Fund Objective: The Rivkin Global Equity Fund aims to produce positive average annual returns while seeking to maintain a level of volatility lower than that of the MSCI World ex Australia 100% Hedged to AUD Index over the same investment period.

31 January 2021 Unit Price – A$1.0376

Welcome investors to the monthly update for the Rivkin Global Equity Fund (GEF) for January 2021. For the month of January, the GEF gained 3.54%, concluding with a NAV price of 1.0376. The fund performed strongly relative to the broader market, with the S&P500 declining 1.1% over the month, while the Nasdaq100 gained 0.3%.

Monthly Commentary

Broadly speaking, equity markets have begun 2021 reasonably subdued. Prices drifted higher for much of January before a small but sharp sell-off occurred into month-end. Encouragingly, after the first week of February, this sell-off has been reversed, with both major equity indices recovering to new highs. There has been increased attention in the US markets over the past month, with many heavily shorted stocks surging strongly. Irrespective of the few companies that have rallied, in general, small-cap stocks in the US have been outperforming over recent months, with the Russell 2000 Index up 35% over the past 3 months alone.

Government policy, both locally and in the US continues to provide a positive tailwind for equities, and asset prices more broadly. In the February RBA meeting, Governor Philip Lowe stated that the current RBA cash rate of 0.1% was likely to remain unchanged for up to 4 years. More so, the RBA has committed to buying another $100 billion in bonds to get long-term interest rates lower. Interestingly, despite the RBA extending its quantitative easing (QE) program, the yield on the Australian 10-year bond has ticked up to its highest level since March last year. Nevertheless, with interest rates likely to remain at low levels for the foreseeable future, asset markets should continue to perform strongly. Signs are already beginning to emerge across property prices in Sydney and Melbourne, and we expect equity markets will also benefit over the months to come. In the US, government stimulus is coming more from the fiscal side, with the Biden administration pushing to get their Covid-19 Stimulus package, currently in the order of around US$1.9 trillion, through the House. This is planned to include direct payments to Americans of US$1400, in addition to funding to states and cities.

In terms of the current composition of the portfolio, there has not been significant change over the past month, with our cash weighting sitting at 5.1%, down from 8.5% at the end of December. Our momentum, quality, and large-cap (discretionary) strategies all remain fully invested. Momentum has been doing particularly well in the US over the past 3 months and was a significant reason as to why the Fund outperformed the broader market in January. We have also seen some strong gains in several of our discretionary names, in particular, a company called Sunpower (SPWR), which more than doubled in price over the course of the month. Having run very hard, we made the decision in early February to exit this position and lock in our profits. We have used the proceeds and entered a position in Fulgent Genetics (FLGT), a company involved in medical diagnosis, which is currently benefitting from the need for rapid Covid-19 testing.

Looking ahead, February has begun in a rather bullish fashion, with prices quickly recouping the late January decline. And with positive monetary and fiscal tailwinds, not to mention, the continued economic recovery, we believe equity markets remain an attractive option for investors with a three-to-five-year time horizon.

If you have any questions regarding the above or your investments with Rivkin in general, please call us on 02 8302 3605.

Performance

NAV Price Chart

Monthly Returns

Portfolio Composition

Sector Breakdown

Top 10 Stock Holdings

Strategy Weighting

Fund Description & Information

The Fund invests predominantly in listed Global companies listed on developed market exchanges whose characteristics satisfy one or more of the strategies that occupy the portfolio. These strategies include: Momentum, being securities that are enjoying positive price trends; Quality, being companies with robust earnings profiles that are priced favourably versus their peers; and Defensive, being securities that provide a combination of characteristics including fixed income or high yield returns, negative or low short-term correlation to risk markets like equities or outcomes that we consider to be market-neutral. The Fund operates within the context of a rules-based framework that encourages a disciplined, long-term approach to equity exposure among developed global markets.

Important Disclaimer

The Rivkin Global Equity Fund is available to wholesale investors only. Past performance is not a reliable indicator of future performance. The value of your investment may rise and fall, and you may not receive the amount originally invested.

Contact

Thomas Silitonga – Director, Rivkin Asset Management

thomas.silitonga@rivkin.com.au –  +612 8302 3605