We remain cautious and selective

The ongoing low interest rate environment and stimulus measures from several leading Central Banks continue to encourage investors into equity markets despite many imbalances in the global economy. We thus remain cautious and selective and continue to position our portfolios defensively, holding quality stocks which in our view are trading at justifiable valuations and that we believe can grow their earnings in the years ahead. Aurizon (AZJ) rose +6% over the quarter, as the company took substantial steps towards industrial relations reform. AZJ has been operating under legacy enterprise agreements, which were negotiated under government ownership, and included a number of uncompetitive conditions. The protracted union negotiations were brought to a close, after a Fair Work Commission ruling terminated the legacy agreements, and paved the way for new agreements to be reached, allowing AZJ to modernise their work practices and reduce costs. AZJ represents good value, having strong recurring cash-flows, and a 4.1% fully franked dividend yield. The latest report from the IML Australian Share Fund is available here: (VIEW LINK)