Video transcript

Selina: Hi, I'm Selena Zhang from Australian Ethical and joining me today is John Woods, our deputy CIO and head of Multi-Asset. Thank you for joining me, John. Tell me about what's happened in the last couple of months.

John: So a lot has been happening. China's economy was asleep until recently, the property market there subdued, the consumer subdued, and that's been a tailwind for our portfolios after the over the last 12 months, as we don't have significant investments in resources or in the emerging market consumer. But earlier this year we started to look at how that economy is changing to what they call productive forces, investing in the energy transition, batteries, solar, EVs, and what that might mean going forward with policy announcements. Over recent weeks, they've started to stimulate again for the first time on the demand side, and that's driving a lift in resources prices across the board.

What's a little bit different to previous cycles is that the beneficiaries of that investment are broader. It used to be iron ore. We used to see oil prices run on the back of that type of stimulus, but now we're seeing it in transmission metals as well. We're seeing it in copper. We're seeing it in lithium and other metals associated with transition

Selina: And John, what does this mean for our portfolios and returns in our fund?

John: So over the last year, it's been a tailwind for our portfolio when metals like iron ore have underperformed and the oil price as well. But as the world re-emerges, or the world's second largest economy re-emerges, it's positive for growth. Our pattern of returns will be different because we're not exposed to them some of those sectors, like other funds are but broadly, when the world's second largest economy is growing and the US is heading into an environment of potential rate cut that tends to be supportive for returns across our portfolios.

Selina: And John, over the long term, what should we expect?

John: Look, resources by their nature is a very cyclical strength sector, but there is a structural trend in place for some of these newer metals and we expect them to benefit over time.

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Interests in the Australian Ethical Managed Funds are issued by Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949), the Responsible Entity of the Australian Ethical Managed Funds.

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