Regal Investment Fund · ASX:RF1
Regal Investment Fund — Regal Investment Fund Investor Update & Q&A Webinar March 2024
36 slides from Regal Investment Fund's conference presentation, Mar 21, 2024
Slide 1: Regal Investment Fund (ASX:RF1) Investor Update & Q&A
Regal Investment Fund (ASX:RF1) Investor Update & Q&A March 21, 2024 This presentation deck accompanies a webinar scheduled for 11:00am AEDT on 21 March 2024. To access the recording, please click here or email investorrelations@regalfm.com For any questions on RF1, please reach out to the registry,
Slide 2: Investor Update & Q&A
Investor Update & Q&A Regal Investment Fund March 2024
Slide 3: Contents
Contents Page Section Page 4 Welcome & Regal Update Page 12 Market Update & RF1 Positioning Page 23 Emerging Companies Page 31 Private Credit Page 34 Q&A Discussion 3
Slide 4: Welcome & Regal Update
Welcome & Regal Update Charlie Aitken, Investment Director, Regal Partners
Slide 5: Disclaimer
Disclaimer Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Regal Investment Fund and has authorised the issue of this document (Information). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22607 797 615), a publicly liste
Slide 6: Speakers
Speakers PHILIP KING JESSICA FARR-JONES GAVIN GEORGE Co-Founder & CIO Portfolio Manager Portfolio Manager Long/Short Equities Emerging Companies Private Credit Regal Funds Regal Funds Regal Funds RF1 Investment Committee Member 6
Slide 7: The Regal Investment Fund (RF1) has been established to provide exposure to alternative strategies
The Regal Investment Fund (RF1) has been established to provide investors with exposure to a diversified selection of alternative investment strategies managed by Regal Its objective is to produce attractive risk-adjusted absolute returns over a period of more than five years, with limited correlati
Slide 8: Regal Partners Limited (RPL)
Regal Partners Limited (ASX:RPL) Regal Partners Limited is an ASX-listed, specialist alternative investment manager with RPL $772m $11.0 billion1 in funds under management. • Combining deep industry experience, extensive networks, and multi-award-winning performance track $11.0bn ASX ticker Funds Un
Slide 9: Regal Investment Fund – the only diversified alternative investment strategy vehicle listed on the ASX
Regal Investment Fund (ASX: RF1) – the only diversified alternative investment strategy vehicle listed on the ASX UNDERLYING ALTERNATIVE INVESTMENT STRATEGIES MARKET GLOBAL LONG SHORT SMALL EMERGING LONG SHORT WATER RESOURCES PRIVATE NEUTRAL ALPHA EQUITY COMPANIES COMPANIES HEALTHCARE STRATEGY ROYAL
Slide 10: Increasing allocations to uncorrelated investment strategies
Increasing allocations to uncorrelated investment strategies RF1 Strategy Allocations RF1 Strategy Allocations Strategies added since inception As at 31 October 2020 As at 29 February 2024 Long Short Healthcare Private Credit Market Neutral 9% Water Strategy 14% Global Alpha 8% Resources Royalties M
Slide 11: RF1 Performance Since Inception
RF1 Performance Since Inception Net of fees, as at 29 February 2024 A$/share RF1 PERFORMANCE SINCE LISTING 4.0 (NET ASSET VALUE, ADJUSTED FOR DISTRIBUTIONS) Launch date 17 June 2019 3.5 Regal Investment Fund +120.8% Annualised Return Since Inception1 3.0 +18.1% Regal Investment Fund (RF1)1 S&P/ASX 3
Slide 12: Market Update & RF1 Positioning
Market Update & RF1 Positioning Philip King, Co-Founder & CIO Long/Short Equities, Regal Funds
Slide 13: Market outlook
Market outlook Key takeaways 11 Markets should finish the year higher as the market looks through the economic slowdown to a recovery 23 Main risk remains rising bond yields 3 Stock pickers’ market within the “Magnificent 7” and across the broader market. Rise of passive investing is making markets
Slide 14: US bull market continues
US bull market continues S&P 500 AND ASX 200 INDEX LEVELS REBASED TO 100 200 S&P 500 ASX 200 180 160 140 120 100 80 60 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 Mar-24 Source: Bloomberg as at March 2024 (weekly data). Past performance is not a reliable indicator of future
Slide 15: S&P 500's gains have been driven by mega cap US technology stocks
S&P 500’s gains have been driven by mega cap US technology stocks "Magnificent 7" Remaining 493 S&P 500 100% 93% 90% 80% 70% 60% 50% 40% 33% 30% 20% 19% 10% 0% -10% Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Source: Bloomberg as at March
Slide 16: S&P 500 trades on 21x P/E but 19x ex the Magnificent 7
S&P 500 trades on 21x P/E but 19x ex the “Magnificent 7” 45x "Magnificent 7" Remaining 493 S&P 500 40x 35x 30x 29x 25x 21x 20x 19x 15x 10x 2019 2020 2021 2022 2023 2024 Source: Bloomberg as at March 2024 (weekly data). Magnificent 7 include Apple, Microsoft, Alphabet, Amazon, NVIDIA, Tesla and Meta.
