Munro Global Growth seeks to generate double digit annualised returns over the medium to long term, whilst maintaining a capital preservation mindset. The Fund will invest in a global portfolio of listed equities with the aim of generating a double digit absolute annual return to Investors over the medium to long term. The number of equity holdings and option positions the Fund will hold at any point in time will typically range between 30 and 50 holdings. The Fund will generally invest in: international listed equities, cash equivalent instruments, exchange traded derivatives, and over the counter equity swaps.
The Munro Global Growth Fund returned -4.9% in September. Long equities detracted from performance during the month. Short equities and hedging contributed positively to performance. Global markets declined in September, with continued concerns that the US Federal Reserve will keep its benchmark lending rates higher for longer than anticipated, with the US 10-year bond yield rising and valuation multiples coming under pressure. Robust economic data from the US and an increase in oil prices reviving inflation added fuel to the rise in bond yields. The Fund’s defensive growth holdings in Costco and United Health were positive performers during the month. The biggest detractors included Nvidia and Amazon despite stellar results during August, essentially giving back some of their recent strong performance. Currency was a modest detractor from performance for September. The Fund remains 50% hedged back to AUD.
What is Munro Global Growth Munro Global Growth is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Long Short Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Munro Global Growth has Assets Under Management of 999.04 M with a management fee of 1.35%, a performance fee of 10.00% and a buy/sell spread fee of 0.15%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Munro Global Growth has returned 1.45% in the last month. The previous three years have returned 6.1% annualised and 10.96% each year since inception, which is when the Munro Global Growth first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Munro Global Growth first started, the Sharpe ratio is NA with an annualised volatility of 10.96%. The maximum drawdown of the investment product in the last 12 months is -3.98% and -22.79% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Munro Global Growth has a 12-month excess return when compared to the Foreign Equity - Long Short Index of 18.98% and 1.88% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Munro Global Growth has produced Alpha over the Foreign Equity - Long Short Index of NA% in the last 12 months and NA% since inception.
What are similar investment products? For a full list of investment products in the Foreign Equity - Long Short Index category, you can click here for the Peer Investment Report.
What level of diversification will Munro Global Growth provide? Munro Global Growth has a correlation coefficient of 0.54 and a beta of 1.35 when compared to the Foreign Equity - Long Short Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Munro Global Growth and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Munro Global Growth with the Developed -World Index? For a full quantitative report on Munro Global Growth compared to the Developed -World Index, you can click here.
Can I sort and compare the Munro Global Growth to do my own analysis? To sort and compare the Munro Global Growth financial metrics, please refer to the table above.
Has the Munro Global Growth been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Performance Commentary - August 31, 2023 The Munro Global Growth Fund returned 1.4% in August. Long equities and hedging modestly detracted from performance. Positive contribution came from short equities and currency. Global markets declined in August, with concerns that the US Federal Reserve will keep its benchmark lending rates higher for longer than anticipated, leading the US 10-year bond yield higher and putting pressure on valuations. Soft economic data out of China and a credit downgrade for the US government also added pressure on global growth expectations. GLP beneficiaries, Novo Nordisk and Eli Lilly, were strong performers during the month, both key names in the Innovative Health Area of Interest.
Novo Nordisk announced results from the SELECT cardiovascular outcome trial, which were much better than expected. Results showed a reduction of major adverse cardiovascular events (MACEs) by 20% in people treated with its GLP1 drugs. NVIDIA continued to perform, with its results also significantly beating elevated expectations. Key detractors included Liberty Media (F1), ASML and Richemont. Currency was a large contributor to performance for August as the AUD weakened in line with the softening outlook for China. The Fund remains 52% hedged back to AUD and hence did not capture all the upside from the 3.5% fall in the AUD.
Performance Commentary - June 30, 2023 The Munro Global Growth Fund returned 1.6% in June. Long equities contributed positively to performance; whilst currencies and portfolio hedging detracted from performance. Global markets rallied strongly in June. One of the key potential risks to the market was taken off the table at the beginning of the month with US President, Joe Biden, signing legislation that lifts the nation’s debt ceiling. The market’s breadth widened during the month as non-technology sectors also performed well, with some of the more financially leveraged sectors like, industrials, recovered some recent underperformance. Top contributors for the month included Nvidia, continuing to rally after exceptional earnings results in May and Amazon, as the market reappraised their outlook as a beneficiary in artificial intelligence given their strong incumbency in cloud computing infrastructure. Detractors for the month included Alphabet and Synopsys which gave back some of their recent strong gains. From a portfolio perspective, we remain encouraged by earnings outlooks for our portfolio holdings, which point to an acceleration in earnings growth from some of our key Areas of Interest.
Performance Commentary - May 31, 2023 The Munro Global Growth Fund returned 4.6% in May. Long equities, currencies and portfolio hedging all contributed to performance. Global markets were mixed in May, with the S&P finishing relatively flat. However, Artificial Intelligence (AI) was the big story of the month, which was largely driven by the quarterly earnings report of Nvidia. The stock rose over 20% on the day of reporting, putting it close to USD 1tr in market capitalisation. Additionally, investors followed the debate around the US debt ceiling until an eventual proposed resolution was put to Congress towards the end of the month. Top contributors came from our High-Performance Compute Area of Interest (AoI) – ASML, Nvidia, Synopsys and TSMC, all benefiting from the rise of AI. While the largest detractors were Visa and Luxury Goods company, LVMH, as investors continue to worry about the health of the US consumer. From a portfolio perspective, we remain encouraged by earnings outlooks for our portfolio holdings, which point to an acceleration in earnings growth from some of our key AoI’s.
