Download CC Marsico Global Fund APIR CHN0002AU

ReportingCurre
IndexName
ReportingCurrencyCode
MSCI All CountryAustralian
World Index
Dollar
Net AUD
AUD
MARSICO
Fund Update as at 30 June 2016
CC Marsico Global Fund (APIR: CHN0002AU)
Fund Benefits
Fund Facts
Exclusive Australian Access:
Investment Manager
Access to a proven global fund manager not otherwise
available to Australian investors.
Marsico Capital Management, LLC.
("MCM")
Portfolio Manager
Tom Marsico
Global Equity Fund, unhedged in
Australian Dollars
23 February 2016
Structure
Experienced Investment Team:
Over 18 years managing global growth equity portfolios.
Differentiated, Diversified Global Investment
Opportunities:
Inception Date^
Benchmark
Management Fee #
MCM evaluates companies in industries around the
world to uncover quality investments.
Performance Fee #
Performance Fee of 10% p.a.
outperformance of the Benchmark
(net of the Base Fee)
Buy / Sell Spread
Distributions
0.10% / 0.10%
Semi-annual
Fund Size+
AUD $10 million
Time-Honoured Philosophy & Process:
Renowned for fundamental, intensive, hands-on
research, MCM combine “top-down” macroeconomic
analysis with “bottom-up” security selection.
Performance (Australian Dollars)
MSCI All Country World Index,
Net in AUD
Base Fee of 1.25% p.a.
Top 5 Holdings
Returns
Fund*
Benchmark**
Active
Stock Name
Sector
1 Month
-6.99%
-3.30%
-3.70%
Tencent Holdings Ltd
Information Technology
3 Months
1.60%
4.33%
-2.73%
Facebook Inc
Information Technology
FYTD
-
-
-
Alibaba Group Holding Limited
Information Technology
1 Year
-
-
-
Dollarama Inc
Consumer Discretionary
2 Years p.a.
-
-
-
Visa Inc
Information Technology
3 Years p.a.
-
-
-
0.77%
5.50%
-4.73%
Inception
Country Allocation
Sector Allocation
Australia
Belgium
Canada
Cash
United States
Source: Marisco Capital Management, LLC.
China
Denmark
France
Republic of Ireland
United Kingdom
Materials
Information Technology
Industrials
Health Care
Financials - Ex Prop
Trusts
Source: Marisco Capital Management, LLC.
Source: Marisco Capital Management, LLC.
Platform Availabilty
Further Information
PowerWrap
Phone:
Email:
Web:
Cash
Consumer Discretionary
Consumer Staples
1800 940 599
[email protected]
www.channelcapital.com.au
# All figures disclosed include the net effect of GST and RITC. ^ Inception Date for performance calculation purposes. + Fund size refers to the CC Marsico
Global Fund ARSN 610 434 896, which is comprised of both Class A and Class B Units. * Performance is for the CC Marsico Global Fund (APIR: CHN0002AU),
also referred to as Class B units, and is based on month end unit prices before tax in Australian Dollars. Net performance is calculated after management fees
and operating costs, excluding taxation. This is historical performance data. It should be noted the value of an investment can rise and fall and past performance
is not indicative of future performance. ** Benchmark refers to the MSCI All Country World Index Net AUD. All data is the property of MSCI. No use or
distribution is permitted without written consent. Data provided “as is” without any warranties. MSCI assumes no liability for or in connection with the data.
Page 1 of 3
Fund Update as at 30 June 2016
CC Marsico Global Fund (APIR: CHN0002AU)
Market Review
In the second quarter of 2016, financial markets appeared to be locked in a tight trading range after risk assets
completed a recovery from February lows. Very late in the quarter, the world was confronted with a political surprise
as 52% of voting British citizens chose to pull the lever for leaving the European Union (“EU”). As global financial
markets grappled with the implications of Great Britain’s exiting the European Union, a substantial repricing of
assets took place. The British pound plunged and European equity shares, reflecting more stress in Europe and
pressure from newly cheapened British goods, retreated. Japanese shares extended losses as the yen continued its
rise. Domestically, it became increasingly clear that monetary tightening would be put on hold, which tempered
pressure on equities. Meanwhile, sovereign debt markets soared around the globe, with many government bond
issues registering new low yields.
For the quarter, the S&P 500 Index rose by 5.9% (in Australian dollar terms), while the NASDAQ Composite Index
gained 3.1%. The MSCI ACWI Index rose by 4.3%. Emerging economy equity markets, including China, were up for
the quarter. Oil prices rebounded by roughly USD $10/barrel, although prices retreated late in the quarter. The U .S.
trade-weighted dollar was essentially flat for the quarter.
Before the world was confronted with the potential reality of “Brexit,” there was a growing sense that economic
momentum had slowed, and that inflation worries were misplaced. Britain’s potentially destabilising decision to leave
the EU reinforced this notion. The economies of Britain and the rest of Europe both look somewhat less healthy now
that they must tackle a messy divorce. U.S. growth, though stronger on the spending side, seemed somewhat
weaker on the employment side. China, as has been the case for some time, appeared steady but uninspiring.
One clear policy outlook associated with Brexit has been a substantial rollback of previous expectations for
tightening U.S. monetary policy. Prior expectations that the Federal Reserve might move twice to tighten interest
rates in 2016 gave way to widespread expectations of an extended pause in the ratcheting up of U.S. interest rates.
