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 July 2020 Unit Price – A$0.8730
Welcome investors to the monthly update for the Rivkin Global Equity Fund (GEF) for July 2020. The GEF has followed up a strong June (+4.23%), with a gain of 6.05% in July, with the NAV price ending the month at 0.8730. While domestic equities were relatively quiet in June, with the ASX200 Accumulation Index gaining 0.50%, it has been a slightly different and more bullish story in the US. Following a few weeks of sideways trading, the major stock indices have continued their upward path, with the S&P500 and Nasdaq100 Total Return Indices gaining 5.64% and 7.41% respectively in July. The recovery off the March lows is a good example of how the performance of ASX and US equity markets can diverge from time to time, with US equities, particularly the Nasdaq listed technology stocks, far outperforming local equities over the past 3-4 months.
| PORTFOLIOS | GEF |
|---|---|
| Latest Month | 6.05% |
| QTD | 6.05% |
| Calendar YTD | -9.54% |
| Financial YTD | 6.05% |
| 12m | -4.26% |
| Inception | -11.71% |
Monthly Commentary
The strong recovery in US equity prices has prompted quite a few clients across our business, both in funds management, and the general advice reports to question the sustainability of the current rally and to ponder whether or not a bubble is forming. Given the economic shock of the Covid-19 pandemic, evidenced by the recent US GDP figures that showed the US economy contracted in the 2nd quarter at an annualised rate of 32.9%, such a view is understandable. However, it is always important to remember that equity markets are forward looking and will almost always react considerably faster than the actual economy will recover.
More so, part of the benefit of using a systematic investment strategy, is that our portfolios will stay invested while the trend remains up, and revert partly to cash when the trend reverses, via the momentum strategy component, which removes the need to have to guess when or if a bull market is at risk of ending. Sitting on the sidelines while a strong trend is underway can be just as detrimental to long-term performance, as holding into the beginnings of a downturn.
With all that said, we have taken some steps to de-risk the portfolio slightly throughout the month of July, by increasing the weighting to cash from 7.6% to 17.3%. This has been done by scaling back both our Momentum and Quality strategies to both hold a few less stocks. This leaves slightly over 80% of the portfolio currently invested in US equities, which we believe strikes a good balance between risk and reward in the current environment.
In terms of sector weightings, the information technology sector continues to be the fund’s highest exposure, at 33.4%, down from 39.9% at June. This is followed by consumer discretionary (+20.6%), health care (+16.8%), and consumer staples (+12.2%) being the next largest.
The Momentum portfolio outperformed Quality in June, with several holdings posting large returns, including Tesla (TSLA) and Apple (AAPL) which gained 32.5% and 16.5% for the month, respectively. Qualcomm (QCOM) and Amazon (AMZN) were also strong performers for the month.
Looking to the weeks and months ahead, we believe that markets will shortly shift focus onto the US Presidential elections that are coming in November. Given that equity market performance leading into an election is often a predictor of whether the incumbent remains in power, we believe that President Trump will do everything in his power over coming months to maintain a positive environment for stock markets, including continuing fiscal support.
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
