September, 2023
Global equity markets were generally subdued in September as investor sentiment remained cautious towards recessionary risks. The exceptions being Japan (up slightly) and the UK which rallied modestly in local currency terms. The PAN-Tribal Global Equity Fund fell by 4.22% (net of fees) in Australian dollar terms whilst the MSCI ACWI (in AUD) fell by 3.80% over the month.
Security selection detracted from relative performance of the Fund during September. Stock selection was positive within the Information Technology and Materials sectors with HollySys (China) and Teck Resources (Canada), respectively, the largest relative contributors. However this was more than offset by underperformance within the Consumer Discretionary and Financials sectors where holdings such as Delivery Hero (Germany), MGM Resorts (US) and AIA Group (Hong Kong) were amongst the main laggards.
Regional allocation was flat for the month, whilst sector allocation boosted relative returns. The Fund’s overweight to the Financials sector contributed given the sector was the second best performing MSCI sector during September (despite negative returns in Australian dollar terms). The Fund was underweight both the worst performing sector (Information Technology) and the best performing sector (Energy) which negated the impact of either.
With regard to individual company contributions, Danske Bank (Denmark, Financials) and Meta (US, Communication Services) contributed positively in addition to companies mentioned above; whilst Amazon (US, Consumer Discretionary) and Julius Baer (Switzerland, Financials) were amongst the main detractors not already mentioned.
KE Holdings is a newly purchased company in the Fund. It is the parent entity of Beike, a leading Chinese platform (both online and offline) for housing transactions and services.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/NPSCF_FR_202309-1.pdfAugust, 2023
Softer economic data out of China combined with renewed concerns about the Chinese property sector gave rise to heightened volatility across global markets over August. Emerging markets underperformed, down by almost an additional 4% for the month (in USD terms) versus their developed market counterparts. Against this backdrop the PAN-Tribal Global Equity Fund declined by 2.99% in Australian dollar terms (net of fees), with rolling 1-year performance to end-August of 22.63% (net of fees).
The Davis Investment Discipline is underpinned by fundamental research to identify and purchase durable businesses with expanding earnings at value prices and hold them for the long term. Stock selection is key to this process and was also the main determinant of the Fund’s performance over August.
Ping An Insurance (China) and Capital One Financial (US) were the main companies contributing to underperformance within the Financials sector; with JD.com (China) and Prosus (Netherlands) underperformers within the Consumer Discretionary sector. Stock selection within the Communication Services sector also detracted over the month, albeit to a lesser extent.
Sector allocation detracted slightly from relative performance over the month. The Energy sector was the best performing MSCI sector during August (continuing its strong run since July) and as such the Fund’s underweight detracted, as did the overweight positioning in Financials. Furthermore the underweight to Health Care detracted marginally. At a regional level, the Fund’s overweight to Emerging Markets dragged down relative performance, due mostly to the overweight positioning in China. Both sector and regional allocations result from bottom-up individual company exposures in the Fund, rather than top-down macro views.
Amongst the individual stocks contributing the most in absolute terms over the month were Amazon (Consumer Discretionary, US), HollySys (Information Technology, China), Berkshire Hathaway (Financials, US) and Viatris (Health Care, US). The main laggards have previously been mentioned.
There were no new companies purchased during August, whilst Intel (Information Technology, US) was the only position exited.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2308-PTGEF-Monthly.pdfJuly, 2023
During July, global equity markets continued the upward trajectory that has been characteristic of the calendar year to date. The MSCI ACWI (in AUD) rose 2.40% over the month as investors took confidence from inflation and GDP data across developed markets that suggested a softer landing for economies than had previously been anticipated. The PAN-Tribal Global Equity Fund returned 5.64% (net of fees) during July, outperforming the MSCI ACWI (in AUD) by over 3%.
In keeping with the bottom-up, active, stock picking investment philosophy of Davis Advisors, the main driver of the Fund’s outperformance over the month was security selection. Chinese holdings JD.com and Meituan were among the companies driving strong stock selection within the Consumer Discretionary sector. Likewise Ping An Insurance (China) and Julius Baer (Switzerland) outperformed within the Financials sector, whilst the only sector with marginally negative stock selection was Information Technology.
