Conditional Teaminvest sale adds uncertainty after INES asset fall

Unrealised losses drive INES into the red

The Intelligent Investor Ethical Share Fund ended 2026 with a $6.448 million loss, reversing the $9.394 million profit recorded a year earlier. The main swing came from a $11.689 million unrealised loss on financial instruments at fair value through profit or loss. That was partly offset by $4.768 million in realised gains, but total investment income still turned into a $5.529 million loss.

Operating costs were comparatively stable. Management fees fell slightly to $702,000 from $706,000, while transaction costs declined to $151,000. The fund’s basic and diluted loss was 32.16 cents per unit, compared with earnings of 43.88 cents per unit in 2025.

Redemptions and distributions shrink the asset base

Net assets attributable to unit holders dropped from $75.781 million to $58.670 million. The decline reflected the investment loss alongside a reduction in units on issue, with redemptions of $11.120 million exceeding applications of $5.246 million. Units outstanding fell from 20.531 million to 18.849 million during the year.

That contraction did not prevent a much larger distribution. The fund declared distributions of $4.994 million, or 26.49 cents per unit, compared with $551,000 and 2.68 cents per unit in 2025. About $1.714 million of the 2026 distribution was subsequently reinvested through the distribution reinvestment plan in July, according to the report.

Proposed Teaminvest sale remains unfinished

The fund’s investment management arrangements are also set against a proposed ownership change. InvestSMART Group announced in May that it intended to sell the Intelligent Investor business to Teaminvest Private Group (ASX:TIP). If completed, ownership and control of Intelligent Investor Holdings, the investment manager, would transfer to Teaminvest.

The report says Intelligent Investor Holdings would remain investment manager to the exchange-traded funds, while Teaminvest intends to retain the investment team and the fund’s investment strategy. One condition of the transaction had been fulfilled after year-end, but all other conditions precedent remained outstanding when the report was signed on 28 September. The transaction may not proceed.

Portfolio volatility remains the central exposure

At 30 June, the fund held $56.624 million in listed equity securities and $7.288 million in cash. Its disclosed sensitivity analysis estimated that a 15% move in equity prices would change operating profit and net assets by approximately $8.494 million in either direction. The fund also hedged about 70% of its identified US-dollar exposure with forward currency contracts, compared with about 81% a year earlier.

BDO Audit issued an unqualified opinion, identifying the valuation of the $56.6 million listed portfolio as the key audit matter. The report does not identify which holdings produced the investment losses, leaving the next portfolio disclosure and the outcome of the proposed ownership transfer as the more immediate points of uncertainty for unit holders.