Where’s the Doom? Strong gains by selected stocks in most world markets

Our fund targets growth stocks worldwide, and in the last month, that is exactly what we got, with some spectacular stock moves in most regions. The Fund’s Net Asset Value rose 6.4% which compares with a rise of 4.9% for the MSCI World (net) in GBP Index.

The US market, where over half the portfolio is invested, has been the best area for us in July. Every holding except one, which was only marginally lower, made good progress. Results season is in full swing. It is a period which is often the cause of hysteria, but this month, those of our companies that reported second quarter numbers have forged ahead: Pool Corp and Visa gained 9% and 5% respectively following release of their figures.

The market’s two internet giants also surged, with Amazon up by 6% and Facebook by 9%. These are extraordinary gains for such massive companies, but their quarterly figures were significantly higher than expected. Furthermore, after a research trip to America last month we feel the promising opportunities we have long expected in the technology, medical technology and services sectors there are starting to materialise.

Europe was very helpful, despite the upheaval following the June EU referendum vote in the UK. Make of it what you will — but shares in Hill & Smith, a firm which originated in the UK but now also has a widespread presence in the US, soared 20%. The company supplies innovative signage and barrier solutions for roads, highways, and bridges.

Grand City Properties is a specialist real estate company focused on investing in and managing turnaround opportunities in the German market. It has performed poorly so far this year, but has now revived on the back of broker upgrades. Germany’s Grenke, a lessor of office equipment, produced a set of extremely good results, and the shares rose by 11%.

Asia and Emerging Markets were also in excellent form, and it is starting to feel as if four years of investor outflows from these areas is finally reversing. India had another strong month, with the market 4% higher, as quarterly results were released. Following outstanding figures, IndiaBulls Housing Finance was up by 14%, and Eicher Motors, the maker of Royal Enfield motorcycles, rose by 19%.

In China, internet service portal company Tencent, and travel firm Ctrip made steady progress, while a position was started in Cebu Air, the rapidly growing Filipino low cost carrier. This followed a meeting with Air Asia, the leader in the region, which highlighted the particularly promising prospects in the Philippines. On the same theme, Grupo Aeroportuario, one of Mexico’s leading airport operators, continued to advance, with recent results showing passenger numbers up by 9% so far this year, leading to a 27% rise in revenues.

Overall we remain positive about world markets since corporate profitability seems to be holding up well across most regions. Our European holdings have performed strongly so far this year, but we expect now to increase our focus on the USA and Emerging Markets, where we see a greater opportunity.

 

About the S&W Aubrey Global Conviction Fund

The S&W Aubrey Global Conviction Fund invests in growth stocks worldwide in a concentrated and index agnostic fashion, with the aim of achieving capital appreciation.

As the name implies, it often takes substantial positions in regions and sectors which the managers consider attractive, with the result that the portfolio disposition and performance is generally very different from the MSCI World Index.

Investment Objective & Policy: The Fund aims to achieve long term capital growth over a three year rolling period by investing in attractive markets and sectors on a worldwide basis. The investment policy is to invest in shares, warrants, bonds, money market instruments, cash and deposits, directly or indirectly through collective investment schemes, that can best take advantage of economic opportunities worldwide. As a result, the Fund may not always have exposure to all asset types. Derivative and forward transactions may be used by the Fund for Efficient Portfolio Management.

Investment Strategy: Using a financially disciplined and growth based approach to investing, ACM invests in companies that exhibit high earnings growth and a strong, stable competitive business. At the heart of Aubrey’s investment process is the use of a distinctive wealth cycle approach that aims to identify secular growth drivers that result in wealth creation. Portfolios are the result of individual stock selections and are not constructed by reference to any market index. ACM expects that its portfolios will show a significant departure from benchmark indices in regards to weightings given to sectors, countries and individual stocks.

With such demanding growth requirements, the portfolio tends towards the higher growth regions of the world, and is generally overweight Asian markets, where excellent demographics and strong economies create an exciting backdrop.  In developed markets, particularly the USA, the emphasis has tended towards the Technology, Biotechnology, and Consumer Services sectors.  As a consequence, the portfolio is usually underweight in Europe and Japan.

 

This article is specifically provided for use by media representatives in the UK. The views expressed are those of the fund manager at the time of writing, and may have since changed.

This document has been issued by Aubrey Capital Management Limited which is authorised and regulated in the UK by the Financial Conduct Authority. You should be aware that the regulatory regime applicable in the UK may well be different in your home jurisdiction. This document has been prepared solely for information purposes and is not a solicitation, or an offer to buy or sell any security. The information on which the document is based has been obtained from sources that we believe to be reliable, and in good faith, but we have not independently verified such information and no representation or warranty, express or implied, is made as to their accuracy. All expressions of opinion are subject to change without notice.

Please note that the prices of shares and the income from them can fall as well as rise and you may not get back the amount originally invested. This can be as a result of market movements and also of variations in the exchange rates between currencies. Past performance is not a guide to future returns and may not be repeated.

Aubrey Capital Management Limited accepts no liability or responsibility whatsoever for any consequential loss of any kind arising out of the use of this document or any part of its contents. The use of this document should not be regarded as a substitute for the exercise by the recipient of his or her own judgment.


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