September, 2023
For the quarter, the Fund posted a return of negative 3.30% and the broad market returned negative 2.87% as measured by the MSCI World ExAustralia Index, hedged into $A. Uncertainty was evident through much of the quarter, with markets swinging up and down throughout but ultimately declining for the period.
Absolute return was mixed across sectors, with the largest detractions coming from utilities and communication services. Electric utilities were primarily responsible for the drag on return from the utilities sector, which saw valuations broadly pressured due mainly to rising interest rates. Rising yields tend to negatively affect utilities due to a view that they act as "bond proxies", however, in contrast to bonds utility companies also have growth, often at or above mid-single digits, which offsets the rate impact. The drag on return from communication services came primarily from poorly performing diversified telecommunications names.
The largest positive contribution to relative return came from information technology. Stock selection within technology hardware storage and peripherals names was the primary driver of performance, as within the segment the fund had exposure to the top performing name in the benchmark and was underexposed to the second worst performer. Underweight allocation to the sector aided performance as well, with information technology having the second worst return in the index for the quarter. On the negative side, stock selection within some diversified telecommunications holdings that lagged for the quarter detracted the most from relative performance.
Among the largest individual contributors to return were TotalEnergies and AbbVie. TotalEnergies is a global energy company that explores and produces oil and gas, refines petroleum products, manufactures petrochemicals, and operates gas stations. It is also growing its presence in generating electricity from renewable sources. Shares outperformed along with its integrated peers due to rising oil prices, as OPEC+ decided to extend the production cut to maintain a tight market. Management remains focused on driving cash flow growth from liquified natural gas (LNG) and integrated power which includes renewables. TotalEnergies' global scale, strong balance sheet, integrated business model, capital flexibility, and cost discipline allow the company to pay a sustainable dividend through commodity price cycles and reward shareholders with buybacks using excess free cash flow.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Quarterly-Fund-Update-2309.pdfAugust, 2023
For the month of August, the Fund posted a return of -2.2% while the broader market returned -1.9% as measured by the MSCI World Ex Australia Index Net dividends in AUD (100% hedged into $A). The Fund was protective on the downside when markets fell but ended slightly behind the benchmark after a few AI related mega-cap stocks in the index took off at month end, riding a rebounding tailwind. Low beta benefitted the Fund during the month, while negative exposure to medium-term momentum detracted.
Absolute return was positive in most sectors, with the largest contributions coming from information technology and health care. Return in information technology came mostly from a communications equipment holding that saw an outsized return for the month. Within health care, pharmaceutical stocks primarily accounted for performance.
On a relative basis, the Fund finished the month slightly behind the broad market benchmark. Sector results were mixed, with the largest contribution coming from information technology and the largest detraction coming from utilities. Stock selection drove return in information technology, primarily due to underexposure to a technology and hardware stock that suffered heavily when markets fell despite rallying at month end. The drag on return from utilities was attributable to an overweight allocation, as the sector was the worst performer in the index.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2308.pdfJuly, 2023
Global equity markets were positive in July, with the Fund posting a return of 2.1% and the broader market returning 2.8% as measured by the MSCI World Ex Australia Index in AUD (100% hedged into $A). A lower-than-expected June CPI report drove more traction for a softlanding narrative that has been building all year. The month saw some slowing of the sharp big tech rally that has been fuelling market returns year to date on the back of a few high-profile earnings disappointments and valuation concerns in the cohort. The Fund's low beta and low volatility exposure remained headwinds to return.
Absolute return was positive in almost all sectors, with financials contributing by far the most to performance. Banks drove performance for the sector, as the dissipation of concerns following the turmoil in the industry earlier this year continued to accelerate, and thus far the regulatory response to the crisis has remained measured. Furthermore, strong 2Q earnings for select holdings showcased resilient profitability and healthier-than-feared credit quality.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2307.pdfJune, 2023
Global equity markets rose during the quarter, though surging indexes painted a misleading picture, as market leadership continued to be astoundingly narrow. A handful of mega-cap tech stocks that have seen multiples blow out on the back of AI mania accounted for the majority of broad market return.
The Fund recorded positive absolute returns in most sectors, with Information Technology by far the biggest contributor, followed by Industrials and Consumer Discretionary. Information Technology was buoyed primarily by technology hardware and storage names and a semiconductor stock that benefitted from the AI hype tailwind. Returns in Industrials came largely from electrical equipment companies and trading companies and distributors. Consumer Discretionary performance was driven by a restaurant name that outperformed on strong earnings.
On a relative basis, the Fund finishing behind the broad MSCI World ex Australia benchmark, though it outperformed the MSCI World High Dividend Index. Communication Services was the largest detractor to relative returns due to stock selection, underperformance came primarily from exposure to a diversified telecommunications name that lagged along with very strong returns in two interactive media and services companies that are outside of our investable universe due to not paying a dividend. Information Technology was the next biggest drag, owing primarily to an underweight allocation, as the sector was the top performer in the index. Underexposure to a technology hardware storage and peripherals name that saw an outsized return for the quarter also detracted meaningfully.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Quarterly-Fund-Update-2306.pdfMay, 2023
Turmoil spilled into May, as First Republic became the 3rd U.S. bank failure this year. Despite uncertainty around a U.S. debt ceiling resolution and continued warnings of a looming recession, mega-cap tech stocks aggressively decoupled from the broader market, posting outsized returns driven by AI mania. The Fund's high dividend yield and low beta were headwinds to Index relative returns during the month.