Sector allocation also contributed to relative outperformance of the Fund. The overweight position to Financials bolstered returns moderately, whilst the portfolio’s overweight to Communication Services, and underweight to both Health Care and Information Technology also contributed albeit to a lesser extent. Detracting slightly from sector allocation was the underweight position in Energy which was the best performing MSCI sector over July. At a regional level, emerging markets outperformed developed markets and this was evident in the Fund’s performance with the overweight to China contributing significantly.
At an individual stock level (in addition to companies already mentioned) the Fund’s absolute returns benefitted from its holding in Meta (Communication Services, US) as well as additional Financials holdings in DBS Group (Singapore) and Wells Fargo (US). There were only five holdings in the portfolio that were down in absolute terms over the month, with the main laggards of these being Liberty Media (Communication Services, US), AIA (Financials, Hong Kong) and HollySys (Information Technology, China).
MGM Resorts International (Consumer Discretionary, US) was purchased as a new holding in the Fund over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2307-PTGEF-Monthly.pdfJune, 2023
Global equity markets rallied across the board during the month of June, with the MSCI ACWI (in AUD) delivering a positive return of 2.87%. The PAN-Tribal Global Equity Fund benefitted from strong stock selection returning 5.09% over the month (net of fees), outperforming the MSCI AWCI by 2.22%. This takes performance of the Fund over the 2022/23 financial year to 20.92% (net of fees) in absolute terms.
The Davis Investment Discipline has its foundations in fundamentals-based, bottom-up research. We see this philosophy reflected in the attribution data with the key driver of relative performance over the month of June being stock selection. Stock selection was strongest within the Communication Services sector with Meta (US) being the largest contributor to relative return. Strong selection was also seen within the Financials, Healthcare and Industrials sectors, with Danske Bank (Denmark), Cigna (US) and Owens Corning (US), respectively, all performing well.
At the asset allocation level, sector allocation contributed somewhat to relative performance over the month, however this was more than offset by regional allocation, noting that both sector and regional positioning are a direct outcome of the individual holdings within the portfolio, with neither being determined by top-down macro views. At the sector level, the Fund’s overweight to the Consumer Discretionary sector was positive, as was the underweight positioning to the Health Care and Consumer Staples sectors.
Weighing on relative performance was the underweight to Industrials and the overweight to Communication Services. From a regional standpoint, Asia ex-Japan underperformed US and European equity markets during June, and as such the Fund’s overweight exposures to China, Singapore and South Korea all contributed in roughly equal parts to relative underperformance at a regional level.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2306-PTGEF-Monthly-updated.pdfMay, 2023
Global economic data was mixed over the month of May. Labour market data was positive throughout the US, UK & Europe with low unemployment and steady wages growth, however all three economies also reported data signalling a contraction in manufacturing activity. Against this mixed backdrop the MSCI ACWI (in AUD) gained 1.02% over the period. The PANTribal Global Equity Fund was slightly down by 0.45% (net of fees) over May with stock selection the main detractor from relative performance.
Lagging performance from both Meituan (China) and Prosus (Netherlands) drove relative underperformance from a stock selection point of view within the Consumer Discretionary sector during the month. Also weighing on performance was stock selection within the Financials and Materials sectors driven by companies such as Julius Baer (Switzerland) and Teck Resources (Canada), respectively. Although not a direct holding in the portfolio, the failure of First Republic Bank in the US continued to weigh on banking stocks more broadly and contributed to heightened volatility across the Financials sector. Positively, strong performance from US companies Meta (Facebook) and Alphabet (Google) contributed to outperformance within the Communication Services sector.
Sector allocation was slightly negative over May. The Fund’s underweight positioning to the Consumer Staples, Energy and Healthcare sectors contributed to relative performance, as did the overweight to Communication Services. However, this was offset by the overweight to Financials and underweight to Information Technology, the latter being the strongest performing MSCI sector during the month. From a regional perspective the Fund’s exposure to emerging markets also weighed on relative performance.
Amongst the top contributors to the Fund’s absolute performance over the month (in addition to companies mentioned already) were Amazon (US, Consumer Discretionary), Capital One Financial (US, Financials) and Samsung (Korea, Information Technology). Conversely, Financials holdings Ping An Insurance (China), DBS Group (Singapore) and AIA (Hong Kong) weighed on the Fund’s returns.
