Ellerston Asia Growth Fund clears benchmark with 38.4% return

• 38.4% return versus 35.8% benchmark performance
• Annual profit increased to $12.49 million
• Net assets rose to $41.84 million
• Distributions fell to 32.76 cents per unit
• Redemptions exceeded applications by nearly $3 million

Fund outperforms Asian equities benchmark

Ellerston Asia Growth Fund Complex ETF (ASX:EAFZ) delivered a 38.4% return for the year ended 30 June 2026, outperforming the MSCI Asia Ex Japan Index in Australian dollars, which returned 35.8%. The fund’s figure is based on daily unit prices after fees and expenses, with distributions reinvested.

That 2.6 percentage-point lead marks a stronger year than the 17.9% return recorded in 2025, although the comparison also reflects a much stronger period for the broader Asian equities market, whose benchmark gained 16.5% in the previous year. The audited report does not identify which holdings or investment decisions drove the outperformance.

Fair-value gains lift profit above $12 million

The fund recorded a profit of $12.49 million, up from $6.04 million a year earlier. The main contributor was a $12.64 million net gain in the fair value of financial assets and liabilities, compared with $5.78 million in 2025. Dividend income, by contrast, fell to $582,784 from $1.21 million, while interest income declined to $17,957.

Investment assets stood at $42.03 million at 30 June, representing 97% of total assets. All of those assets were listed equity securities classified as Level 1 fair-value investments, meaning the portfolio was valued using quoted market prices. That makes the result relatively transparent, but also leaves reported net assets directly exposed to movements in Asian sharemarkets: the fund’s sensitivity analysis indicated a 10% change in equity prices would have affected net assets by about $4.20 million at year-end.

Net assets grow despite investor redemptions

Net assets attributable to unitholders increased to $41.84 million from $31.91 million. The improvement came despite $3.45 million of redemptions against only $462,575 of applications. Investment gains and the reinvestment of $1.89 million in distributions more than offset that net outflow, while units on issue fell to 4.44 million from 4.53 million.

Distributions dropped to 32.76 cents per unit from 103.84 cents in the prior year, with $1.34 million payable at year-end. The fund’s report says distributions are determined by reference to net taxable income and that unrealised gains are not assessable or distributable until realised, a distinction that matters when comparing a strong total return with the cash income received by unitholders.

Fees rise as performance improves

Management fees increased to $278,956 from $265,342, while performance fees rose to $98,364 from $41,189. The responsible entity is entitled to a management fee of 0.75% of net asset value and a performance fee of 10% of investment returns above the MSCI AC Asia Ex Japan Index, subject to recovering prior underperformance.

Ernst & Young issued an unqualified audit opinion. Its key audit matter was the existence and valuation of the investment portfolio, reflecting the fact that listed equities accounted for almost all of the fund’s assets. The report records no significant post-year-end matters, but it also provides no forward performance guidance.

Bottom Line?

The headline return is strong, but the next test is whether EAFZ can retain that benchmark outperformance while reversing net redemptions in a less favourable market.

Questions in the middle?

• Can the fund repeat its 2.6 percentage-point benchmark outperformance without the same level of market gains?
• Will applications recover after redemptions exceeded new subscriptions during the year?
• How much of the next period’s result will come from realised gains, dividends and cash distributions rather than portfolio revaluations?