Absolute returns were negative for the month with the largest detractions coming from Financials and Materials, while holdings in Information Technology and Consumer Discretionary were positive contributors. Financials continue to face headwinds following banking failures, and banks and insurance companies primarily accounted for performance in the sector. The negative return in Materials was largely driven by a chemicals company that came under pressure due to weaker than expected earnings and guidance.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2305.pdfApril, 2023
Global equity markets were positive in April, as sentiment appeared to remain driven by investors betting on the timing of an end to interest rate hikes and the likelihood of a recession in the near term. The banking turmoil seen in March looked to be easing through most of the month but crept back into headlines near month end.
Absolute returns were positive in all sectors except for Information Technology, with the largest contributions coming from Health Care and Financials. Within Health Care, pharmaceuticals were the primary driver of return, while Insurance stocks were the main driver of return within Financials.
On a relative return basis, the Fund finished roughly in-line with the broad MSCI World ex Australia benchmark and ahead of the MSCI World High Dividend Yield Index. Consumer Discretionary was the largest contributor to relative return owing mostly to stock selection, with the most impact coming from having no position in an automobile stock that was pressured heavily during the month. The biggest detractor to relative return was stock selection within Information Technology, as exposure to a few underperforming semiconductor stocks was a drag on performance.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2304.pdfMarch, 2023
Despite shifting sentiment, equity markets finished strong in the first quarter of 2023. A steep, growth-led rally kicked the year off on the back of disinflation and a perceived rising likelihood of an economic soft landing. Hotter-than-expected January PPI numbers and a reassessment upwards of peak-rate expectations cooled sentiment in February, reversing the bull run. The end of the quarter was defined by the collapse of Silicon Valley Bank, Signature Bank, and Credit Suisse and subsequent intense scrutiny of industry peers. While the crisis drove significant outflows from financials, it also accelerated a rally in mega-cap tech stocks that buoyed markets into quarter end, with investor positioning signalling broad expectations for a dovish pivot by central banks in response to systemic risk in the banking system. broad expectations for a dovish pivot by central banks in response to systemic risk in the banking system.
All sectors except for Financials contributed to the Fund’s positive absolute return in Q1, with the largest contributions coming from Information Technology and Industrials. Semiconductors drove return within IT, as investors looked through current industry inventory digestion to a potential rebound in the second half of the year. Performance in Industrials was fuelled by air freight and logistics companies.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Quarterly-Fund-Update-2303.pdfFebruary, 2023
Stocks fell in February, giving back some of January's gains. The weakest results came from the Energy, Healthcare, and Consumer Staples sectors while the Materials, Financials, and Communications Services sectors provided modest gains. In January, U.S. inflation slowed for the seventh consecutive month, but not by enough to meet expectations. Despite the continued reduction in inflation, the Federal Reserve has indicated that a policy pivot is unlikely to occur in 2023. Japan continued to see rising wages and inflation grew to 4.3% in January. Inflation continued to ease in the euro zone, PMI indicators rose, and consumer confidence increased. The European Commission published its Winter 2023 Economic Forecast indicated that the EU economy is likely to avoid a recession.
Absolute returns were positive in all sectors except for Consumer Discretionary, with the largest contributions coming from Information Technology and Financials. Semiconductors drove performance in Information Technology, owing largely to one holding in particular that rose on a strong earnings report. Banks and insurers accounted for return within Financials, with contributions spread broadly across holdings. On a relative performance basis, the Fund finished slightly ahead of both the broad market MSCI World ex Australia benchmark as well as the MSCI World High Dividend Index. Health Care was the largest contributor to relative return on the back of stock selection. The contribution came primarily from exposure to a biotech stock that was one of the top performers in the index for the month. Energy was the next biggest aid to relative performance due to stock selection within oil, gas and consumable fuel names. A majority of industry companies in the index struggled during the month, and the portfolio's exposure to a handful of out-of-benchmark holdings that held up well aided relative return.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2302.pdfJanuary, 2023
Stocks rose sharply in January on improving sentiment and growing hopes for an economic soft landing. The Consumer discretionary, Communications Services, Materials, and Information Technology sectors had the strongest gains. Health care, Utilities, and Consumer Staples lagged. U.S. inflation slowed for the sixth consecutive month in December and the annualised personal consumption expenditure decelerated to 3.9%, which is now below the federal funds rate. Despite the good inflation news, the Federal Reserve indicated a policy pivot in 2023 was unlikely. The euro zone defied expectations and experienced faster growth than the U.S. or China in 2022 and appeared on track to avoid a recession in 2023. Inflation eased in the euro zone, PMI indicators rose, sovereign spreads dropped, and sentiment indicators jumped. Japan saw wages rising and inflation growing above a 3% rate. The Bank of Japan dashed expectation of lifting its interest rate target any further. The International Monetary Fund upgraded its economic outlook, citing moderating inflation and energy prices and China's reopening.