There were no new positions established in the Fund during May, nor positions exited.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2305-PTGEF-Monthly.pdfApril, 2023
The MSCI ACWI (in AUD) returned 2.80% over the month of April with global equity markets continuing the upward trajectory they have enjoyed calendar year to date. Economic data pointed to growth ahead of expectations in the US, UK & Europe, and Q1 GDP data out of China was also stronger than anticipated. The PAN-Tribal Global Equity Fund delivered a return of 3.93% (net of fees), outperforming the MSCI ACWI by 1.13%.
The ‘Davis Investment Discipline’ focuses on bottom-up stock selection and seeks to purchase durable businesses with expanding earnings at value prices and to hold these for the long term. In keeping with this discipline, the driver of outperformance during the month can be attributed to stock selection. Sector allocation was neutral whilst regional allocation detracted (noting that sector and regional allocations are direct consequences of each individual stock holding). Strong stock selection was observed in each of the Communication Services, Financials and Materials sectors with Meta (US), Ping An Insurance (China) and Teck Resources (Canada), respectively, key contributors. Conversely JD.com (China) underperformed, weighing down stock selection within the Consumer Discretionary sector.
With regard to sector allocation the Fund’s overweight to Financials and underweight to Information Technology contributed to relative performance. However, this was offset by underweights to Health Care, Energy and Consumer Staples, and the overweight to Consumer Discretionary, all of which combined to detract from relative returns.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2304-PTGEF-Monthly.pdfMarch, 2023
Performance of global equities surprised on the upside over the March quarter, despite the ongoing conflict in Ukraine, US-China tensions, and the collapse of Silicon Valley Bank (SVB) which placed downward pressure on US and European financial stocks in the latter part of the quarter (noting that the Fund did not have any exposure to SVB). The PAN-Tribal Global Equity Fund returned 6.77% (net of fees) over the quarter, whilst the MSCI ACWI returned 8.65% in Australian dollar terms. Over the rolling 12 months, the Fund finished 4.25% (net of fees) ahead of the index.
In line with the active, bottom-up investment discipline of Davis Advisors, stock selection was the predominant detractor from the Fund’s relative underperformance over the quarter. Sector allocation also detracted slightly whilst regional allocation was broadly flat. Strong stock selection was seen within the Communication Services sector with Meta (US) the standout performer. However, this was offset by relative underperformance within the Consumer Discretionary sector where JD.com (China), Delivery Hero (Germany) and Meituan (China) all underperformed. Stock selection also detracted, albeit to a lesser extent, within the Health Care and Information Technology sectors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2303-PTGEF-Quarterly.pdfFebruary, 2023
After outperforming strongly in January, the PAN-Tribal Global Equity Fund consolidated some of its previous gains to return negative 0.38% in February in what was a more subdued month for global equities. The MSCI ACWI (in AUD) returned 1.50%. While the US Federal Reserve increased interest rates over the month, such an increase was widely anticipated by the market and therefore failed to surprise investors.
Stock selection was strong within the Communication Services sector over the month led by Meta (US) and iQiyi (China), however, this was more than offset by underperformance within the Consumer Discretionary sector.
Neither JD.Com, China’s largest online retailer, nor Delivery Hero, a large European online food delivery service were immune to the protracted downward pressure on global consumer discretionary spending with investors selling off both stocks sharply.
Sector allocation detracted slightly from relative performance during February whilst regional positioning detracted more markedly, with the overweight to emerging markets (notably via China) the largest underperformer. It’s important to recall that both sector and regional positioning within the Fund is a direct output of the bottom-up stock selection process.
The Fund exited its position in Alibaba during February, whilst there were no new purchases over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2302-PTGEF-Monthly.pdfJanuary, 2023
Global equity markets commenced the 2023 calendar year strongly, with the MSCI ACWI in Australian dollars returning 3.14% for the month of January.
The PAN-Tribal Global Equity Fund returned 8.23% (net of fees) over the same period, outperforming the MSCI ACWI by over 5%.
The strong relative returns over January were driven roughly in equal parts by stock selection and sector allocation, with regional allocation also contributing modestly. It’s important to reiterate that the Davis Investment Discipline is founded on bottom-up stock selection, and as such all sector and regional positioning within the Fund is derived from the underlying allocation to each individual company. At a stock level, relative outperformance was greatest within the Financials and Communication Services sectors with US companies such as Capital One Financial and Meta (Facebook), respectively, leading the way. Notably, stock selection was positive within all sectors for the month.
