Dear investor

The December 2023 quarter saw a return after fees of +6.8% 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) increased 8.4%. The share market sprang to life during the quarter with a strong upward surge as investors settled into the view that inflation was falling and interest rates had peaked and likely to start falling later in 2024.

Third Link Growth Fund achieved a return after fees for the twelve months to 31 December 2023 of +11.9%, which was very satisfactory. The Fund’s long-term annual compound return is just over 10% pa, being slightly ahead of the S&P/ASX 300 Accumulation Index. As mentioned last quarter, there are 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 31 December 2023, the Fund fully redeemed its long-held investment held in the Paradice Mid Cap Fund to help fund redemptions and the forthcoming large distribution of 6 cents per unit for the six months ended 31 December 2023. We also invested in a new fund, the Auscap Ex-20 Australian Equities Fund, to provide good exposure to the mid-cap market.

The Fund size at 31 December 2023 was $178.3m, and all fees received from managing Third Link Growth Fund, net of fund expenses, continue to be donated to the charitable sector. Donations to the charities we support totalled $372k during the last quarter, with donations since inception now over $20.5m.

In this quarter's newsletter, we feature an article on BackTrack (one of the charities supported by Third Link), highlighting its impressive work helping young people develop healthy foundations for positive life pathways.

Lastly, a reminder to investors that the Fund is open to new or additional investments. Every additional dollar in the Fund allows us to give more money to charity.

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 December 2023, the portfolio was invested as below:

The Fund paid an income distribution of $0.0600 per unit for the six months ending 31 December 23. The Fund also redeemed out of the Paradice Mid Cap Fund during the quarter, and made a new investment in the Auscap Ex-20 Australian Equities Fund, a Fund which commenced on 1 December 2023.

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 December 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.  

Keeping kids alive, out of jail and chasing dreams
Third Link x BackTrack

Bernie Shakeshaft says that when he first brought wild kids and wild dogs together, he knew he was onto something special. In 2006, he started a small youthwork operation called BackTrack in Armidale, NSW, with just a rundown shed, some working dogs and a handful of volunteers.

Seventeen years later, BackTrack is nationally recognised for the profound impact it has in helping some of the country’s most vulnerable young people turn their lives around. Using an integrated approach involving wraparound youthwork, diversionary activities, 1:1 education aligned to the curriculum, accredited training programs, residential accommodation, a working farm and a social enterprise, BackTrack offers a proven alternative to the cycle of incarceration and a supported path towards education, employment and community.

Many are surprised that less than 10% of the BackTrack budget comes from government funding, which often applies a more siloed, short-term lens to service delivery. The BackTrack Way is all about a holistic and long-term approach. We do whatever it takes for as long as it takes, providing family-like support throughout a young person’s life - because that’s what works. It means we rely on the generosity of private funding to keep the lights on and to keep all of our programs running. And it means our consistent funding partners are an integral part of the family. Third Link has been a leader in understanding the power of discretionary funding to a small and necessarily nimble charity like ours. Thanks to the generosity of Third Link investors, we’ve been able to position ourselves and begin a journey of growth that we hope will set BackTrack up to help at-risk young people for generations to come.

In 2023, we established the BackTrack farm and transitioned to a new CEO, Marcus Waston, who is working alongside Bernie to ensure that BackTrack will be around for more young people for the long haul. We are consolidating our BackTrack Network of like-minded organisations doing similar work across NSW and QLD to determine how we can support more passionate people to deliver programs like ours in their own communities, and we are embarking on a 100-year vision for BackTrack.

BackTrack’s mantra is to keep kids alive, out of jail and chasing their hopes and dreams. Sometimes, it’s hard to quantify the impact of work like this, which is based on relationships and profound personal change. To this end, we have worked with a documentary filmmaker to provide insight into the intersecting challenges our young people face. The 2018 feature documentary ‘BackTrack Boys’ is an award-winning film available to stream on our website.

In December 2023, we released an update, ‘BackTrack: Chasing Dreams’ to follow some of our original young men and show the power of this vital work. Together, we are changing lives, communities and generations.

For more information see backtrack.org.au and follow along on Insta, Facebook & LinkedIn @backtrackyouthworks

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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