Global Titans Fund Commentary
Global stocks rose in local currencies amid strong corporate earnings growth, improving world economic data and a fourth-quarter surge in merger-and-acquisition activity. Political events also helped propel markets higher as investors cheered tax cuts in the U.S. and the re-election of Prime Minister Shinzo Abe in Japan.
Information technology stocks provided the largest gains. Basic materials stocks also rallied on a brighter outlook for global economic growth. Heath care, utilities and telecommunication services stocks lagged the overall market.
The Fund’s unit price decreased by 1.55%, after the cost of protection, in December. The performance was driven by positive contributions from our holdings in eBay, Twenty-First Century Fox, Comcast Corp, Reckitt Benckiser and Diageo. The main negative contributors were Zoetis Inc, Stryker Corp, Cognizant Tech Solutions, Oracle Corp and Paypal.
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
Cognizant Tech Solutions
Monster - Long Runway of Growth
Over three years ago Coca-Cola took a stake in Monster Beverage Corp. Coca-Cola basically said, "We're done competing in the energy drink space’. Coca-Cola currently owns about 18% of Monster. This reflected the attractive growth prospects of the industry and high barriers to entry. Red Bull, the number one player, and Monster have a combined market share in excess of 50% of the energy drinks market.
Energy drinks are part of a wider soft drink branch, that includes carbonated beverages, sports drinks, ready to go tea and coffee. Market analysis has shown that the consumers have been buying less amount of soda and increased amount of energy drinks. Penetration of energy drinks is still low, estimated to be circa 5% of the carbonated soft drinks market, and therefore provides a long run way of growth for the major players. The major industry players are very profitable delivering high margins and returns on invested capital.
Monster has been successful in taking market share by volume in the United States and this can be transferred to other key markets where the Coca-Cola Company has strong distribution. Recent data supports our thesis with international momentum building as they fully transition to the global coke distribution system.
Our analysis indicates that Monster is undervalued based on the sustainability of its profitability and future growth opportunities. Insync’s view is that Monster is extremely well positioned to profitably participate in an attractive growth category globally with the opportunity to also take market share from its competitors.
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%
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.
Concentrated, large cap global equity fund, incorporating active currency management and downside protection strategies
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
How to apply
Apply online here.