Absolute Return Fund Performance: September 2026

The Datt Capital Absolute Return Fund fell 8.15% in September. Its three largest detractors fell for three separate reasons: a sector-wide de-rating in technology, weaker Chinese steel data, and a change to lithium futures contracts in China.

Three Detractors, Three Separate Causes

In September 2026, the Datt Absolute Return Fund recorded a net return of -8.15%, against 0.79% for its benchmark, the RBA cash rate plus 5%. The ASX 200 fell 2.84% over the same month. The Fund has returned 11.78% per annum net to investors since inception in August 2018.

WiseTech Global (WTC) was the largest detractor. Whitehaven Coal (WHC) fell after soft Chinese steel data, and PLS Group (PLS) sold off after a change to lithium futures contracts on the Guangzhou Futures Exchange.

The result extends a difficult period. The Fund’s 1-year return is -33.18%, against 9.42% for the benchmark. Over three and five years, the Fund now trails its benchmark, at 7.23% and 8.45% per annum against 9.54% and 8.63%. Since inception, it has returned 11.78% per annum against 7.54%. Investors assessing the Fund should weigh all of these horizons together.

Performance Snapshot

Performance reported after all fees and expenses. Inception August 2018. Past performance is not an indicator of future performance.

Download the full report: “Absolute Return Fund - September 26 - Newsletter”

To summarise:

• Monthly return: -8.15%
• Benchmark return (September): +0.79%
• 3-month return: +0.21%
• 1-year return: -33.18%
• 3-year return: +7.23% per annum
• 5-year return: +8.45% per annum
• Annualised return since inception: +11.78%
• Net return since inception: +147.89%
• Unit price: $1.0397
• Fund status: Open to wholesale investors

Disclaimer:

• The Fund’s benchmark is the RBA cash rate plus 5%.
• Past performance is not a reliable indicator of future results and does not guarantee future returns. Investment in the Fund is limited to wholesale and sophisticated investors as defined under Australian law.
• The Datt Capital Absolute Return Fund was launched in August 2018. Returns are calculated net of all fees and expenses and reflect actual performance since inception. Performance may vary for individual investors depending on the timing of their investment.

Sector Sentiment Outweighed Company Progress at WiseTech

WiseTech’s integration of its E2Open acquisition is running ahead of schedule, bringing forward the expected financial synergies. The share price fell regardless. Over short periods, a company’s valuation multiple is set largely by how the market prices its whole sector. Company-specific delivery shows up in earnings over a longer horizon.

Technology valuations have yet to recover from the sell-off driven by concerns about AI disruption to software businesses. In the team’s assessment, improving fundamentals, lower valuation multiples and a clearer understanding of the limits of AI adoption support a recovery in the sector’s valuation. The team also views WiseTech’s global footprint as reducing its exposure to a slowing Australian economy.

Coal and Lithium Fell on Signals From China

In August, Chinese supply disruptions lifted seaborne coal prices. In September, the demand side of the same market moved against the Fund. Coking coal is a steelmaking input, so soft Chinese steel data reads directly into demand expectations for metallurgical coal, and Whitehaven’s share price followed.

PLS Group fell for a market-structure reason. When an exchange changes the specification of a futures contract, material that was previously ineligible can be delivered against it. The re-specification of lithium contracts on the Guangzhou Futures Exchange encouraged a short-term surge in inventory, which weighed on prices and on sentiment toward producers. The episode followed the Fund’s rotation into lithium in August.

The RBA Raised the Cash Rate to Its Highest Level Since 2011

The ASX 200 fell 2.84% in September, ending a five-month run of gains. Energy was the only sector to finish the month higher. Information Technology was among the weakest sectors, and mid and small caps again underperformed large caps.

On 29 September, the RBA unanimously raised the cash rate by 25 basis points to 4.60%. This was its fourth increase of 2026 and the highest cash rate since November 2011. Consumer inflation expectations rose to 4.9% in September, and underlying price pressure proved stickier than the Bank’s August forecasts implied.

A higher cash rate raises the return investors require from equities. This weighs most on companies whose value depends on earnings further in the future, such as software businesses, and on companies that rely on borrowing. It also lifts the Fund’s own hurdle, since a benchmark of the cash rate plus 5% now equals 9.60% per annum.

Portfolio Positioning – September Snapshot

97% of the Fund’s capital was deployed at month end. The Fund held 15 positions, down from 17 in August, with the top five accounting for approximately 61% of the portfolio. The three largest holdings, in alphabetical order, were:

• New Hope Corporation (NHC): Energy
• Whitehaven Coal (WHC): Energy
• WiseTech Global (WTC): Technology

Energy was the Fund’s largest sector exposure at 43.6%, followed by Materials at 32.9%, Software & Services at 12.4% and Real Estate Management & Development at 8.0%, with cash at 3.1%. The team remains positive on energy and resources into the end of the year and is pursuing selected opportunities in small caps.

What the Positioning Means for Investors

With 76.5% of the portfolio in Energy and Materials across 15 positions, and 3.1% in cash, the Fund has a limited buffer when its core sectors fall at the same time. September showed that coal and lithium can fall in the same month for unrelated reasons, which makes the independence of each thesis as important as the strength of each one. The Fund’s approach continues to demonstrate:

• Concentrated positioning across Australian-listed assets
• Independent research into competitive advantage, capital allocation, industry structure and valuation
• Full manager alignment with investors
• Flexibility to hold cash and move across sectors as conditions change

To learn more about the Absolute Return Fund, visit the Fund page or contact our Head of Distribution, Daniel Liptak, on 0419 004 524 or via email at daniel@datt.com.au.

About Datt Capital

Datt Capital is an investment fund manager in Australia focused on capital preservation and risk-adjusted returns. Our philosophy is centred on long-term wealth creation, combining disciplined research, opportunistic thinking and a strong focus on capital preservation.