Slide 17: Magnificent 5 P/E multiples have remained broadly stable vs NVIDIA and Tesla
“Magnificent 5” P/E multiples have remained broadly stable vs NVIDIA and Tesla 80x NVIDIA Tesla "Magnificent 5" 70x 60x 54x 50x 40x 35x 30x 27x 20x 10x Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Source: Bloomberg as at March 2024. Magnifi
Slide 18: US financial conditions easing and economic growth accelerating
US financial conditions easing and economic growth accelerating GS US FINANCIAL CONDITIONS INDEX REAL US GDP GROWTH IMPULSE FROM GS FCI (% points) 102 2.0 1.5 101 1.0 0.5 100 0.0 99 -0.5 -1.0 98 -1.5 97 -2.0 -2.5 2Q21 3Q21 4Q21 2Q22 3Q22 4Q22 2Q23 3Q23 4Q23 2Q24 3Q24 4Q24 1Q22 1Q21 1Q23 1Q24 96 2019
Slide 19: Strong bounce in equity markets since yields peaked
Strong bounce in equity markets since yields peaked MSCI World Total Return (LHS) 10 yr US Treasury yield (RHS) 130 6.00% Rising bond yields pressure Rising bond equity markets yields pressure equity markets 120 5.00% 110 4.00% 100 3.00% 90 2.00% 80 1.00% 70 0.00% Nov-21 Feb-22 May-22 Aug-22 Nov-22
Slide 20: Resources cheap but bank valuations at 35 year highs
Resources cheap but bank valuations at 35 year highs ASX200 RESOURCES FORWARD EV/EBITDA ASX200 BANKS FORWARD P/E 12.0x 17.0x 11.0x 16.0x 10.0x 15.0x 9.0x 14.0x 8.0x 13.0x 7.0x 12.0x 6.0x 11.0x 5.0x 10.0x 4.0x 9.0x 3.0x 8.0x 1997 2001 2005 2009 2013 2017 2021 1997 2001 2005 2009 2013 2017 2021 Source
Slide 21: ASX reporting season in 1H24 was one of the most volatile of past 15 years
ASX reporting season in 1H24 was one of the most volatile of past 15 years ASX 200 % OF EARNINGS DAY MOVE >10% 16% >10% <-10% 14% 12% 10% 8% 6% 4% 2% 0% H1 2010 H1 2011 H1 2012 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2007 H1 2008 H1 2009 H2 2010 H2 2011 H2 2012 H2 2013 H2 2014 H2
Slide 22: Takeover activity continues… but IPOs have evaporated
Takeover activity continues… but IPOs have evaporated ANNOUNCED M&A INVOLVING AN AUSTRALIAN TARGET (A$BN) 401 400 Public Non-Public 359 300 257 274 238 228 213 200 203 184 200 161 158 149 146 120 114 122 124 100 26 0 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY2
Slide 23: Emerging Companies
Emerging Companies Jessica Farr-Jones, Portfolio Manager
Slide 24: Regal Emerging Companies Strategy overview
Regal Emerging Companies Strategy overview INVESTMENT UNIVERSE Emerging Companies LISTED UNLISTED INVESTMENTS Strategy combines MICROCAPS PRE-IPO INVESTMENTS EXPANSION CAPITAL the attributes of — IPOs, placements and block — Private companies on a path to — Companies which have a private equity and
Slide 25: Micro and small caps outperform in bull markets
Micro and small caps outperform in bull markets 200 RELATIVE RETURNS FROM 2020-2024 • Micro and small caps have materially 180 SPAXEC underperformed large caps since the SPAXEC drawdown -34% SPAXEC market peaked at the end of 2021 160 +271% rally +14% rally from from lows • Large caps (ASX200) had a
Slide 26: Australian micro and small caps provide great opportunity
Australian micro and small caps provide great opportunity Performance of the Emerging Companies Index vs ASX Small Ordinaries Index vs ASX 100 Index Jan 2021 – Mar 2024 110 S&P/ASX 100 105 +7.1% 100 95 90 ASX Small Ords 85 -12.9% 80 Emerging Companies Index 75 -23.8% 70 65 Emerging Companies Index A
