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| Fund Overview | |
| Manager Comments | The five largest stocks in the portfolio at the end of March were; Google Inc 6.1%, Tesco Plc 5.8%, Microsoft Corp 5.7%, Lowe's 5.3% and eBay Inc 5.2%. The top ten holdings were 52% of the portfolio. Over the quarter, all stocks held within the portfolio produced positive local currency returns. Within the top ten holdings, the three stocks with the strongest returns in local currency were Novartis (+22%), Target Corp (+16%) and McDonalds (+14%) while the three stocks in the top ten holdings with the weakest local currency returns were eBay (+6%), Lowes (+7%) and Microsoft (+8%). The significant changes to the portfolio during the quarter were the result of active portfolio management regarding relative valuation and opportunity cost. The Fund sold the entire position of General Mills which had appreciated materially since investment and purchased a new stock, Microsoft which is trading well below our assessed intrinsic value. The Microsoft position was subsequently increased to the top ten holdings during the quarter. The portfolio remains fully invested, reflective of the manager's comfort with the current macroeconomic environment and subsequent view that it remains an attractive time to be investing in a select portfolio of extremely high quality multinational companies. The manager remains focused on prudent portfolio construction with emphasis on the avoidance of aggregation of risk within the portfolio and believe that it is likely to exhibit substantially less downside risk than the market in the event that global markets deteriorate materially. Within the current macro environment the manager sees value in high quality companies exposed to certain investment themes. The portfolio has material exposure to the following themes: - Emerging market consumption growth via investments in multinational consumer franchises. - The move to a cashless society. There continues to be a strong secular shift from spending via cash and cheque to cashless forms of payments, such a credit cards, debit cards, electronic funds transfer and mobile payments. - Internet/e-commerce convergence. There are a number of internet enabled businesses that have very attractive investment characteristics with increasing competitive advantages. - US housing Recovery. A recovery in new housing construction should drive a strong cyclical recovery in companies exposed to US housing and also provide a strong boost to the overall economy. - US interest rates normalising over the next 3-5 years as the US economy recovers. |
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