It was a positive start to the year for global equities despite a broadly disappointing earnings season featuring struggling margins and underwhelming guidance, continued disinflation and a perceived rising likelihood of an economic soft landing fueled risk-on sentiment. The month saw many growth names that were among the most punished in 2022 sharply rebound, especially within big tech. As is expected during rapid, growth-led rallies, the fund lagged during the month, with negative exposure to market sensitivity as a headwind. Absolute returns was positive in most sectors, with the largest contributions coming from Financials and Materials. Banks and insurance companies primarily accounted for return within Financials, while a strong month for chemical stocks drove performance within Materials. On a relative return basis, the fund finished behind the broad MSCI World ex Australia benchmark, though it outpaced the MSCI World High Dividend Yield index by a solid margin. The biggest detractions to relative returns came within the Consumer Discretionary and Information Technology sectors. Consumer Discretionary underperformance came from a mix of stock selection and sector allocation, as not owning a few names with outsized returns that are outside our investable universe due to not paying a dividend and an underweight to the sector, which was the strongest in the benchmark. Stock selection accounted for relative performance in Information Technology, owing mostly to not owning a semiconductor stock with an outsized return and exposure to an IT services company that struggled during the month.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2301.pdfDecember, 2022
Global markets were positive in Q4, equities rose from the outset of the quarter on more speculation of a downshift in central bank rate hiking, and momentum was sustained by a softer-than-expected October CPI print. As expected, the Fed raised rates by 50bps instead of 75bps in December, though markets faded into year-end with recession concerns as an overhang. Value led the quarter's rally handily, underpinning a continued rotation and investor preference for strong business fundamentals as monetary conditions, though slowing in their tightening, remain firmly restrictive. The fund performed well during the quarter, aided by its high exposure to dividend yield.
All sectors contributed to positive absolute returns, with the largest contributions coming from Financials and Health care. Performance within Financials was driven primarily by insurers, with strong contributions from banks as well. Pharmaceutical companies accounted for the majority of return within Health care on the back of a strong earnings season for several holdings.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Quarterly-Fund-Update-2212.pdfNovember, 2022
Global Equities rose in November, with the Fund posting a return of 6.9% and the broader market returning 2.0% as measured by the MSCI World Ex-Australia Index in AUD. The peak inflation narrative that struggled to gain traction in the summer finally found support in the form of a softerthan-expected October CPI report.
Bullish sentiment intensified into month end as the Fed signaled the possibility of a downshift in hiking pace as early as December, which was perceived as dovish despite a reiteration of "higher interest rates for longer" rhetoric. The Fund outpaced its benchmark during the rally, aided by its high dividend yield exposure and investors' continued preference for value stocks. Absolute return was positive in all sectors, with the largest contributions coming from information technology and Utilities. Return within information technology came almost entirely from semiconductors, which saw outsized returns for the month. A mix of electric and multi utilities holdings contributed the most to return for the utilities sector.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2211.pdfOctober, 2022
Bouncing off deeply depressed sentiment at the end of last month, October saw global equity markets rise strongly. Despite a hotter-than-expected September CPI report and underwhelming earnings from big tech names, markets rose as investors once more began speculating on a curtailing of interest rate hikes. Expected inflation relief from supply chain normalisation and central bank discussions on slowing the pace of tightening were among talking points supporting the bullish move. It was a strong month for the fund, as it managed to outperform the benchmark during the rally.
All sectors contributed positively to absolute returns during the month, with the largest contributions coming from Financials and Health care. The contribution from Financials was carried by a very strong month for banks and insurance firms. Pharmaceutical stocks drove performance within Health care, buoyed largely by one holding that saw shares rise on the announced commercialisation of a new cancer mRNA vaccine.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2210-V.2.pdfSeptember, 2022
Global equities finished the quarter with slightly positive returns, though the quarter saw significant swings in sentiment, beginning with a tech led rally and ending with a decline into quarter end. The early bull run came after June rate hikes remained in-line with expectations, fueling a narrative of dovish pivoting by central banks and igniting risk-on sentiment. In response, monetary policy makers swiftly grounded markets with messaging that elevated rates are here to stay until inflation is curbed, regardless of looming recession risks. Markets took heed, as volatility ruled the quarter from mid-August to quarter end, with equities falling. The Fund was protective on the downside during the second half of the quarter but finished behind due to underperformance during the growth dominated rally in July.
The largest detractors from absolute returns over the quarter came from Health Care and Communication Services. Health care's poor performance was derived largely from two pharmaceutical holdings. Looming litigation around a drug manufactured by both companies put share prices under intense pressure during the quarter. Diversified telecommunications stocks were primarily responsible for communication services' drag on return.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2209.pdfAugust, 2022
The Fund posted a negative return of 2.9% in August. Equities came under pressure again during the month, and the broad market as measured by the MSCI World Index Ex-Australia fell. July's exuberance bled into the early part of the month, as the peak-inflation narrative drove risk-on sentiment in hopes of a dovish policy pivot from central banks. However, markets turned negative when remarks from Fed officials made clear that monetary conditions will continue tightening until inflation is lowered to target levels. The Fund provided a measure of downside protection during the sell-off, as it's done through most downturns this year.
On an absolute basis, most sectors were negative for the month, with the largest drags on return being Health care and Information Technology. Within Information Technology semiconductors were primarily responsible for performance, owing partially to perceived softening of demand in consumer-focused end markets. Pharmaceuticals largely accounted for the negative return in Health care.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2208.pdfJuly, 2022
The Fund posted a return of 3.4% in July.The broader market moved sharply higher, as messaging from the Fed regarding a shift away from front-loaded rate hikes fueled bullish sentiment for investors. Stronger-than-feared earnings, particularly within big tech names, provided further tailwinds for markets.
