Monthly Fund Commentary - Dec 2017


Global Titans Fund Commentary

Global stocks rose in local currencies amid strong corporate earnings growth, improving world economic data and a fourth-quarter surge in merger-and-acquisition activity. Political events also helped propel markets higher as investors cheered tax cuts in the U.S. and the re-election of Prime Minister Shinzo Abe in Japan.

Information technology stocks provided the largest gains. Basic materials stocks also rallied on a brighter outlook for global economic growth. Heath care, utilities and telecommunication services stocks lagged the overall market.

The Fund’s unit price decreased by 1.55%, after the cost of protection, in December. The performance was driven by positive contributions from our holdings in eBay, Twenty-First Century Fox, Comcast Corp, Reckitt Benckiser and Diageo. The main negative contributors were Zoetis Inc, Stryker Corp, Cognizant Tech Solutions, Oracle Corp and Paypal.

The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside. Over 50% of the Fund is currently protected using our put protection strategy.

Top 10 Holdings

  • Visa

  • Microsoft

  • Google

  • Paypal

  • Heineken

  • Stryker Corp

  • BAT

  • Priceline

  • Cognizant Tech Solutions

  • Zoetis Inc

Monster - Long Runway of Growth

Over three years ago Coca-Cola took a stake in Monster Beverage Corp. Coca-Cola basically said, "We're done competing in the energy drink space’. Coca-Cola currently owns about 18% of Monster. This reflected the attractive growth prospects of the industry and high barriers to entry. Red Bull, the number one player, and Monster have a combined market share in excess of 50% of the energy drinks market.

Energy drinks are part of a wider soft drink branch, that includes carbonated beverages, sports drinks, ready to go tea and coffee. Market analysis has shown that the consumers have been buying less amount of soda and increased amount of energy drinks. Penetration of energy drinks is still low, estimated to be circa 5% of the carbonated soft drinks market, and therefore provides a long run way of growth for the major players. The major industry players are very profitable delivering high margins and returns on invested capital.

Monster has been successful in taking market share by volume in the United States and this can be transferred to other key markets where the Coca-Cola Company has strong distribution. Recent data supports our thesis with international momentum building as they fully transition to the global coke distribution system.

Our analysis indicates that Monster is undervalued based on the sustainability of its profitability and future growth opportunities. Insync’s view is that Monster is extremely well positioned to profitably participate in an attractive growth category globally with the opportunity to also take market share from its competitors.

About Us

PORTFOLIO CHARACTERISTICS

Average market cap A$189.3bn

WAVG⁴ forecast dividend yield 1.50%

Wt AVG forecast PE ratio 20.3x

WAVG ROE 21.0%

Current FX hedging position 0% overseas exposure hedged back into $A

Current put protection 50%

Benchmark Unconstrained

KEY INFORMATION

APIR code SLT0041AU

ASX mFund code INS01

Distributions paid Annually, as at 30 June

Unit pricing Daily

Minimum initial investment $10,000

Applications & redemptions Each Sydney business day

Entry & exit fee Nil

Buy/Sell spread 0.20%/0.20%

MER 1.3% (plus GST) p.a.

Investment style

Concentrated, large cap global equity fund, incorporating active currency management and downside protection strategies

Investment objectives

To provide long term capital growth and some income through investment in listed global securities. Insync believes that a strong focus on capital preservation will lead to superior relative and absolute returns over time

How to apply

Apply online here.

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©2018 by Insync Funds Management Pty Ltd.

Disclaimer

The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.