Performance Commentary - April 30, 2023 The Munro Global Growth Fund returned 0.8% in April. Long equities and currencies positively contributed, while portfolio hedging negatively contributed to performance. Global markets appreciated in April, driven by earnings results that were better than expected, particularly from the Consumer and Health Care sectors.
Big Tech stocks reported late in the month and largely exceeded expectations too. Positive contributors for the month included Microsoft, which saw Azure revenue growth and guidance top expectations, as well as commentary around their Artificial Intelligence-related products being received positively. Chipotle Mexican Grill, the restaurant chain famous for its burritos, also had good results, with traffic improving significantly compared to late 2022.
Finally, Eli Lilly performed strongly on the back of a positive outlook on GLP-1 medications, given its Mounjaro (diabetes and weight loss drug) sales came in above consensus and with encouraging efficacy data. The key detractors for the month were in the semiconductors – with ASML and TSMC giving back some of their calendar year gains. The portfolio remains positioned for accelerating growth from AI-related adoption, Chinese consumers rebounding with the re-opening of the economy and the policy tailwinds supporting Climate Change.
Performance Commentary - March 31, 2023 The Munro Global Growth Fund returned 2.1% net in the March quarter (MAET.ASX 2.0% net). The Fund’s long positions contributed positively, while the fall in the Australian dollar also modestly added to performance. Short positions and hedging detracted from performance. Equity markets began the quarter strongly with expectations that the Federal Reserve would moderate its rate hikes. This saw the US 10-year bond yield retreat, leading to a rally in long-duration stocks. Q4 earnings season also drove stocks higher – full year 2023 guidance did not lead to the widespread downward revisions the market had anticipated. Technology companies, in particular, offset slowing top-line growth with widespread cost cutting programs, with many companies cutting 10% of their workforces, enabling them to give strong margin expansion guidance. Artificial intelligence (AI) was the big buzzword throughout the quarter. Microsoft announced a further investment in OpenAI, the developer of AI chatbot ChatGPT. The launch of Microsoft 365 Copilot in mid-March excited the market. The product is designed to increase productivity by embedding the power of ChatGPT into the Microsoft 365 applications to create a powerful productivity tool. The other major event for the quarter was the collapse of Silicon Valley Bank (SVB). Credit Suisse also ran into problems on the other side of the pond and was abruptly taken over by Swiss rival UBS with the support of the Swiss authorities. Several other regional banks also ran into significant issues, but with a swift response from policymakers, this has not yet led to a systemic issue. From a Fund perspective, our long positions added to absolute performance for the quarter. This was led by stocks that benefited from the market’s interest in artificial intelligence. As well as Microsoft mentioned above, the key beneficiaries of AI are the underlying infrastructure companies namely, semiconductor companies (see stock commentary on page 5). ASML (+92 bps), NVIDIA (+69 bps) and Advanced Micro Devices (AMD) (+43 bps) all performed well throughout the quarter. Luxury goods names LVMH (+78 bps) and Richemont (+10 bps) were also strong performers during the quarter following China’s reopening and a resilient US luxury consumer (see stock commentary on page 6). Our largest long detractor was United Health (-51 bps), which suffered from some changes to Medicare Advantage reimbursement rates. Short selling detracted from performance during the quarter, given the consumer held up better than expected. Option hedging also detracted from performance during the quarter as the market quickly stabilised following the regional banking crisis with a swift response from policy makers. The Australian dollar gave back some of last quarter’s gains leading to a small positive gain from exposure to the USD. We ended the quarter at approximately 57% hedged to Australian dollars.
Performance Commentary - February 28, 2023 The Munro Global Growth Fund returned -2.1% in February. Exposure to currencies positively contributed, while equities and portfolio hedging tools negatively contributed to performance. Global markets were mixed in February, with hawkish comments from the US Federal Reserve, higher bond yields and recession concerns weighing on markets. Earnings results from Q4 and guidance for this year was reasonably well received and investors were willing to look through soft Chinese consumption numbers given positive current trends on their re-opening. Artificial Intelligence (AI) was a big talking point for the month with Microsoft’s product launch of their new Bing search engine, integrated with OpenAI’s ChatGPT. NVIDIA, a key beneficiary of AI adoption, commented very positively on the AI trends they are seeing and described it as a “new computing era”. The top contributor for the month was Novo Nordisk, with their semaglutide drugs continuing to see strong growth. Alphabet was a detractor as investors feared that Microsoft’s new Bing search engine would provide a more competitive threat to their dominant Google search engine.
Performance Commentary - January 31, 2023 The Munro Global Growth Fund returned -0.3% in January. Long equities positively contributed, while short equities, portfolio hedging, and currencies negatively contributed to performance. Global markets rallied strongly in January driven by expectations that the Federal Reserve will moderate its rate hikes. US 10-year bond yields fell back to 3.5% as a result, leading to a strong rally in long-duration stocks particularly unprofitable technology stocks. The top contributor for the month was ASML, as the stock regained momentum from November when the company significantly upgraded their long-term guidance. LVMH was another strong performer as confidence in the China economy re-opening helped fuel expectations for strong sales growth from that region. Nextera was the largest detractor as they didn’t upgrade their financial guidance, which we feel is the management being conservative on the Inflation Reduction Act until projects and rulings are finalised. The portfolio remains balanced as we remain watchful for any material signs of macroeconomic pressure on earnings.
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