The Fund’s absolute return was boosted by nearly all sectors providing positive performance, with Information Technology and Industrials providing the largest contributions. Semiconductor holdings accounted for most of the return within Information Technology, benefitting from broad strength in the sector during the month. Return in Industrials came primarily from electrical equipment stocks.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2207.pdfJune, 2022
In very challenging market conditions, the Fund posted a negative return for the quarter, with key positive contributions from Health Care, Consumer Staples and Utilities sectors being offset by Information Technology and Financials. Semiconductor stocks were primarily responsible for challenging performance in Information Technology, as the industry underperformed on reports of weakening consumer demand. European insurance firms accounted for the bulk of Financials' detraction to return, as the sector in the region remains pressured by the ongoing war in Ukraine.
All sectors contributed to relative performance, with the largest contributions coming from Information Technology and Communication Services, Consumer Discretionary and Utilities sectors. A combination of sector allocation and stock selection drove the strong relative returns in Information Technology, with an underweight allocation to the poorly performing sector and exposure to an IT services stock with strong performance driving return, while stock selection fueled outperformance in Communication Services, as exposure to the only positive segment in the sector, diversified telecommunications services, was mainly responsible.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2206.pdfMay, 2022
The Fund posted a return of 1.9% in May while the broader market had a negative month. All sectors except for Consumer Discretionary were positive contributors to the positive absolute return. Energy was the strongest performer on the back of a continued rise in commodity prices and resilient global demand. Utilities and Communication Services were the next biggest contributors, due mostly to a solid month for electric utility stocks and diversified telecommunication names. A multiline retail holding was mainly responsible for the negative performance in Consumer Discretionary, as inflationary supply chain costs remain headwinds for the industry.
On a relative return basis, it was a good month for the Fund, as it outperformed both the broad market benchmark and the MSCI World High Dividend Yield Index. The biggest contributor to relative returns was Information Technology, driven by an underweight exposure to poorly performing technology hardware storage names and strong performance in an IT services stock. Relative performance in Consumer Staples was also strong due to stock selection, primarily within food and staples retailers and beverage stocks
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2204.pdfApril, 2022
The Fund posted a negative return of 2.5% in April. The largest sector contributor to the portfolio’s absolute returns was Consumer Staples. Health Care was the second biggest contributor on the back of several pharmaceutical holdings. Information Technology was the biggest detractor due mostly to poor performance in semiconductor names, which continue to struggle with supply chain issues.
On a relative performance basis, it was another strong month for the Fund as it led the broad market MSCI World benchmark by a wide margin and finished slightly behind the MSCI World High Dividend Index. All sectors were positive contributors to relative performance, with stock selection in Consumer Discretionary and Communication Services names bolstering returns most significantly. Within Consumer Discretionary, having no holdings in internet and direct marketing stocks, the worst performing segment, was the biggest boost to performance. Exposure to select diversified telecommunication services stocks accounted for the contribution from Communication Services
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2204.pdfMarch, 2022
Through a difficult first quarter of the year for equities, the portfolio posted a positive return. Volatility persisted through the quarter, fueled by the arrival of monetary tightening and the onset of war in Ukraine. The Fund showed strong resilience in a rocky market, providing significant downside protection supported by its low volatility exposure and high dividend yield tilt.
Information Technology and Consumer Discretionary investments provided the biggest headwinds to returns for the quarter. Within Information Technology, and poor performance in semiconductor stocks impacted returns the most. Performance in Consumer Discretionary was driven primarily by negative returns in specialty retailers and hotel, restaurant and leisure stocks. On the positive side, Health Care and Materials sectors contributed most to return. A strong quarter for one biotech holding and a pharmaceutical stock accounted for performance in Health Care. An outsized return for an agrochemical stock was the driving force behind Materials' contribution to absolute return.
The global macroeconomic outlook remains challenging. Global economic growth is being pressured by the Russia/Ukraine war, commodity price pressures, and supply chain issues. Inflation has increased in the face of broad commodity price pressure, U.S. labor markets have tightened causing wage growth to accelerate, and housing rents remain strong. Central banks have been forced by inflation to raise rates despite growing uncertainty caused by the war in Ukraine.
Against this backdrop, it is hard to imagine that we will see equity returns benefit from multiple expansions. Multiples for long-duration stocks continue to come under pressure and are unlikely to expand in the near future, while shorter-duration stocks should be resilient in the rising rate environment. Shareholder distributions are expected to be the most reliable, and perhaps most significant component of returns. Companies have accumulated large cash balances which should continue to lead to growing dividends and an ongoing resumption of share buybacks.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Quarterly-Fund-Update-2203.pdfFebruary, 2022
The Fund posted a negative return of 2.0% in February. Financials and Information Technology provided the largest drag on absolute returns, with Financials showing acute sensitivity to the Ukraine situation, as Western sanctions were largely targeted at Russia's financial system. European insurance stocks accounted for the bulk of the sector's negative performance for the strategy. Semiconductor firms were mainly responsible for Information Technology's negative returns. Ukraine is a large supplier of neon gas to the semiconductor industry and while supply stoppage is unlikely to have meaningful effects on the industry as there are alternative suppliers, the current conflict has highlighted recent tensions in the South China Sea. Military action in this region by China or its neighbors would have more immediate and long-term repercussions.