The Fund’s overweight to the Consumer Discretionary sector was the largest relative contributor from a sector point of view, followed by the underweight to Health Care. The contributions from the underweight to Consumer Staples and overweight to Communication Services were also meaningful, whilst the only relative detractor of note at a sector level was the underweight to Information Technology. From a regional standpoint, the overweight exposure to emerging markets, namely China, was positive over January, aided by the quicker than anticipated end to China’s Covid-zero policy.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2301-PTGEF-Monthly.pdfDecember, 2022
The PAN-Tribal Global Equity Fund outperformed the MSCI ACWI (in AUD) over December. Although the Fund was down by 2.33% (net of fees) for the month, this was 2.80% above the MSCI ACWI return of negative 5.13%. In what has been a challenging environment globally over the past twelve months (in Australian dollar terms the MSCI ACWI had only three months of positive returns), it is pleasing that the Fund has been able to close out the calendar year 2.89% ahead of the benchmark index.
Almost all of the Fund’s relative outperformance over the month of December can be ascribed to strong stock selection, in line with the fundamental, research-driven approach to stock picking embedded in the Davis Investment Discipline. Stock selection was particularly strong within Consumer Discretionary and Financials with companies such as Prosus (Netherlands) and Danske Bank (Denmark), respectively, the strongest relative contributors in these sectors.
Sector allocation was a slight detractor from relative performance for December. The Fund’s overweight to Financials and underweight to Information Technology both contributed to performance, however, were overshadowed by the overweight positioning in Consumer Discretionary, and underweight positions in Consumer Staples, Health Care, Industrials and Utilities, all of which detracted from relative performance. Regional positioning bolstered performance primarily through the overweight position in China. The Fund’s sector and regional allocations are a direct output of the individual stock positions held within the Fund, which is an important differentiator to taking a top-down macro approach to sector and regional positioning.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2212-PTGEF-Monthly-1.pdfNovember, 2022
Global equity markets delivered a positive month in November, with the MSCI ACWI (in AUD) returning 2.89%. Investor sentiment was buoyed by improving economic expectations, primarily driven by lower than anticipated inflationary data out of the US. China also rebounded strongly with signs that policy makers may be entertaining relaxation of the country’s zero-Covid policy. Against this backdrop the PAN-Tribal Global Equity Fund performed very strongly, returning close to 11% (net of fees) during the month and outperforming the MSCI ACWI by 8.06%.
In keeping with Davis Advisors’ bottom-up, active investment philosophy, stock selection was responsible for almost all of the relative outperformance of the Fund over November. Stock selection was particularly strong within the Consumer Discretionary and Financials sectors with Chinese companies such as JD.com and Ping An Insurance, respectively, leading the way. The Communication Services, Information Technology and Materials sectors also all benefitted from positive stock selection.
Sector allocation contributed modestly to relative performance. The Fund’s overweight to Financials was beneficial, as were the underweight positions to both the Health Care and Energy sectors. Detracting only slightly was the Fund’s underweight to Industrials. From a regional perspective, the overweight to emerging markets (notably China) bolstered performance, with China reversing its underperformance from October to be the best performing MSCI country over the month of November. It’s important to note that the sector and regional positioning of the portfolio is premised upon the weighting of each individual stock in the portfolio.
With respect of top/bottom individual stocks over the month, Prosus (Consumer Discretionary, Netherlands), Meta (Communication Services, US) and AIA (Financials, Hong Kong) contributed strongly (in addition to Ping An Insurance and JD.com previously mentioned) whilst US companies Capital One Financial (Financials), Amazon (Consumer Discretionary) and Darling Ingredients (Consumer Staples) were among the main laggards.
Vimeo (US video hosting and sharing platform provider) was exited during the month of November, and there were no new positions entered into.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2211-PTGEF-Monthly.pdfOctober, 2022
The latter half of October saw strength in global equity markets, and the MSCI ACWI (in AUD) finished the month up 6.62%. There was a marked divide between the performance of US / European equities (strongly positive) and Asia ex-Japan equities (negative), with China in particular a significant laggard. The PAN-Tribal Global Equity Fund was marginally negative for the month, down 0.35%.
