Active Growth Portfolio

Reece (ASX: REH) $18.11

REH +5.97%: traded higher today after delivering a first-quarter result that was better than the market had been braced for. That is important given both Citi and Jarden downgraded the stock last week on expectations REH would underwhelm, which has not happened.

Portfolio Amendments – Active Growth & Income Portfolios

GQG has been a poor performer over recent months, with weak investment performance driving persistent outflows and heaping pressure on the share price. We had been prepared to give GQG the benefit of the doubt for two reasons: 1. Its attractive dividend yield, and 2. Its differentiated positioning away from technology, which provided something of a hedge against the risk of the tech trade failing to live up to increasingly lofty expectations.

Reece Ltd (ASX: REH) $15.62

After testing 18-month highs earlier this week REH was smacked almost 9% yesterday making it the worst performer on the main board. The stock, like so many have of late, suffered at the hands of broker downgrades: Citi cut it to a Sell, from Neutral, with a $16.10 target, while Jeffries tweaked its price target down almost 2% to $16.60 - both PT’s above yesterday's close.

Portfolio Amendment – Active Income Portfolio

We are making several changes to the Income Portfolio today.

Fortescue (ASX: FMG) vs Rio Tinto (ASX: RIO)

Fortescue (FMG) has come under significant pressure recently, falling more than 35% from its 12-month highs as softer iron ore prices, operational challenges and increasingly difficult negotiations with China's centralised iron ore buyer weigh on the stock. We hold FMG in the Income Portfolio, largely for its attractive dividend yield, but recent developments have us questioning whether RIO is now a better option. Both stocks have fallen, but while FMG has traditionally offered a higher yield, RIO provides greater diversification, lower operational risk and arguably better value at current levels.

Whitehaven Coal (ASX: WHC) $7.91

Portfolio Amendment – Active Growth Portfolio

We expect RIO to be hit on open this morning on broader commodity weakness overnight. Having trimmed BHP from a ~11% prevailing weight back to an 8% target early last month, we are now recycling the capital into Rio Tinto following an aggressive pullback, inline with our view of adding quality commodity exposure into weakness.  Risk/reward looks appealing below $150. 

ANZ Group Ltd (ANZ) $39.69

ANZ has been the standout local bank having delivered a solid 3Q26 trading update here, and we simply see no reason not to be long the bank that’s executing best, especially with its relatively low housing exposure. It's still the cheapest of the Big Four local banks, which we do not feel is warranted under Nuno Matos; it’s a legacy issue that’s slowly being addressed by this year's outperformance.

Pro Medicus Ltd (ASX: PME) $193.42

PME has already started to regain ground after being caught up in the recent software sell-off. The company continues to deliver, winning new contracts and upscaling existing ones; its share price is all about what valuation the markets are prepared to attach to growth stocks, with bond yields a major influence here.

Xero Ltd (ASX: XRO) $63.70

Xero has endured an awful 12-months and obviously MM wishes we’d jettisoned it months ago but we have to review things from today, and it's gaining strength and looks on track to retest its August highs - a simple slight valuation rerating will get it there after dropping ~70% in recent times. Encouragingly, US rival Intuit surged almost 6% overnight despite general weakness in US tech.