|Asset classes||Global equities (including emerging markets, excluding US companies)|
|Investment style||Systematic investing based on stocks’ relative strength|
|Quarterly return||-8% (net of fees)|
|Annualised volatility (since inception)||23%|
Global equity markets saw further declines in Q3 as central banks around the world continue to tighten monetary policy in the face of ever-persistent inflation. However, as rates become more normalised they are likely to cause inflation to moderate, which could be positive for global equity markets. The value of the USD continues to appreciate relative to other currencies.
Sectors of the global economy where the portfolio currently has the most exposure are: Financials (19%), Healthcare (15%) and Telecom (10%) and sectors where there is the least exposure are: Consumer Staples (6%), Utilities (7%) and Technology (7%). Over the course of the third quarter, there has been added exposure to Healthcare, Technology and Utilities and a reduced exposure to Basic Materials, Energy and Financials. These changes were driven by our relative strength ranking process which seeks to overweight strong sectors of the global markets and seeks to underweight weak areas.
From a country perspective, the largest exposure is currently to the UK (14%), Brazil (12%), India (11%), Switzerland (7%) and Denmark (6%). A noteworthy underweight continues to be China due to its weak relative strength.
Regional exposure is currently tilted towards Europe (48%) and Asia (19%). As the strategy is not constrained geographically, the exposure will change over time depending on where areas of strength are observed. Also, currently, about 51 percent of the portfolio is allocated to developed markets and 49 per cent to emerging markets.
Portfolio performance (net of fees)
Top 10 portfolio holdings (as of 30/09/22)
|Tenaris S.A. ||3.79%|
Best-performing positions (note that the position may not have been held for the full quarter, but performance shown for the security is for the full quarter)
- (+20.79%) Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil.
- (+18.21%) ICICI Bank Limited provides various banking products and services in India and internationally. ICICI Bank Limited was founded in 1955 and is headquartered in Mumbai, India.
- (+15.89%) MakeMyTrip Limited, an online travel company, sells travel products and solutions in India, the United States, Singapore, Malaysia, Thailand, the United Arab Emirates, Peru, Colombia, Vietnam and Indonesia. MakeMyTrip Limited was incorporated in 2000 and is based in Gurugram, India.
- (+6.69%) Perusahaan Perseroan PT Telekomunikasi Indonesia provides telecommunications, informatics and network services worldwide. The company was founded in 1884 and is headquartered in Bandung, Indonesia.
- (+5.65%) Petróleo Brasileiro S.A. - Petrobras explores for, produces, and sells oil and gas in Brazil and internationally. Petrobras was incorporated in 1953 and is headquartered in Rio de Janeiro, Brazil.
Worst-performing positions (note that the position may not have been held for the full quarter, but performance shown for the security is for the full quarter)
- (-31.70%) Sasol Limited, together with its subsidiaries, operates as an integrated chemical and energy company in South Africa. Sasol Limited was founded in 1950 and is headquartered in Johannesburg, South Africa.
- (-28.11%) Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufactures in the People's Republic of China. Daqo New Energy Corp. was founded in 2006 and is based in Shanghai, the People's Republic of China.
- (-24.63%) Diana Shipping Inc. provides shipping transportation services. Diana Shipping Inc. was incorporated in 1999 and is based in Athens, Greece.
- (-20.34%) National Grid plc transmits and distributes electricity and gas. The company was founded in 1990 and is headquartered in London, UK.
- (-20.20%) HSBC Holdings plc provides banking and financial services worldwide. HSBC Holdings plc was founded in 1865 and is headquartered in London, UK.
Historically, market declines of the magnitude we have seen so far in 2022 have often led to favourable investment opportunities and this is the likely outcome this time as well. Some of the headwinds, such as high inflation, ongoing supply chain challenges and the underperformance of China, all have the potential to improve as we move forward.