Equities continued to rally in November, which has been a relatively consistent feature of markets in 2019, buoyed by the potential for progress on a trade deal. Developed market equities outperformed emerging market equities, with the S&P 500 ending the month as the best performing major equity index. There was a notable slowdown in China with industrial production growing at just 4.7% year on year compared to the previous month’s reading of 5.8%. S&P 500 companies reported broadly flat earnings relative to the third quarter of last year. Overall, around 80% of companies beat earnings estimates for the quarter.
The Insync Global Quality Equity Fund returned 4.62% compared to the benchmark return of 4.37% with the Insync Global Capital Aware Fund delivering a return 4.54%, after the cost of downside protection. Despite a more challenging period over the last quarter the funds one-year performance numbers, and longer-term numbers, continue to show strong levels of outperformance versus the benchmark.
September and October saw a cyclical rotation towards value-based stocks which effected the short-term performance of our funds. However, the one area of consistency in this cycle has been the performance of quality growth companies. Current market conditions continue to reflect the trend in place since the GFC of low growth and low inflation. If this trend continues to persist over the medium to long-term, investing in a portfolio of high ROIC stocks, benefitting from global megatrends should prevail as the Insync portfolio of companies is less dependent on the global economy to generate consistent, profitable growth.
Positive contributors during the month include Walt Disney, Adobe, Accenture and Amadeus. Detractors were Stryker, Zoetis, IDEXX Laboratories and Booking Holdings. No currency hedging continues across both funds as we consider the main risks to the Australian dollar to be on the downside.
Both Insync strategies have very specific quality and growth attributes, have a consistent long-term track record of picking up most of the upside in rising markets, and most importantly, an inherently low downside participation in declining markets that are caused by weakness in the global economy. The Global Capital Aware Fund has an additional explicit (put) protection, buffering the fund from sharp and significant market corrections.
EQT Responsible Entity Services Limited (“EQT”) (ABN 94 101 103 011), AFSL 223271, is the Responsible Entity for the Insync Global Quality Equity Fund and the Insync Global Capital Aware Fund . EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) (“Insync”), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.