Monthly Fund Commentary - Jul 2017

July 31, 2017

Global Titans Fund commentary

 

Global stocks posted modest gains in local currencies, amid healthy corporate earnings reports and an improving outlook for global economic growth, but finished lower in Australian dollars. The markets seem to be largely unconcerned about the pace of interest rate increases or the unwinding of massive central bank balance sheets. Returns this month were generally led by cyclicals, with the materials, energy, financials and technology sectors among the best performing. Trailing were the more defensive health care and consumer staples sectors

The Fund’s unit price decreased by 1.5%, after the cost of protection, in July.  The performance was driven by positive contributions from our holdings in PayPal, Priceline, Diageo, Heineken and Visa. The main negative contributors were Nestle, Oracle, Reckitt Benckiser and Medtronic.

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

  • Heineken

  • Microsoft

  • Visa

  • Unilever

  • Reckitt Benckiser

  • Comcast

  • PayPal

  • Cognizant Tech Solutions

  • eBay

  • Oracle

 

 

 

Reckitt Benckiser – Powerbrands and megatrends

 

Reckitt Benckiser (RB) is a beneficiary of 2 powerful global megatrends; the rapidly growing middle class in developing countries and the increasing demand for OTC healthcare products because of the rapidly ageing population. There has been an increasing secular trend towards self-medication which is being increasingly supported by governments keen on reducing their respective healthcare bills. RB is a leading global fast moving consumer goods company in consumer health, hygiene and home care categories, with operations in 60 countries and sales in 180 countries. RB holds strong global market share positions behind its 19 Powerbrands, including Mucinex, Durex, Nurofen in Consumer Health and Finish, Dettol and Veet in Hygiene. The global appeal of these labels provide RB with a very high level of revenues visibility most firms can only dream of, as does its broad presence across both developed and emerging economies. Since its creation in 1999 when Reckitt & Colman merged with Benckiser, RB has followed the same operational strategy consisting of focusing on no.1 or no.2 brands in growth and/or niche categories. Being the undisputed category leader in underpenetrated product categories offers RB superior medium and long term growth prospects and high levels of profitability. This has been supported by its relentless focus on efficiencies and by implementing a strong and differentiated corporate culture. Insync’s view is that Reckitt Benckiser will continue to generate sustainably high returns on invested capital due to their dominant market positions and a management incentive structure focused on profitable growth, supported by two powerful megatrends providing the business with a long runway of growth. The stock trades on an attractive free cash flow yield of 5.5%.

 

 

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.

 

Apply online here.

 

 

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