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Insync: Negativity proving overly-pessimistic


Insync Funds Management (Insync) says views it held last year, that forecasts for equities were overly-pessimistic, are proving valid. ‘Many commentators were too focused on macroeconomic indicators, which are notoriously hard to consistently get right, said Insync CIO, Monik Kotecha. ‘But as we have repeatedly said, it is earnings growth that drives stock prices long term.’ He said those with a ‘top down’ focus, who bought into the negative commentary, would likely have been very defensive and therefore missed the +20% returns available from October’s 2022 lows. ‘A top-down focus overlooked the fact that while share prices broadly fell over most of last year, earnings of highly profitable businesses benefitting from secular megatrends, continued to grow in the double digits,’ Mr Kotecha said. ‘By focusing on a select group of high ROIC businesses – just 30 global businesses across 16 megatrends – we were able to benefit from their inevitable rise in price.’ For the year to June 2023, Insync experienced strong positive returns at 24.5%, outperforming the MSCI benchmark. Importantly, both its funds are meeting their rolling 5-year return fund objectives (against benchmark).

‘Our results reveal that we have identified companies that are beneficiaries of megatrends and able to power right on through recessions,’ Mr Kotecha said. Megatrends are far broader impacting, more durable, and longer lasting than mere themes. They drive profound changes across multiple industries and the businesses within them, that for the right company, act like strong tailwinds on their compounding earnings. ‘The rate of technological change, most dramatically illustrated with the latest advances in generative AI, is an incredibly important ‘super-driver’ of many of our 16 investor-ready megatrends,’ Mr Kotecha said. ‘We believe it will be the next major tectonic shift and the most compelling force powering technological innovation and our lives over the next decade.’




 

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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