Slide 27: ASX Small Ords continues to trade below its long-term average PEG ratio
ASX Small Ords continues to trade below its long-term average PEG ratio PEG ratio (using 3 yr forward EPS CAGR) 1.6 1.4 1.2 10 year average 1.0 0.8 Small Ords PEG ratio 10 yr avg 0.6 Mar-14 Mar-16 Mar-18 Mar-20 Mar-22 Mar-24 Source: Goldman Sachs research as at March 2024 (monthly data). Past perfor
Slide 28: Listed Investment Examples – DUG & GTK
Listed Investment Examples – DUG & GTK DUG 12 month share price chart GTK 12 month share price chart 2.75 8.00 2.50 +183% +184% 7.00 2.25 2.00 6.00 1.75 5.00 1.50 1.25 4.00 1.00 3.00 0.75 0.50 2.00 Feb-23 May-23 Jul-23 Oct-23 Dec-23 Mar-24 Feb-23 May-23 Jul-23 Oct-23 Dec-23 Mar-24 DUG owns multiple
Slide 29: Small cap highlight – Life360 (ASX: 360)
Small cap highlight – Life 360 (ASX: 360) 360 12 month share price chart 14.00 Regal is a substantial shareholder in 360 and has been invested since pre-IPO 13.00 +142% Life360 (ASX:360) is the market leader in family safety and location sharing globally: 12.00 11.00 – Mission “is to keep people clo
Slide 30: Unlisted Investment examples – Firmus & ATI Global
Unlisted Investment examples – Firmus & ATI Global – Unlisted investment in Firmus, which has developed and commercialized a – Unlisted investment in ATI Global, a global legal technology leader that sustainable AI compute platform for generative AI workloads provides an integrated legal workflow pr
Slide 31: Opportunities in Private Credit
Opportunities in Private Credit Gavin George, Portfolio Manager
Slide 32: Current overweight to structured credit within portfolio
Current overweight to structured credit within portfolio Approx 60% of portfolio in asset backed structured loans MARKET APPROACH PORTFOLIO BY SEGMENT ESTABLISHED ISSUERS Non Prime Resi RMBS 7% REPUTABLE SENIOR FINANCIER Resi & 60,000+ ABS - Auto / Equipment MATERIAL EQUITY Comm Underlying loan 35%
Slide 33: Themes and observations in Private Credit
Themes and observations in Private Credit BOOTS ON THE GROUND MATTER IN AUSTRALIA 1 • Australia is a highly relationship driven market, where deep and interconnected relationships and ‘boots on the ground’ matter; • Best risk-adjusted returns available in the $25 - $75m range where we observe limite
Slide 34: Investor Q&A
Investor Q&A Submit your questions via the side menu on the webcast player PHILIP KING JESSICA FARR-JONES GAVIN GEORGE Co-Founder & CIO Portfolio Manager Portfolio Manager Long/Short Equities Emerging Companies Private Credit Regal Funds Regal Funds Regal Funds RF1 Investment Committee Member 34
Slide 35: RF1 Portfolio & Investment Characteristics
RF1 Portfolio & Investment Characteristics As at 29 February 2024 CURRENT EXPOSURE BY STRATEGY (NAV) Market Neutral SECTOR LONG SHORT NET 9% Global Alpha Communication Services 4 -3 1 8% Consumer Discretionary 13 -8 5 Percentage of Positive Months Small Companies 68% Consumer Staples 2 -3 -0 14% Div
Slide 36: 36
36
Regal Investment Fund — Regal Investment Fund Investor Update & Q&A Webinar March 2024 on 6ix