SUMMARY
The Fund returned +8.0% in May1, outperforming the benchmark return of +5.1%.
The Fund returned +8.0% in May1, outperforming the benchmark return of +5.1%.
The Fund returned +8.0% in May1, outperforming the benchmark return of +5.1%.
Global equities soared for a second straight month. Investors were encouraged by the gradual lifting of restrictions imposed to contain the spread of COVID-19 along with additional stimulus from many central banks. Equity markets looked past poor global economic data, increasing tensions between the U.S. and China, and general social discord in the U.S.. Emerging markets lagged developed markets, as strength in Latin America was more than offset by declines in most of the Asian markets due in part to continued US-China trade tensions. US equities posted a strong May as the major information technology stocks led the rally. European markets moved higher, primarily due to gains in France, Germany, and the Netherlands. The Pacific Rim markets were mixed, with advances in Australia and Japan, and declines in Hong Kong due to China-related tensions. Oil prices continued to recover from their lows but remain well below pre-crisis levels. The US dollar weakened slightly in May.
Individual stock selection was the main driver of the Fund’s outperformance in May. Approximately 187 bps separated the top contributor and largest detractor. Over 76% of the names in the portfolio positively contributed to performance. Positive contribution was driven by both new and existing positions.
Fiverr was the largest contributor during the month and a position we initiated earlier this year. Long term holdings like PRA Group, Motorpoint, and Kruk, were all top contributors as they bounced back from their March lows. Equiniti was the largest detractor due to disappointing revenue expectations.
As of 31st May, the top 10 holdings accounted for approximately 38% of the Fund’s assets, with the largest position approximately 4.8% of the portfolio. There was a slight decrease in overall gross exposure and nominal change in both regional and sector exposure month of over month. The Fund has outpaced the benchmark 7 out of the last 8 months and 8 out of the last 12 months. Over the past year, the Fund’s upside capture has been 112.6% while the downside capture has been 102% vs. the benchmark, generating 2.2% of alpha.
Four new positions were initiated and we continue to add to these positions. The largest of these new names is a US listed technology security company operating in the end-point detection niche. We also invested in a Korean payments business, a Nordic online retailer, and a US based cannabis company. We exited positions BeNext in Japan and NESR in the US. Both were challenging investments given the current market environment.
CIO and Portfolio Manager
The Fund invests principally in small and midcap listed (or soon to be listed) global equities. Its investment objective is to obtain returns greater than the MSCI All Country World Index SMID Cap unhedged in Australian dollars (‘Index’) over rolling 3 year periods after fees. The Fund’s investment manager, Lizard Investors LLC, uses a value oriented investment approach that seeks to identify and invest in quality businesses that create significant value but are mispriced, overlooked, or out-of-favour. The investment manager believes that unique opportunities exist due to limited available research, corporate actions, or unfavourable investor perception.
1. Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. No allowance has been made for buy/sell spreads. Please refer to the PDS for information regarding risks. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. Inception 1st April 2015.
3. Annualised standard deviation since inception.
4. Relative to MSCI All Country World SMID Cap index unhedged in AUD.
* For further information regarding fees please see the PDS available on our website.