Insync January 2020 Fund Commentary


Performance Commentary

The Global Equity Market built upon its strong year-end December close (+3.50% in US dollars (USD)) adding another 2.5% USD by mid-January when the Coronavirus first made itself known. The indices then retreated 3.6% over the remainder of the month as investors deliberated the impact the virus would have on the Global economy.

Whilst the benchmark lost a net 1.13% in US dollars (USD) by the end of January, a 4.85% decline in the Australian dollar (AUD) against the relevant basket of currencies lifted local currency denominated returns significantly. Relative gains were posted in Utilities (AUD +10.44%) and Information Technology (AUD +7.88%) with Materials (AUD -1.99%) and Energy (AUD -4.88%) under-performing due to the negative impact the Coronavirus is likely to have on Chinese raw material demand in the short term.

Fund Performance

Positive contributors during the month included Intuit, Visa, Adobe, S&P Global, and PayPal. Detractors were, Bookings.com, Treasury Wine Estates, Boston Scientific, Walt Disney and Estee Lauder. No currency hedging continues across both funds as we consider the main risks to the AUD to be skewed to the downside.

The prevailing low growth and low inflation environment is unlikely to change in the medium term. Insync constructs a portfolio of attractively priced businesses that have the ability to deliver profitable revenue growth due to an underlying megatrend(s) supported by a high return on invested capital (ROIC). Insync designs a diversified portfolio of companies able to generate consistently profitable growth, independent to the velocity of the global economy.

Both strategies, the long-only (Global Quality Equity Fund) and the long-only with put protection (Global Capital Aware Fund) 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 (favourable idiosyncratic risk) in declining markets typically caused by cyclical weakness in the global economy. The Global Capital Aware Fund has additional explicit (put) protection, buffering the fund from sharp and significant market corrections (systematic risk).

Disclaimer

Equity Trustees Limited (“EQT”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality 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.

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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.