Relative performance was solid for the month, as the Fund finished ahead of the broad market MSCI World ex-Australia benchmark and modestly behind the MSCI World High Dividend Index. Communication Services stocks were the biggest contributors to relative performance, followed by Industrials and Materials. Stock selection in Communication Services drove performance, due mostly to not owning interactive media and services companies which were the worst-performing segment in the sector. Outperformance in Industrials and Materials came from stock selection as well, with relative returns being boosted by exposure to aerospace and defense holdings and an exceptionally strong return in an out of benchmark chemical holding.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GESYH-Monthly-Fund-Update-2202.pdfJanuary, 2022
The Fund posted a return of -0.3% for January. Absolute returns were positive for most sectors, with Energy and Financials providing the largest contributions. Within Energy, the portfolio's oil, gas, and consumable fuel stocks accounted for the positive returns on the back of a continued rise in crude oil prices. Solid returns from insurance companies drove performance in Financials. The largest detractor was Information Technology, driven primarily by weakness in semiconductor stocks. The Fund was ahead of the broad-market MSCI World benchmark by a wide margin for the month and finished slightly ahead of the MSCI World High Dividend Index. All sectors except Real Estate added to relative performance. Health Care was the largest contributor, as stock selection in select pharmaceutical and biotechnology holdings drove performance. Stock selection in Communication Services and Information Technology gave the next largest boosts to return. Communication Services contribution was due to exposure to diversified telecommunication stocks, while performance in Information Technology was driven by stock selection in semiconductors and being underweight software stocks.
Among the largest individual positive contributors to absolute performance were TotalEnergies and British American Tobacco. TotalEnergies is a global energy company that explores and produces oil and gas, refines petroleum products, manufactures petrochemicals, and operates gas stations. It is also growing its presence in generating electricity from renewable sources. Shares outperformed as oil and gas prices moved higher due to supply constraints and sustained global demand despite the surge in Omicron cases. Management is focused on driving cash flow growth from liquified natural gas (LNG) and renewables. TotalEnergies' global scale, strong balance sheet, integrated business model, capital flexibility, and cost discipline allow the company to pay a sustainable dividend through commodity price cycles.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2201.pdfDecember, 2021
The Fund posted a strong positive return of 6.9% for the December quarter. The period was characterised by strong earnings, the emergence of Omicron, and shifting market sentiment around the Fed's messaging on interest rates and inflation. After the sell-off in September, markets were off to the races in October and early November on the back of strong earnings despite the higher interest rate environment. The Fund didn't keep pace for the first half of the quarter, however, once the market pulled back in November and then came back in December, the Fund outperformed as a more hawkish Fed and the prospect of higher interest rates pressured long-duration growth stocks. Against this volatile backdrop, the Fund provided good upside participation.
Nearly all sectors contributed to absolute performance led by Information Technology due to outperformance of several semiconductor, software, and hardware holdings. Within Utilities, the portfolio's electric, gas and multi-utility holdings generated positive returns for the period as defensive stocks did well in the face of a more aggressive Fed. Select pharmaceutical and biotech positions within Healthcare also supported absolute returns. Communication Services was the only detractor due to holdings in diversified telecommunication services companies that underperformed.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2112-2.pdfNovember, 2021
The Fund posted a return of -2.6% for November. For the month, nearly all sectors contributed to absolute performance. Information Technology was the largest contributor mostly due to several semiconductor, hardware and software holdings that outperformed. Strong performance from a mix of electric and gas utilities and a few pharmaceutical holdings within the Healthcare sector also aided returns. Financials was the only detractor, largely due to a handful of bank and insurance holdings that underperformed. On a country basis, the U.S. contributed the most while Germany modestly detracted.
The Fund lagged the broad-market MSCI World benchmark for the month, with the shortfall in relative returns due to being underweight Information Technology, the best performing sector in the benchmark, along with one of our hardware stocks that performed well but is underweight in the portfolio. Stock selection in Consumer Discretionary and Consumer Staples also impacted relative returns. On the positive side, stock selection in Communication Services and an underweight to one of the worst performing sectors helped relative performance due to not owning a couple of entertainment and interactive media companies that underperformed. In terms of countries, stock selection in the U.S. and an overweight to Germany detracted whereas an overweight to Taiwan contributed.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Fund-Hedged-Update-2111-1.pdfOctober, 2021
The Fund posted a return of 2.5% for October, with most sectors detracting from performance on an absolute basis. Communication Services and Consumer Staples were the most notable detractors due to some telecommunications and tobacco holdings that underperformed. On the other hand, Energy was the most notable contributor. In terms of countries, Germany and Japan detracted the most while the U.S. contributed.
The Fund lagged the broad-market MSCI World benchmark for the month, although it outperformed the dividend-paying universe represented by the MSCI World High Dividend Index. Relative returns were attributable to being underweight semiconductor and IT services holdings along with certain large software and hardware stocks that performed well during the month. Stock selection in Consumer Discretionary and being underweight one of the best performing sectors in the benchmark was also a drag on returns. On the positive side, an underweight to Communication Services modestly helped relative performance. On a country basis, stock selection in the U.S. and Canada detracted whereas an underweight to Japan modestly contributed.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2110.pdfSeptember, 2021
The Fund posted a return of -1.3% for the third quarter. The quarter continued to see a push and pull between growth and value along with sensitivity to interest rates and commentary around COVID variants. The market environment was like last quarter with sentiment flip-flopping numerous times.
Almost all sectors contributed to performance on an absolute basis. Good returns for portfolio holdings in Financials, Information Technology and Utilities led to some of the largest contributions on the sector level and were broad-based across industries. On the negative side, Consumer Discretionary slightly detracted due to a mix of positions across subsectors. By country, the U.S. and Canada contributed the most while Korea detracted
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2109.pdfAugust, 2021
The Fund posted a positive return of 1.6% for August. Equity markets continued to move higher in a volatile month despite an increase in new Delta variant cases and widespread concerns about the durability of the market rally. On an absolute basis, most sectors contributed to performance. Financials, one of the best-performing sectors in the month, provided strong performance from select insurance and asset management company holdings. Utilities and Information Technology also helped performance, with Utilities mainly driven by outperformance from certain electric utilities holdings and Information Technology helped mostly by a few of our software and communication equipment positions. On the negative side, Consumer Discretionary was the only detractor due to challenging performance of one of our holdings in the hotel, restaurant and leisure subsector. In terms of countries, the U.S. contributed strongly followed by France and Germany while Singapore detracted.
