Inflation, monetary tightening, and supply chain woes continue to be a drag on global growth in the short term
PORTFOLIO
Top Holdings (alphabetically)
Capitalisation Breakdown
Region Breakdown
PERFORMANCE
Performance Table
NET PERFORMANCE FOR PERIODS ENDING 31 Oct 20211
Performance Chart
NET PERFORMANCE SINCE INCEPTION2
COMMENTARY
Following September’s sell-off and a slow start to the month, equities regained momentum throughout October with many indices around the world hitting new highs. Inflation, monetary tightening, and supply chain woes continue to be a drag on global growth in the short term, but a strong start to the Q3 earnings season made investors look beyond all that. The U.S. outperformed global markets by a significant margin. At the end of October, just over 50% of the listed companies in the U.S had reported their earnings and of these 80% had exceeded market expectations, capping off one of the best starts to a U.S. earnings season on record. Some of the strongest returns in the month came from the consumer discretionary and energy sectors.
In Europe, global supply constraints, rising inflation pressures, and concerns of natural gas shortages weighed on investors at the beginning of the month. These concerns faded however as the European Central Bank (ECB) reiterated that it expected the current rise in inflation to be transitory and fuel prices declined after Russian President Putin called for Gazprom to start filling European storage facilities.
In Japan, COVID-19 infections have started to decline, and vaccinations are progressing well, enabling the government to reduce some restrictions on activity. As a result, economic growth is expected to accelerate in the coming quarters. Despite the more optimistic long-term outlook, Japanese equities ended up in negative territory for the month. In the rest of Asia, rising vaccination rates enabled economies to gradually reopen, with travel across the continent picking up accordingly. Returns for emerging market equities were positive but lower than for developed equities as good performance in China was offset by weaker performance across the rest of Asia and Brazil.
Individual stock selection was the main driver of negative performance versus the benchmark in October. Approximately 118 bps separated the top contributor and largest detractor. As of 31st October, the top 10 holdings accounted for approximately 30% of the Fund’s assets, with the largest position approximately 4.5% of the portfolio. Regional and sector exposure remained relatively unchanged month over month.
Cash holdings stayed consistent month over the month as we added and exited a small number of names. Innodisk, a Taiwanese memory manufacturer, was initiated in the Fund. The business has an excellent history of high return growth and value creation. The recent turmoil in China caused the stock to sell off with many other Taiwanese companies. While China continues to be a challenging place to invest given the changing political landscape, Taiwan and Korea continue to offer excellent opportunities and have sold off in sympathy with China, despite having differing fundamentals. Cornerstone OnDemand, a software company, was removed as it was bought by private equity in a successful outcome for the Fund.
Lastly, we’d like to highlight an existing Fund position, CDON. The company employs an Amazon-like model in the Nordic region, where it enjoys a leading market share. The Fund recently participated in an equity raise that will allow the company to speed up the development of its technology platform, enhancing its long-term potential to grow its online marketplace business in Sweden.
PROFILE
Platform Availability
- AMP North
- Asgard eWrap
- AET Wholesale Access Fund
- BT Panorama
- BT Wrap
- Colonial First Wrap
- Centric IDPS
- Centric Super
- Hub24
- IOOF Pursuit
- IOOF Portfolio Service
- IOOF Core
- Macquarie Wrap
- Mason Stevens
- MLC Navigator
- MLC Wrap
- Netwealth
- Omniport(lifespan)
- Powerwrap
- Praemium
- uXchange
STATISTICAL DATA
PORTFOLIO SUMMARY
FEATURES
- APIR CODE PCL0022AU
- REDEMPTION PRICEA$ 1.724
-
FEES *
Management Fee: 1.1%
Performance Fee: 20.5% - Minimum initial investment A$10,000
- FUM AT MONTH END A$ 191.9m
- STRATEGY INCEPTION DATE 1 April 2015
- BenchmarkMSCI All Country World SMID Cap Index unhedged in AUD
Fund Managers
Jon Moog
CIO and Portfolio Manager
Description
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.
EXPLORE OUR FUNDS
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.