Markets had their best first quarter since 1998, led by the US, with most major global indices in the black. The UK and Chinese equity markets also performed well despite the ongoing Brexit and trade related uncertainty.
The most notable influence on performance was likely the Fed, and to a smaller extent the ECB, where they notably softened their policy stances on some signs of decelerating global economic data. In fact, the Fed signalled it may not raise rates at all in 2019 which came as a significant surprise. From an investment style perspective, growth significantly outperformed value in Q1, a consistent feature of the market rally from the 2009 lows.
Positive contributions originated from Accenture, Intuit, Visa, Amadeus IT and Tencent. Negative contributors were RELX, Boston Scientific, Wirecard AG, Twenty-First Century Fox – B and Biogen Idec. No currency hedging continues across both funds. Insync considers the main risks to the Australian dollar to be on the downside. For Global Capital Aware Fund investors (that have less tolerance of price falls) we hold ‘out of the money’ Index Put Options as a buffer against sharp and deep falls in portfolio price. For those in the Long-Only version, the Global Quality Equity Fund, this is the only portfolio difference. For both offers we remain near fully invested.
Insync reduced the level of index put protection cover in the Global Capital Aware Fund in January after one of the most the significant falls in equity markets in December. Markets had retraced to more attractive valuation levels, the VIX index was elevated and with the Federal Reserve signalling no rate rises for 2019 we deemed it appropriate to reduce the level of downside protection. This is in line with our rules-based process driven approach to managing downside risk. As the VIX levels have now fallen significantly, combined with the sharp bounce back in equity markets, we are gradually increasing the level of cover which currently sits at circa 20% of the portfolio value.
EQT Responsible Entity Services Limited (“EQT”) (ABN 94 101 103 011), AFSL 223271, is the Responsible Entity for the Insync Global Quality Equity 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.