Performance relative to the broad MSCI World index was hurt by stock selection in Information Technology as a selection of semiconductor-related holdings underperformed. Being underweight one of the best-performing sectors in the benchmark also detracted. Stock selection within Communication Services weighed on relative returns as a result of strong performance from select interactive media and services companies which are outside of the Fund’s investable universe. On the positive side, stock selection in the Real Estate sector contributed as a key REIT holding outperformed. Stock selection within Materials further added to relative returns. By country, stock selection in the U.S. detracted whereas stock selection in France contributed
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2108.pdfJuly, 2021
The Fund posted a positive return of 0.7% for July. Equity markets continued to move higher in a volatile month with the reflation trade remaining under scrutiny and the spread of the Delta variant of Covid-19 affecting investor sentiment despite strong Q2 earnings reports for numerous companies. On an absolute basis, almost all sectors contributed with Utilities adding the most due to strong performance from select regulated utility holdings.
The benchmark U.S. 10-yr Treasury yield fell in the month, as noted above, which provided a tailwind for the utilities, and our Italian utilities gained as their regulator proposed constructive regulatory parameters for the future. Health Care and Information Technology also helped drive performance, with Health Care mainly driven by outperformance from certain pharmaceutical and medical equipment holdings and Information Technology boosted by strong performance of a few semiconductor, software and hardware holdings. On the negative side, Energy detracted as benchmark oil prices fell in response to concerns about continued supply restraints from OPEC+ and worries that COVID flare-ups might hinder the demand recovery. By country, the U.S. contributed strongly followed by Canada and the U.K., and no countries notably detracted.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2107.pdfJune, 2021
The Fund posted a strong positive return of 4.2% for the June quarter. The quarter was broadly characterised by shifting market sentiment around the reopening/reflation and value vs. growth trades. We are happy with the upside participation as the portfolio continued to benefit from a more widespread recovery across global equities but acknowledge that the strategy may lag during strong market rallies.
All sectors added to absolute performance. Robust returns for portfolio holdings in industrials and information technology led to some of the largest contributions at the sector level, as the strategy's air freight and logistics, software and hardware positions performed well. Healthcare also supported absolute returns. By country, the U.S. contributed strongly along with Canada and the United Kingdom. There were no notable detractors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2106-1.pdfMay, 2021
The Fund posted a positive return of 2.3% for May. Equity markets rose despite a volatile month as investors digested more solid corporate earnings reports, accelerating inflation and mixed economic signals. On an absolute basis, nearly all sectors contributed positively to fund performance with financials adding the most due to strong performance from select insurance and bank holdings. Industrials and materials also helped drive performance, with industrials mainly driven by outperformance from our airfreight & logistics holding and materials boosted by our chemical companies. By country, the U.S. contributed strongly followed by Canada and Germany, and no countries notably detracted.
Performance relative to the broad MSCI World index was driven by strong stock selection across multiple sectors. Information technology and consumer discretionary were the strongest contributors, led by both stock selection and also not owning some high-growth companies outside our investable universe, as well as respective underweights. Strong stock selection in a few chemical companies within the materials sector also contributed positively. However, an overweight to utilities modestly detracted though this was nearly offset by strong stock selection. By country, stock selection in the U.S. contributed positively as did stock selection in Canada as well as an overweight. No countries notably detracted.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2105.pdfApril, 2021
The Fund posted a positive return of 1.7% in April. Equity investors continued to be rewarded by the market, reflecting progress with the pandemic and ongoing monetary support. On an absolute basis, nearly all sectors contributed positively with industrials and financials as the strongest contributors. Financial companies remain beneficiaries of the brightening economic outlook, with banks reporting strong earnings. Information technology detracted. By country, the U.S. contributed strongly followed by Canada, and no countries notably detracted.
Performance relative to the broad MSCI World index was helped by stock selection in industrials as some capital goods and transportation holdings outperformed. Detractors from relative returns included stock selection in information technology as a selection of tech companies that the Fund is underweight, or do not own, came back into favour following an ease in market interest rates. Communication services also detracted, due to strong performance of select interactive media and services companies outside of the Fund's investable universe, as did certain insurance holdings within financials. By country, stock selection in the U.S. detracted whereas an underweight to Japan modestly contributed.
