Dear investor

The March 2023 quarter produced another solid result for Third Link Growth Fund, with a return for the three-month period being +3.5%. Stock markets continued to be driven by the fight against inflation. Volatility was high late in the quarter, as the effect of rapid and sharp interest rate changes revealed cracks in a financial system not designed for such rapid change, resulting in a number of overseas bank failures that investors feared could lead to a wider banking crisis. This rattled markets that were then steadied by decisive US and European regulator intervention. 

The Reserve Bank of Australia held interest rates unchanged in April after noting the potential lag effect that 10 consecutive previous hikes will have on household spending but left open the prospect of more rate increases. The quarter also featured the February reporting season, where most Australian companies reported half-year results. Reporting was mixed, with varying signs that the more challenging environment was pressuring earnings. An easing of consumer demand and elevated cost pressure (particularly employment costs) impacted margins, although there was some evidence that supply chain bottlenecks, freight and energy costs have eased.

In the quarter ended 31 March 2023, the Fund made a full redemption of its investment held in the EGP Concentrated Value Fund due to continuing concerns about the volatility of the microcap end of the stock market given the prevailing economic backdrop. The Fund also made a new investment in the Katana Australian Equity Fund, an actively managed investment fund that invests in a range of Australian listed companies with a strong history of very good performance.

Finally, read on to hear from Daniel Findlay, The Ethic Centre’s first Youth Engagement Coordinator, to learn about his work helping to bring ethics to the centre of everyday life. Daniel’s role has been made possible due to funding support from Third Link. Thank you for allowing your fees to make a difference.

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 March 2023, the portfolio was invested as below:

In the quarter ended 31 March 2023, the Fund made a full redemption of its investment held in the EGP Concentrated Value Fund and a new investment in the Katana Australian Equity 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 March 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.  

Arming young people with ethical decision-making skills

The Ethics Centre is a not-for-profit organisation developing and delivering innovative programs, services and experiences that bring ethics to the centre of everyday life. To support the Centre’s ambition to broaden and deepen its engagement with young Australians, Third Link funding facilitated the employment of its first Youth Engagement Coordinator, Daniel Finlay.

We spoke with Daniel to learn more about The Ethics Centre, how he’s doing and what exciting plans are on the horizon.

Third Link: Daniel, you’ve been in your role with The Ethics Centre for just over a year now. What does your role entail, and how has it impacted on the Centre’s ability to engage with young people?

And what a year it’s been! So, my role is pretty broad, but essentially it covers all of the things we do that directly affect young people, with the intent that a more focused approach to youth outreach and representation will result in a better ability for us to engage young people.

That means I do anything from writing, editing or scoping articles from youth perspectives to supporting the design of various skills and education programs to developing ways that The Centre can involve more young people. Part of my role is also developing a youth strategy, which consists in aligning all our youth-related endeavours under a common purpose and ensuring they’re complementary.

Trying to reach young people is infamously difficult, but we’re already starting to see the fruits of having a role dedicated to it. I’ve been able to develop several community relationships over the past months, meet with community and youth organisation leaders to talk about how they work with and for young people, and involve myself in the content of our programs to ensure that the language and direction are representative and relatable.

Third Link: Can you call out a few highlights in the role recently? What are you particularly proud of?

I'm most proud of the two projects I’m most closely working on at the moment: our inaugural Youth Advisory Council and the Moral Courage Program.

The Youth Advisory Council is an initiative I’m heading that will see The Ethics Centre bring together a small group of 13-25-year-olds from across NSW (and potentially Australia) to be part of our decision-making and creation process for all things youth-related. I know as well as anyone that individuals can’t speak for groups, and so we decided that to properly represent and serve young people, we need to be informed and guided by a variety of young voices. We’re set to have over 50 applications, which I’m super excited about!

The Moral Courage Program is something I’ve had increasing involvement with since I joined The Ethics Centre. This program empowers teenagers with the skills they need to identify their values and how to properly live them, often involving the need to know how to reflect, analyse, empathise and support themselves and others.

Early on, I developed scripts that depict scenarios where young people face difficult internal or external decisions, grappling with their own values and others’. As part of that process, I was lucky enough to speak (and laugh) with some enthusiastic students from various Sydney high schools and incorporate their direct feedback and ideas to make sure that the examples we use in the program are as realistic and relatable as possible.

Third Link: What are some of the big plans in store for The Ethics Centre and its programs for young people over the coming year or two?

One of the larger-scale things I’d love to see us be able to do is a national youth-ethics survey. We began looking into the potential for this last year, but it turns out surveying's an expensive business! It’s definitely something we’re interested in doing medium-long-term because there are no youth surveys that look at youth sentiment regarding ethics, and it would be immensely impactful to be able to pinpoint gaps in understanding or action.

We’re also planning some youth-focused events to complement our current suite. Last year, I was involved with the creation of a highly successful session at the Festival of Dangerous Ideas, where a group of UNSW students presented their dangerous ideas to festival-goers. With the future involvement of the Youth Advisory Council, this is only going to get bigger and better!

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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