Stock selection, sector allocation and regional allocation all detracted from the relative performance of the Fund during October, noting of course that sector and regional positioning result directly from the bottom-up, stock picking approach synonymous with Davis Advisors’ active investment philosophy. Stock selection was weakest within the Consumer Discretionary and Communication Services sectors with companies such as JD.com (China) and Meta (US) notable underperformers. Positive stock selection was apparent within the Health Care sector with both Cigna (US) and Viatris (US) performing well.
At the sector level, Energy was the strongest performing MSCI sector over the month, and thus the Fund’s underweight position was detrimental for relative performance, as was the Fund’s overweight to the Consumer Discretionary sector. Conversely, the overweight to the Financials sector was beneficial for the Fund. From a regional standpoint the Fund’s overweight to emerging markets detracted, driven almost entirely by the overweight to China. China was down over 16% for the month (in AUD terms) amidst heightened volatility surrounding the 20th Party Congress and party leadership changes.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2210-PTGEF-Monthly.pdfSeptember, 2022
Global equity markets declined over September, with the MSCI ACWI (in AUD) falling by 3.58%. Performance for the PAN-Tribal Global Equity Fund was also negative with the Fund down 4.55% (net of fees), underperforming the benchmark by just shy of 1%.
Sector allocation contributed to relative performance of the Fund over the month, however this was more than offset by security selection, which detracted from relative performance. Within the Consumer Discretionary sector, Chinese companies such as JD.com, Alibaba and Meituan all weighed on performance, as did Prosus (Netherlands). Security selection within the Communication Services and Health Care sectors also detracted with Meta/ Facebook (US) and Viatris (US), respectively, among the main laggards. Security selection was positive within the Information Technology sector with HollySys Automation (China) leading the way.
With regard to sector allocation, the Fund’s overweight positioning in Financials was a sound contributor as was the underweight to Information Technology (the second worst performing MSCI sector over the month). The underweight to Health Care, however, was detrimental to relative performance, as was the overweight to Communication Services and underweight to Consumer Staples (albeit the latter two to a lesser extent). The Fund’s regional positioning, namely the overweight to Emerging Markets / China, weighed on relative performance. It’s important to remember that sector and regional positioning are a direct output of the bottom-up, stock picking approach synonymous with the Davis Investment Discipline.
At an individual company level, DBS Group (Singapore, Financials) was a notable contributor to absolute performance during September (in addition to HollySys Automation already mentioned), as was Cigna (US, Health Care). Ping An Insurance (China, Financials) and Samsung (Korea, Information Technology) were amongst the additional companies detracting from absolute performance.
There were no additions to, nor exits from, the portfolio over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2209-PTGEF-Monthly.pdfAugust, 2022
The PAN-Tribal Global Equity Fund delivered positive returns of 0.56% (net of fees) during August, outperforming the MSCI ACWI (in AUD) by just over 2.5% for the month.
In keeping with Davis Advisors’ bottom-up, fundamental research driven philosophy, relative performance over the month can be ascribed mostly to stock selection. Both sector allocation and regional allocation also contributed to outperformance, albeit in more modest increments. Stock selection was strongest in the Consumer Discretionary, Health Care and Materials sectors with JD.com (China), Cigna (US) and Teck Resources (Canada), respectively, leading the way. Underperformance of US firm Owens Corning (insulation, roofing and fibreglass composite manufacturer) was the main detractor from performance within the Industrials sector, the only sector with negative stock selection for August.
At the sector level, the Fund’s overweight to Financials was the greatest contributor, whilst underweight positions to both Health Care and Information Technology (the worst performing MSCI sectors in AUD terms over August) also contributed to relative outperformance. The Energy sector was the strongest performer during the month, as ongoing conflict in the Ukraine continues to impact on energy supplies though to Western Europe. As such, the Fund’s underweight position to this sector detracted from relative performance. Regional positioning was positive for relative performance, with the Fund’s overweight to Emerging Markets boosting performance, namely it’s overweight positioning in China.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2208-PTGEF-Monthly-1.pdfJuly, 2022
The PAN-Tribal Global Equity Fund underperformed the MSCI ACWI (in AUD) over the month of July, with the Fund returning 0.49% (net of fees) whilst the index returned 5.43%. The main driver of underperformance during July was individual stock selection. Chinese companies Alibaba and JD.com were the largest detractors within the Consumer Discretionary sector which overall had the weakest stock selection. Selection within the Financials and Information Technology sectors also dragged on relative performance with Ping An Insurance (China) and Intel (US), respectively, among the poorer performers. Stock selection was marginally positive within the Industrials and Consumer Staples sectors.
