July 2026 - Investor Note - High Conviction Growth Portfolio

Hi Eason,    Australian High Conviction Growth PortfolioJuly 2026 — Investor Note June was a month where headlines moved faster than fundamentals. The Reserve Bank of Australia held the cash rate at 4.35% at its June meeting, pausing after thr Hi Eason, Australian High Conviction Growth Portfolio July 2026 — Investor Note June was a month where headlines moved faster than fundamentals. The Reserve Bank of Australia held the cash rate at 4.35% at its June meeting, pausing after three hikes earlier this year that were largely a response to energy-driven inflation stemming from the Middle East conflict. That pause gave equities some breathing room, but gold told a different story, pulling back from its January record peak near US$5,600 an ounce to trade closer to US$3,960 to US$4,100 as a stronger US dollar and interest rate uncertainty took some heat out of the safe haven trade. Against that backdrop, our portfolio delivered a *+0.97%* return over the past month, a result we're pleased with given the crosswinds. Performance was driven by standout contract wins and earnings upgrades across our industrial holdings, which more than offset softness in our gold and telecom positions. ( https://linkedin.com/in/markelzayed ) Zooming out, the past 12 months have been encouraging, with *the portfolio delivering a +22.34% return*. While periods of market volatility and shifting interest rate expectations have created challenges, our high conviction approach has continued to identify businesses capable of compounding value over time. We'd encourage you to keep the long lens in view. Since inception, the portfolio has returned *+111.81% over five years* , a track record built by remaining disciplined and holding our conviction through both favourable and more challenging market environments. *Portfolio Attribution: Contractors Carry the Month, Telcos Take a Breather* Our biggest contributor was *Megaport (MP1.ASX)* , up +29.40% for the month. We hold Megaport for its exposure to the global data-centre interconnection boom, and the market is starting to reward that thesis: the company's integration of the Latitude.sh acquisition, a major institutional capital raise to accelerate its on-demand GPU infrastructure pool, and FY26 Group revenue guidance of $302–317 million all point to a business scaling rapidly into structural cloud and AI infrastructure demand. Supported by an expanding operational footprint, the growth engine is firmly intact, highlighted by 26% revenue growth in the first half, and we remain confident in the multi-year runway ahead. *SRG Global (SRG.ASX)* was our second-best performer, +23.25% for the month, after the diversified infrastructure contractor landed $1.85 billion in new work across water, defence, energy and data centres, some of it running out to 2034. Management upgraded FY26 EBITDA guidance to the top of its $164–168 million range and issued fresh FY27 guidance above consensus, backed by a record first-half result, 80% recurring revenue and a near net-cash balance sheet. This is precisely the kind of earnings visibility we look for. *MAAS Group Holdings (MGH.ASX)* rounded out our top performers, +7.71%, supported by a strong first-half result (revenue up 35% to $639.3 million) and reaffirmed FY26 EBITDA guidance of $250–280 million, with the sale of its construction materials division to Heidelberg Materials for up to $1.703 billion moving steadily toward its expected second-half calendar 2026 settlement to strengthen the balance sheet materially. On the other side of the ledger, *Aussie Broadband (ABB.ASX)* was our weakest holding, down -13.65%, and *TPG Telecom (TPG.ASX)* also lagged, down -9.25%. Both moves reflect sector-wide margin pressure from NBN wholesale price rises taking effect today, 1 July, alongside intensifying price competition among challenger telcos. We'd note that TPG's underlying business remains sound, with FY25 mobile subscriber additions of 228,000, its strongest in three years, and Aussie Broadband continues to grow through bolt-on acquisitions like the recent $50 million Nexgen deal. We see this pullback as a sector-wide repricing rather than a company-specific problem, and we're watching closely for the point where value re-emerges. *How We're Positioned: Building on Solid Ground* Our sector exposure is deliberately tilted toward the parts of the Australian economy that are least dependent on the RBA cutting rates to perform. Industrials make up our largest concentrated sleeve at 28.42%, dominated by Engineering & Construction (18.47%), where multi-year, government and blue-chip-backed contracts are providing earnings visibility regardless of where the cash rate lands. Basic Materials sits at 17.70%, split between Other Industrial Metals & Mining (8.09%), Gold (5.59%) and Copper (1.95%), giving us both a growth angle on the energy transition and a defensive hedge should geopolitical risk resurface. Gold remains structurally supported by robust central bank buying, with the World Gold Council's latest central bank survey revealing that an unprecedented 95% of central banks expect global gold holdings to increase or stay steady over the next 12 months. Our Technology (8.35%) exposure, split between scientific instruments and infrastructure software, is our channel into the AI and data-centre capex cycle without taking on the valuation risk of pure-play AI names. Smaller weights in Communication Services (5.45%), Consumer Defensive (4.92%) and Utilities (1.98%) round out the portfolio and lift our average dividend yield, with Utilities alone yielding 5.46%. This mix is built for an environment where inflation, not growth, is the swing factor; contractors and infrastructure providers with locked-in work benefit from the very government and private capex programs driving that inflation, while our materials and gold exposure provide ballast if rate or geopolitical risk spikes again. *Risk Management: Staying Disciplined Through the Noise* We manage this portfolio to generate alpha without taking on the market's full volatility, and the numbers since inception in June 2020 back that up. Our annualised return of 17.19% compares to 6.80% for the benchmark, a difference of +10.39%, achieved with a beta of just 0.72, meaning we're capturing more than our fair share of upside while carrying meaningfully less market exposure. Our one-year Sharpe ratio sits at 1.47, and our Sortino ratio of 2.39 shows we're being compensated well for the downside risk we do take. On tail risk specifically, our one-year 95% VaR of -21.10% and CVaR of -29.94% are both better than the benchmark's -22.60% and -31.43%, so in the kind of sharp drawdown scenario markets have flirted with this year, courtesy of Middle East tensions and a hawkish RBA, our downside is genuinely better contained. Our maximum drawdown of -18.81% is modestly deeper than the benchmark's -15.67%, a trade-off of running a concentrated, high-conviction book, but it's more than offset by an information ratio of 2.09 and annualised alpha of 11.76%, which tell us the extra risk we've taken has been well rewarded over time. In a market this jumpy, we'd rather be measured on risk-adjusted terms than raw volatility, and on that basis, we remain comfortable with how the book is positioned. *Looking Ahead: Staying the Course* Heading into the second half of 2026, we expect the RBA to remain data-dependent, with the market split on whether the next move is a final hike or the start of a pause that extends into 2027. That kind of uncertainty tends to reward exactly the type of businesses we're holding: * contractors with locked-in, multi-year order books that don't need rate cuts to deliver earnings growth, alongside * a gold allocation that continues to benefit from institutional macro diversification and ongoing geopolitical risk. We expect the infrastructure and critical minerals investment cycle, water, defence, energy transition and data-centre build-out, to remain a durable tailwind for names like SRG Global, MAAS Group and NRW Holdings well into next year, while our technology and communications exposure gives us a foothold in the AI capex story without excessive concentration risk. We're not chasing every rally, and we're not panicking on every pullback; our job is to keep the portfolio tilted toward quality, visibility and balance sheet strength, and let the compounding do the work. Thank you, as always, for your continued trust and patience. we'll be back next month with an update on how it's tracking. Warm regards, Mark Elzayed ( https://linkedin.com/in/markelzayed ) **Free Disclaimer:* The base platform has no monthly fees, however, brokerage fees apply when buying or selling stocks through the platform. Many thanks for reading our updates! Feel free to call us or reply to this email with suggestions. 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