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December 2023 Monthly Update

Updated: Jan 29

Pleasingly both funds substantially outperformed the market for the year and more importantly continue to meet their stated objective over rolling 5 year periods.  Indeed since 2017 they have outperformed each calendar year in 6 out of 7 (see table below)


Whilst selecting the right stocks has been an obvious key driver of our outperformance aided greatly by the use of Megatrends, portfolio sizing has been a significant contributor to return consistency and risk management.  This is where Insync’s data driven process plays a critical role as it processes a large amount of data points to establish the correct size of each stock position. Incorporating large amounts of data becomes even more important especially with the rapid adoption of AI; and so a systematic quantitative driven process combined with the creative aspect of human decision-making will be a key success factor for the fund’s ability to continue to deliver outperformance.


Forecasting stock market returns a year ahead as always remains elusive, evidenced by the widespread inaccuracies in bearish predictions on stock market returns for 2023. Looking further out than a year or so we can assert a far higher degree of accuracy that stock prices tend to mirror sustainable earnings growth. This principle forms the cornerstone of our investment strategy. Lowering risk further still, the benefits of utilising megatrends emanate from their relative insensitivity to the ebb and flow of economic cycles. By focusing on the most profitable companies riding the waves of these megatrends, we enhance the likelihood of investing in entities poised for sustainable earnings growth.


Both Funds outperformed!

Proprietary Data: Strategic AI Advantage

 

AI the biggest tech revolution in decades. Apart from the more obvious winners, such as semiconductor and  cloud storage companies, are the owners of vast pools of high-quality proprietary data.

 

Proprietary data sets provide firms with competitive advantages due to their uniqueness and relevance. This data is often more specific, accurate, and tailored to a company's particular needs or industry, providing a rich data source for AI algorithms. We discussed two of Insync’s holdings that benefit, RELX and Adobe, in past monthlies.  Let’s add Booking Holdings to this list.

 

Personalized experiences have shifted from being a luxury to a necessity. With 80% of consumers expecting personalized interactions from retailers it’s significantly impacting tourism. Every step of the journey, from pre-booking to post-stay, now demands alignment with customer preferences. As global tourism rebounds, the importance of leveraging personalization to provide appealing and loyalty-enhancing experiences has intensified.

Booking Holdings demonstrates the power of tailored AI to enhance customer experiences. Unlike general AI platforms like ChatGPT, Booking's AI Trip Planner utilizes the company's unique data sets for heightened effectiveness in travel-specific scenarios. Access to Booking's extensive database, including hotel ratings and detailed property information, underscores the advantage of specialized AI applications powered by proprietary data for superior performance.

 

Travel continues to go from strength to strength. By example, Carnival Corp, the world's largest cruise company, said during its fourth-quarter earnings call that nearly two-thirds of its 2024 business was already booked. This is up from a pre-pandemic average of a little more than half.

 

Booking Holdings is in pole position to benefit from the Experiences Megatrend. Booking has the leading competitive position in online travel, best-in-class margins and ROIC, strong free cash flow generation, diversified geographic mix and disciplined capital allocation. Perfect for Insync investors.





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