on the Australian stock market) fell 0.8%. The share market continued to lack momentum as views were mixed on the direction of interest rates, albeit inflation seems to be slowly coming down.

Third Link Growth Fund achieved a return after fees for the twelve months to 30 September 2023 of +9.2%, which was very satisfactory. However, it lagged the S&P/ASX 300 Accumulation Index, which increased by +13.0% over the same period. As mentioned last quarter, there are early signs that mid-to-small capitalisation stocks listed on the Australian Stock Exchange are starting to positively lift off their very low bases. This augurs well for Third Link Growth Fund, which has a bias toward investing in funds exposed to such stocks.

In the quarter ended 30 September 2023, the Fund made a full redemption of its investment held in the Bennelong ex-20 Australian Equities Fund, in which it had been invested for many years. The fund has performed well over most of the years we were invested, but it is now of a size where we believe the task will be harder.  We are targeting the proceeds for a new fund that will be launched in the coming months.

The Fund size at 30 September was $179.5m, and all fees received from managing Third Link Growth Fund, net of fund expenses, continue to be donated to the charitable sector. The end of this quarter marks a very significant milestone, with donations since inception passing $20m.

In this quarter's newsletter, we feature a Q&A with Danielle Wood, the CEO of Grattan Institute (one of the charities supported by Third Link), to discuss its policy research work to improve the lives of Australians.

Thank you for continuing to make a difference in the community through your investment.

Regards,
Chris Cuffe AO, Founding Director and Portfolio Manager
Third Link Investment Managers Pty Limited

Portfolio update

The objective of Third Link Growth Fund (“the Fund”) is to provide a well-managed investment in Australian listed shares. To achieve this, the Fund extensively invests with professional third party investment managers.

As at the end of September 2023, the portfolio was invested as below:

In the quarter to 30 September 2023, the Fund made a full redemption of its investment held in the Bennelong ex-20 Australian Equities Fund.

A description of each of the fund managers we invest with can be found on our website. Each of these managers rebates their management fees and performance fees, effectively meaning they are managing the assets of the Fund for free. It is through this extraordinary generosity, together with that of other service providers, that Third Link is able to make sizeable donations to the charitable sector without diluting the returns to investors from the Fund.

Fund performance

The aim of the Fund is to outperform, after fees and over rolling five year periods, the S&P/ASX 300 Accumulation Index¹. As at the end of September 2023 the Fund performance relative to the Fund benchmark was as below:

Figures greater than one year are expressed as annual compound returns. No allowance is made for tax. The benefits of franking credits from dividends received have not been included.

¹ The S&P/ASX 300 Accumulation Index covers the largest 300 shares listed on the Australian market. Being an accumulation index, it measures changes in both the value and income of the shares.

² The Fund was registered on 12 March 2008, commenced operations on 18 April 2008, and commenced investing on 1 June 2008 as a multi-sector growth fund. In February 2012 the Fund's investment strategy changed from multi-sector growth to Australian equities.  

Third Link and Grattan Institute: policy research to improve lives

Grattan Institute is an independent, non-partisan public policy think tank. It researches and advocates for policy changes to improve the lives of Australians. This year Grattan celebrates its 15^th year.

Third Link spoke with Danielle Wood, Grattan Institute CEO to discuss its work and why philanthropic support like Third Link’s is important.

Grattan Institute is an independent, non-partisan public policy think tank. It researches and advocates for policy changes to improve the lives of Australians. This year Grattan celebrates its 15^th year. Third Link spoke with Danielle Wood, Grattan Institute CEO to discuss its work and why philanthropic support like Third Link’s is important.

Of Grattan’s work, what are you most proud of?

I am hugely proud of the quality, rigour and impact of our research. Given our size, we pack a big punch. 

Last year, our team of 20 researchers produced 15 reports, which were downloaded almost 45,000 times. We held more than 1,200 stakeholder meetings, including almost 200 with politicians and political offices. Our work was cited more than 100 times by politicians and government agencies.

We also channelled our resources into selling our message to the broader public. Our staff gave 263 speeches, published more than 150 opinion pieces in major newspapers, and our work was mentioned more than 40,000 times in the media.

We emphasise public advocacy in our work for two reasons.

The first is that there is an inherent value in adding facts and context to the public debate. In a media landscape that is increasingly shouty and riddled with mis- and disinformation, expert, research-based commentary on topical issues – presented in a way that people can engage with – is extremely important to rational policy debate.

Second is that publicly making the case for specific policy changes helps to shift hearts and minds. Major policy change is hard and often involves difficult trade-offs. People are much more receptive to change when the case has been publicly explained.

This leads me to the thing I am most proud of: Grattan’s capacity to positively influence public policy.

While successful policy changes have many ‘mothers’, there are so many policy initiatives and changes where Grattan played a key role in galvanising action. A couple of my favourites:

• The NSW and Victorian Governments have so far allocated just over $2 billion in small group tutoring over the past three years to help school students who are struggling with reading and maths, in line with recommendations from Grattan reports.
   
• This July, the federal government delivered major reductions in out-of-pocket childcare costs. They are also supporting an increase to 26 weeks of government-paid parental leave, including time set aside for dads and partners. Both changes improve choice for families and will catalyse the social and economic benefits associated with higher women’s workforce participation. Grattan has done a lot of research and advocacy to support these changes.

But these are just a couple of many examples. Policy enthusiasts can find a more comprehensive list at www.grattan.edu.au/impact.

How do you see philanthropic investment in policy research as unique from more traditional service delivery support?

Investing in policy research and advocacy requires a way of thinking about success and failure that is very different from the traditional philanthropic interventions such as service delivery.

Policy research is more uncertain and less linear in its payoffs. But on the flip side, if you can shift the dial on government policy, your impact will be many, many times greater than philanthropy can achieve alone.

In mid-November, I will leave my role as Grattan Institute CEO, and I will do so with immense pride in an organisation that has achieved an oversized impact in improving the lives of Australians.   

To find out how support from Third Link is helping Grattan Institute shape the Australian policy conversation, reach out to Grattan Institute’s Head of Philanthropy, Ant Clark, at ant.clark@grattan.edu.au or 0422 939 200.

Important Information: ­This information has been issued by Third Link Investment Managers Pty Ltd (Third Link), ABN 31 128 965 702, AFSL 321611 as investment manager of the Third Link Growth Fund (Fund).  This information provided is general information only.  It does not constitute financial, tax or legal advice or an offer or solicitation to subscribe for units in the Fund. This information has been prepared without taking account of your objectives, financial situation or needs. Before acting on the information or deciding whether to acquire or hold a product, you should consider the appropriateness of the information based on your own objectives, financial situation or needs or consult a professional adviser. There can be no assurance that the Fund will achieve its targeted rate of return and no guarantee against loss resulting from an investment in the Fund. All investments carry risks. Past fund performance is not indicative of future performance. Fundhost Ltd ABN 69 092 517 087, AFSL No. 233045 is the Responsible Entity for the Fund. Applications can only be made on the application form dated 30 June 2022 accompanying the Fund Product Disclosure Statement (PDS) dated 30 June 2022. Potential investors should consider the PDS and the Additional Information to the PDS (AIB) before deciding whether to invest, or continue to invest in the Fund. The PDS and AIB can be obtained from www.thirdlink.com.au or by contacting Third Link. The TDM can be found at fundhost.com.au/fund/the-third-link-growth-fund/

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