Among the largest individual positive contributors to absolute performance were Iron Mountain and United Parcel Service. Iron Mountain provides physical document storage, document retrieval and destruction services, and digital data management services to clients globally. Shares traded higher as the company announced positive developments in the continued build-out of its data center business, including two new leases for its Phoenix expansion project which is 100% powered by renewable energy. We believe Iron Mountain is well-positioned with a strong management team and a globally recognised brand. The legacy document storage business is stable and very cash generative, while the data center business offers long-term growth potential. The company generates significant free cash flow and is committed to paying an attractive dividend and reducing leverage. United Parcel Service (UPS) is the world's largest package delivery company. Shares outperformed on first quarter results that showed persistent growth in e-commerce delivery volume outside of its peak season and the ability of the company to leverage its network to generate higher profitability. The company pays an attractive, growing dividend and regularly repurchases shares.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Update-2104.pdfMarch, 2021
The portfolio Fund a strong positive return of 7.8% for the first quarter. It was a bumpy quarter, but the portfolio continued to benefit from a more widespread recovery across global equities as the wide divergence between high-dividend and growth/momentum stocks continued to show signs of abating. All sectors contributed to performance on an absolute basis. Financials was the strongest contributor, as the strategy's exposure to banks benefitted from a steeper yield curve. While no sectors detracted, health care and utilities lagged the strong contribution by other sectors. By country, the U.S. contributed strongly along with Canada and Germany while Switzerland modestly detracted
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Quarterly-Update-Q1-2021.pdfFebruary, 2021
The Fund posted a positive return of 2.6% for February, as portfolio holdings continued to benefit from the vaccine rollout during February. On an absolute basis, financials was the strongest contributor, as rising interest rates lifted the outlook for the sector. Materials and energy also contributed as the Fund’s exposure to the chemicals and oil & gas industries helped. Utilities and health care were the most notable detractors. By country, the U.S. and Germany contributed while the U.K. detracted.
Relative performance was helped by strong stock selection in consumer discretionary, materials and information technology. However, stock selection in communication services detracted from relative results, as traditional telecommunications firms, which the strategy tends to be overweight, had challenged performance. An overweight to utilities, which was the worst-performing sector in the benchmark, also detracted, though this effect was modestly offset by stock selection in the sector. By country, strong stock selection in the U.S. contributed positively while stock selection in the U.K. detracted.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Monthly-Update-2102.pdfJanuary, 2021
The Fund posted a decline of 1.2% for January. The year started off strong, but markets declined after a sudden increase in volatility towards the end of the month. On an absolute basis, consumer staples, financials and utilities were the most notable detractors. Information technology was the strongest contributor, followed by real estate. By country, the U.S. detracted followed by Germany, while Taiwan positively contributed.
Relative performance was hurt by stock selection in health care, utilities and financials. On the positive side, strong stock selection in information technology boosted results, driven by select semiconductor and technology hardware companies. Stock selection in real estate also contributed positively. By country, exposure to Taiwan and stock selection in France contributed positively while stock selection in Germany detracted.
Among the largest individual positive contributors to absolute performance were Taiwan Semiconductor (TSMC) and Iron Mountain. TSMC is one of the largest semiconductor manufacturers in the world. Shares rose on strong capital expenditure plans by semiconductor manufacturers. End-market demand for logic has been strong, supporting continued need for outsourced foundry services. As the world's foundry, this will support continued demand for TSMC's services and extend pricing power. The company pays a well-covered dividend. Iron Mountain provides physical document storage, document retrieval and destruction services and digital data management services to clients globally. Shares traded higher in the month alongside a broader market rally in certain value-oriented names. There was no material company news. The company is wellpositioned with a globally recognised brand, generates significant free cash flow and is committed to paying an attractive dividend and reducing leverage.
Among the largest individual detractors were Munich Reinsurance and Las Vegas Sands. Munich Re is a global financial services company engaged in reinsurance and primary insurance across both life and P&C market segments. Shares traded lower with insurance sector peers over the month on no material company news, with headlines about the emergence of new COVID variants and logistical hiccups in vaccine distribution eroding some of the gains from a strong Q4 rally. We believe Munich Re is a high quality, defensive stock with a very strong regulatory capital position. The company pays an attractive, growing dividend and regularly repurchases shares. We expect the company to resume regular share repurchases in coming months as COVID-19 vaccines are rolled out and regulatory restrictions on shareholder distributions are relaxed. Las Vegas Sands is the world's largest developer, owner and operator of integrated casino resorts. Shares underperformed on the passing of the company's founder and CEO, Sheldon Adelson, and still weak visitation to the company's integrated resorts due to the continuing impacts of the COVID-19 pandemic and related travel restrictions. Despite Mr. Adelson's passing, management remains committed to the founder's strategy of producing strong returns by reinvesting in current markets and new development opportunities while also returning cash to shareholders through dividends and share repurchases.
The Adelson family, which owns a controlling stake in the company, remains supportive. We believe Las Vegas Sands' strong balance sheet will support it through this challenging period, demand should recover over time, and the company will resume an attractive dividend policy once business conditions stabilise. No new positions were initiated during the period. Atlas Copco was sold during the period in favour of other opportunities.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Monthly-Update-2101.pdfDecember, 2020
The Fund posted a positive return of 2.0% for December. Stocks continued to climb from the vaccine boost in November though ended the month down in Australian dollars. On an absolute basis, most sectors were negative with utilities, health care and communication services the largest detractors. Information technology was the only positive contributor. By country, the U.S. detracted the most followed by France, while Korea modestly contributed positively.
In relative terms, the Fund’s focus on dividend-paying stocks was under pressure during the month as confidence about a recovery led investors to focus on growth and cyclical stocks as opposed to yield. Relative performance was hurt by stock selection in utilities and an overweight to the sector, as utilities was the weakest sector in the benchmark. Stock selection in communication services and consumer discretionary also detracted. On the positive side, strong stock selection in information technology boosted results, driven by select semiconductor and technology hardware companies. Consumer staples also contributed, partially helped by tobacco holdings as the industry outperformed for the month. By country, modest exposure to Korea and Taiwan contributed positively while stock selection in the U.S. and the U.K. detracted.
