Dear investor

The June 2023 quarter was reasonably unremarkable for Third Link Growth Fund, with a return for the three-month period of +0.6%. During the same period the S&P/ASX 300 Accumulation Index (which measures the largest 300 shares listed on the Australian stock market), rose +1.0%. The share market lacked strong momentum as the jury was still out as to whether inflation had peaked and the Reserve Bank of Australia would cease raising interest rates. While inflation appears to be moderating in some areas of the economy, the all-important labour market remains stubbornly tight, likely entrenching an element of inflation that will be hard to reverse. 

Third Link Growth Fund achieved a return after fees for the year ended 30 June 2023 of +8.8%. While on its own this number was reasonable, it lagged the S&P/ASX 300 Accumulation Index which increased by +14.4% over the same period. This was not a reflection of problems with any of the underlying managers we invest with, but more macro factors driving the stock market, where large companies have performed better than smaller companies for some years now. However, 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 to investing in funds exposed to such stocks.

In the quarter ended 30 June 2023, the Fund made a full redemption of its investment held in the QVG Opportunities Fund to assist with funding its end-of-financial year distribution to be paid by mid-August.

The Fund size at 30 June was $183.82m and all fees received from managing Third Link Growth Fund, net of fund expenses, continue to be donated to the charitable sector. In this quarter's newsletter, we feature one of the charities we support, The Foundation for Young Australians, which backs young people and youth-led initiatives to create change.

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 June 2023, the portfolio was invested as below:

The Fund paid an income distribution of $0.0411 per unit for the six months ending 30 June 2023. In the quarter to 30 June 2023, the Fund made a full redemption of its investment held in the QVG Opportunities 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 June 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 FYA backing young people

Nine times out of ten, visionary volunteers juggling work and study run emerging youth-led organisations. With ambitious goals and innovative ideas for how to seize moments to progress their aims, these leaders often need an injection of funds and support to turn their ideas into action.

The Foundation for Young Australians (FYA) understands the profound change young people can make if backed with enough mentorship, resources and trust.

Young people leading change
In September 2021, 60 people, including federal government ministers, academics, and Australian Curriculum, Assessment and Reporting Authority members, attended a round table to discuss including sexual consent education in the national curriculum.

Chanel Contos, the young founder of Teach Us Consent, brought the forum together with the support of The Foundation for Young Australians.
With FYA’s help, Teach Us Consent was able to secure a commitment from the state and federal governments to include consent in the national curriculum, along with $4m in funding to develop resources and training for teachers to deliver the content.

“The unconditional support from FYA was amazing and something I haven’t had from other organisations,” said Chanel Contos. “FYA was the background structure… their expertise and skill were fundamental to the success of the Teach Us Consent campaign.”

Third Link’s impact
Third Link supports FYA to work with youth-led organisations, like Teach Us Consent, with crucial multi-year unrestricted funding. In addition to the base commitment of $300,000 over three years, Third Link offered a further $450,000 of ‘challenge funding’, contingent on FYA securing two other unrestricted grants to an equal amount.

The benefit of this challenge funding was two-fold: firstly, it provided leverage for FYA, which could build on the demonstration of Third Link’s trust to engage funders with higher risk thresholds; secondly, it increased the effectiveness of Third Link’s investment.

The trust Third Link showed in the early stages of FYA’s three-year strategy has enabled FYA to work with several youth-led organisations - groups of young people who have come together to enact their vision for a better world but who require scaffolding and capacity support to get there.

In this way, FYA is ensuring young people have the resources to mobilise in response to key opportunities for systemic change and convert momentum into real-world impact.

Youth Action Fund
FYA is now supercharging this work - putting more resources into the hands of young people through the creation of a Youth Action Fund. 

Piloting the fund in 2023 with a $50,000 grant pool, distributing small grants of $5k-$10, the aim is to grow the fund across 2024-26 through a $1.5m investment from FYA’s corpus, matched by contributions from like-minded partner organisations who want to invest in youth-led change for a fairer Australia for future generations.

As well as grants, FYA will provide wrap-around support, including training, mentorship, connection to networks, and capacity support, helping young people to be the agents of change in their communities and their future world.

To find out more about the Youth Action Fund, or discuss any aspect of how FYA and Third Link are working together to back young people, you can reach out to FYA Development Director Lachlann Carter on 0432 491 800, or lachlann.carter@fya.org.au.

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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