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 2020 Unit Price – A$0.9493
Welcome investors to the monthly update for the Rivkin Global Equity Fund (GEF) for January 2020. Following a solid 4th quarter of 2019, whereby the NAV prices gained 8.23%, the Rivkin Global Equity Fund (GEF) declined 1.72% in January, finishing the month at 0.9493. The GEF, and US equities in general began the month strongly, only to give up these early gains right on month end, whereby the S&P500 declined 1.8% on the last day of the month.
Monthly Commentary
The weakness into month end was largely the result of negative news driven by the Coronavirus outbreak in China. However, to date, the market declines have not been anything out of the ordinary and appear rather mild considering the preceding four months of decent gains from early October. Looking three to six months ahead, we do not believe this poses a sustained risk to US equity prices. If anything, often with the benefit of hindsight, market declines as a result of situations such as this represent good buying opportunities.
Liquidity conditions remain favourable in the US, with the Federal Reserve having increased their balance sheet by over 10% since late August 2019. Furthermore, bond markets are currently pricing in a 15% probability that the Federal Reserve will cut interest rates by 25 basis points at their next meeting, which is not until mid-March. With the Fed having clearly reversed course from their tightening stance in early 2019, we believe looser monetary conditions will continue to provide a favourable backdrop to risk assets.
In terms of the performance split between the momentum and quality strategies, the momentum strategy was positive throughout January, thanks largely to our holding in Tesla (TSLA) which gained over 50% for the month, followed by Apple (AAPL) and Advanced Micro Devices (AMD) which gained 11.1% and 7.2% respectively. The Quality strategy was down for the month, with BorgWarner (BWA) and Nucor Corp (NUE) the largest detractors, declining 17.18% and 12.87%.
Finishing with a look at the current portfolio composition, the GEF ended the month with 35 stock holdings, a slight increase on December, however considerably more concentrated than we have previously been over the past 12 months. Both our Momentum and Quality strategies are fully invested, with a 20.2% weighting to ‘defensive’, leaving just 1.5% as cash. In terms of sector exposure, information technology and consumer discretionary remain the largest weights at 40.7% and 26.9% respectively.
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