Perhaps the most striking development in the second quarter unfolded in government bond markets around the
world. As investors were forced to contemplate the potential impact of Brexit headwinds on already modest growth
in Europe, China, and Japan, they found themselves, once again, reining in any anxieties about rebounding
inflationary pressures and/or aggressive central bank tightening. For the quarter, many sovereign debt market yields
fell by 25 to 50 basis points. As the third quarter began, ten-year bond yields were below 1% in Canada, the U.K.,
France, Germany, Sweden, the Netherlands, Switzerland, and Japan. In the U .S., the ten-year Treasury bond fell to
a yield of 1.38%.
U.S. real economy and inflation developments alone cannot explain the sharp drop in long -term interest rates.
Employment gains stumbled in April and May. In contrast, however, early indications suggest that consumer
spending rose at a 4% annualised pace in the second quarter, the strongest gain registered since the fourth quarter
of 2014, reversing the first quarter’s trends of solid gains in employment and weak spending. With interest rates
substantially lower and spending gains in place, the prospects for continued modest U .S. growth, Brexit
notwithstanding, look reasonable.
Faltering European economic momentum, however, laid alongside tepid gains in China, reinforce the notion that
U.S. inflation relating to global trade may remain “missing in action” for the foreseeable future. This, no doubt,
played a large role in the decline for U.S. interest rates. For the past half dozen years many forecasters who fixated
on an improving U.S. domestic labor market have repeatedly predicted that inflation would accelerate “in the
quarters just ahead.” Instead, macro forces outside of the U.S. have dominated; a trend that appears alive and well
as the third quarter begins.
Page 2 of 3
Fund Update as at 30 June 2016
CC Marsico Global Fund (APIR: CHN0002AU)
Market Outlook
We continue to have a “Lower for Longer” investment view that we have written about for several quarters now,
meaning that we believe global growth will remain muted for an extended period of time, inflation pressures will
remain quiescent, and therefore interest rates should remain low. Volatility, while not as great as in the first quarter,
returned in the second quarter as a result of the surprise Brexit vote in the United Kingdom (“U.K.”) that shifted the
spotlight to the European Union (“EU”) from the focus on oil prices and China’s growth rates and currency which we
saw earlier in the year. The uncertainty arising from the vote in the U .K. offset improving GDP data points globally.
Additionally, while the Fed seemed on a path to raise rates this year, the uncertainty and likely slower GDP growth
resulting from the Brexit vote likely pushes out rate hikes for the U .S. and should lead to more central bank bond
buying, further solidifying the lower for longer outlook.
In theory, low rates would argue for higher price to earnings multiples. However, uncertainty will likely put a
dampener on any multiple expansion, as investors demand a higher risk premium. With one -third of the world’s
sovereign bonds yielding less than zero and two -thirds of the S&P 500 showing dividend yields greater than the 10
year U.S. Treasury yield, equities look to us much more attractive than bonds on a relative basis. Despite that and a
“reasonable” 16.6x S&P 500 Index multiple, our investments are predicated on earnings growth rather than multiple
expansion assumptions.
While the Brexit vote may or may not actually lead to the U .K. exiting the EU, we believe the vote is symbolic of
growing dissatisfaction and frustration with the status quo in global politics, as evidenced by the popularity of
Sanders and Trump on opposite ends of the spectrum in the United States. GDP growth globally has been tepid
and has felt fragile since the financial crisis of 2008 (despite adding 14 million jobs from February 2010 to present
versus 8.7 million jobs lost from 2008 to February 2010), and voters in Europe and in the U.S. are expressing their
frustration by voting for any kind of change. It appears that confidence in monetary policy may be waning, while
coherent fiscal policies appear absent due to a lack of leadership and political stalemates.
Despite these issues, the U.S. economy continues to expand, albeit at a moderate rate, constrained by
demographic trends as well as poor fiscal policies. The stock market year -to-date has swung from risk-off to risk-on
several times as assessments for growth are adjusted with incoming data points. While U .S. equity values have
largely recovered since the Brexit vote, the rally has been defensive in nature and the 10-year Treasury bond yield
remains below 1.5% vs 1.7% before the Brexit vote, a clear indicator of cautionary positioning and concerns about
the future.
We find the best earnings growth opportunities exist in the stocks of companies that are innovative and poised to
show revenue growth contributions from market share gains, rather than dependence on the macroeconomic
environment. In a slow global growth environment, these stocks should outperform as investors seek out secular
growth companies that can grow revenues. We tend to invest in companies that have strong financial balance
sheets, address large global and secular growth markets, and possess large scale that provides competitive moats
versus legacy competition. Their management teams are focused on building growth companies that will not just
survive but thrive over the long-term, and can increase capital investments in their businesses.
The information contained in this report is provided by the Investment Manager, Marsico Capital Management, LLC ('Marsico'). Channel Investment Management
Limited (‘Channel’) ACN 163 234 240 AFSL 439007 is the Responsible Entity and issuer of units in the CC Marsico Global Fund ARSN 610 434 896 (‘the Fund’).
Neither Channel or Marsico, their officers, or employees make any representations or warranties, express or implied as to the accuracy, reliability or
completeness of the information contained in this report and nothing contained in this report is or shall be relied upon as a promise or representation, whether as
to the past or the future. Past performance is not a reliable indication of future performance. A reference to quarters is a reference to a calendar quarter. This
information is given in summary form and does not purport to be complete. Information in this report, should not be considered advice or a recommendation to
investors or potential investors in relation to holding, purchasing or selling units in the Fund and does not take into account your particular investment objectives,
financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any
relevant offer document and in particular, you should seek independent financial advice. Readers are cautioned not to place undue reliance on forward looking
statements. Neither Channel nor Marsico have any obligation to publicly release the result of any revisions to these forward looking statements to reflect events
or circumstances after the date of this report. For further information and before investing, please read the Product Disclosure Statement available on request.
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