Among the largest individual positive contributors to absolute performance were Apple and Phillips 66. Apple outperformed on prospects for additional differentiation with the launch of its M1 processor for the MacBook. There were also rumours of the launch of an Apple car platform although nothing has been corroborated by the company. Apple returns cash to shareholders through dividends and share repurchases. Phillips 66 is an integrated midstream and downstream energy company that transports, refines and markets crude oil and related products. It also produces petrochemicals through CPChem, a 50/50 joint venture with Chevron. Shares outperformed following the November rally as investors gained confidence in demand recovery with the vaccine rollout.
The company also announced a lower 2021 capital budget and reaffirmed its commitment to a secure, competitive, and growing dividend. Management remains focused on generating cash flows from the market-leading refining, chemicals and marketing businesses, as well as the mostly fee-based midstream operations. Cash flow growth is driven by greenfield and brownfield projects that increase production volumes and by cost controls that improve margins. Phillips 66 returns cash to shareholders via an attractive dividend.
Among the largest individual detractors were Verizon and Entergy. Verizon underperformed as investors focused on the increasing price of the C-Band spectrum auction which has yet to conclude but has already exceeded estimates. The ability to fund this purchase is not in doubt but does reduce the balance sheet improvement accomplished since closing the purchase of Vodafone's stake in the company. The debt should be more than manageable, and the company benefits from what we believe will be steadier pricing based on industry consolidation.
Three similar sized players provides the industry greater ability to monetize the value it brings to consumers. Verizon pays a well-covered dividend and is progressing on its debt reduction plans. Entergy underperformed along with its utility peers as the U.S. election outcome and the outlook for the Georgia senate race reduced the likelihood of a tax hike that could potentially benefit the sector in relative performance.
A disappointing rate case outcome in Arkansas, one of the four states the company operates in, and positive vaccine news further contributed to the underperformance as recovery stocks rallied. The company remains on track to exit its unregulated merchant power generation businesses and to become a fully regulated utility company. Management is focused on growing its regulated rate bases and delivering regulated earnings growth, which gives us confidence in Entergy's ability to sustain and grow its attractive dividend.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Monthly-Update-2012.pdfNovember, 2020
The Fund posted a substantial gain of 11.2% during November, as markets celebrated the removal of some of the election uncertainty and optimism surged following promising news about the Moderna and Pfizer coronavirus vaccines. On an absolute basis, nearly all sectors were positive while financials and information technology were the strongest contributors. Utilities was the only negative contributor. Favourable news regarding COVID-19 vaccine developments provided a tailwind for numerous sectors, including energy, materials and financials, which generated solid returns while strength in information technology continued. By country, the U.S. contributed the most followed by Germany and France, while there were no notable detractors. In relative terms, performance was supported by strong stock selection in materials, health care, information technology and financials. Holdings within the chemicals and insurance industries notably drove the stock selection for materials and financials, respectively.
An overweight to energy further helped, as the vaccine news indicated an end to the economic lockdowns may be in sight and demand for oil may return to more normal levels. Utilities was the largest detractor, as both the Fund’s overweight and stock selection dragged. By country, Germany and France contributed positively while stock selection in the U.K. and the U.S. detracted.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Monthly-Update-2011.pdfOctober, 2020
• Income generation from global equities, paid quarterly • A diversified portfolio of 90-120 global companies, including many household names • Provides diversification across assets and income sources • Benchmark unaware, low turnover (av.20% p.a.) • Fund’s holdings have history of increasing dividends • Consistently delivers significant downside protection
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Monthly-Update-2009.pdfSeptember, 2020
The Fund generated a return of -1.7% during September. The broader market turned as fears about the coronavirus pandemic resurfaced and the focus turned to the upcoming U.S. presidential election. On an absolute basis, utilities, materials and consumer discretionary stood out with positive contributions. Energy and financials were the largest detractors. By country, the U.S. followed by the U.K. contributed, while Germany detracted. The portfolio provided downside protection as the month showed weakness in growth/momentum stocks that had rallied strongly since March's lows. The utilities sector was one of the strongest contributors to relative returns overall, driven by an overweight to the defensive sector as well as stock selection. Strong stock selection in information technology also helped, particularly lifted by selection in technology hardware and semiconductor companies. Stock selection in consumer discretionary and communication services further contributed. By country, stock selection in the U.S. followed by the U.K. and Canada contributed while Japan detracted.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Epoch-Global-Equity-Shareholder-Yield-Hedged-Fund-Monthly-Update-2009.pdfticker: GSF0001AU
commentary_block: Array
factsheet_url:
https://www.gsfm.com.au/unlisted-funds/epoch-global-equity-shareholder-yield-hedged/
Monthly Fund Update, first 2 paragraphs enough
release_schedule: Monthly
fund_features:
The Epoch Global Equity Shareholder Yield Funds pursue attractive total returns with above-average levels of income by investing in a diversified portfolio of global companies with strong and growing free cash flow.
- A diversified portfolio of 90-120 global companies with attractive income and capital growth potential
- Risk management is integrated throughout the investment process and seeks to achieve the least possible volatility for the return characteristics sought
- Complements other global equity strategies that primarily focus on traditional valuation methods and capital appreciation
- Suitable for investors seeking income; generally provides a tax-effective income (yield + low turnover)
- Highly regarded by research houses
manager_contact_details: Array
asset_class: Foreign Equity
asset_category: Currency Hedged
peer_benchmark: Foreign Equity - Currency Hedged Index
broad_market_index: Developed -World Index
structure: Managed Fund