With regard to sector allocation, this detracted from relative performance over the month, albeit marginally. The Fund’s overweight to the Consumer Discretionary sector was the largest contributor, with the underweights to Consumer Staples and Health Care also contributing to a lesser extent. However, this was offset by the Fund’s overweight to Financials and underweight to Information Technology, both of which detracted from relative performance. The Fund’s regional positioning, namely the overweight to Emerging Markets / China, weighed on relative performance with China being the worst performing MSCI Country over the month in Australian dollar terms. At an individual company level, Wells Fargo (US, Financials), Amazon (US, Consumer Discretionary), Julius Baer (Switzerland, Financials) and Delivery Hero (Germany, Consumer Discretionary) were among the strongest
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2207-PTGEF-Monthly.pdfJune, 2022
June 2022 saw the PAN-Tribal Global Equity Fund deliver robust relative performance in comparison to the MSCI ACWI, albeit being slightly down in absolute terms. Over the month the Fund declined 0.96% (net of fees), approximately 3.51% ahead of the MSCI ACWI (in AUD) which was down by 4.47% over the same period.
The ‘Davis Investment Discipline’ underpinning the PAN-Tribal Global Equity Fund is governed by fundamentals-based, bottom-up research. Consistent with this philosophy, the driver of performance during June was almost entirely stock selection. Stock selection was particularly strong within the Consumer Discretionary sector, with companies such as Prosus (Netherlands), Alibaba (China) and JD.com (China) leading the way. Companies within the Financials sector also contributed strongly to relative performance, notably Ping An Insurance (China) and AIA Group (Hong Kong). The weakest stock selection was within Information Technology where Applied Materials (US) and Samsung (Korea) lagged.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2206-PTGEF-Monthly.pdfMay, 2022
The PAN-Tribal Global Equity Fund benefitted from strong stock selection over the month of May, resulting in a return of +0.76% (net of fees). This was 1.58% ahead of the MSCI ACWI which was down by 0.82% in Australian dollar terms. With regards to stock selection, the Fund’s holdings of US companies Viatris and Cigna contributed significantly within the Health Care sector. Strong stock selection was additionally evident within the Consumer Discretionary sector with Meituan (China) and Prosus (Netherlands) among the largest relative contributors. Stock selection was also positive within the Information Technology sector, albeit to a lesser extent. Financials and Communication Services were the sectors where stock selection detracted from relative performance over the month.
Sector allocation was broadly flat to marginally positive over May. The Fund’s underweight to Energy (the best performing MSCI sector over the month), and overweight to Consumer Discretionary, both weighed on relative performance, however this was offset by the overweight positioning in Financials. Regional positioning detracted slightly over the month, noting that both sector and regional positioning are a direct product of Davis Advisors’ bottom-up, stock-picking investment approach.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2205-PTGEF-Monthly.pdfApril, 2022
The MSCI ACWI (in AUD) declined by 2.79% over the month of April, as investor sentiment was dampened by a number of factors including geopolitical concerns surrounding the ongoing conflict in Ukraine, COVID lockdowns in China, and the prospect of inflationary pressures and rising interest rates. Against this backdrop, the PAN-Tribal Global Equity Fund declined by 2.66% (net of fees), slightly outperforming the MSCI ACWI. Throughout the month, the Fund benefitted from strong stock selection bolstering relative returns, whilst sector allocation overall detracted from performance. It’s important that sector allocation is contextualised as a direct output of the active, bottom-up investment approach employed by Davis Advisors.
Stock selection was strongest within the Consumer Discretionary, Information Technology and Health Care sectors with companies such as JD.com (China), Clear Secure (US) and Cigna Corporation (US), respectively, among the outperformers. All other sectors enjoyed positive stock selection, with the exception of marginal underperformance within the Communication Services and Consumer Staples where US companies Alphabet and Darling Ingredients, respectively, were the main laggards.
The Fund’s underweight to Information Technology was beneficial at the sector level as the sector represented the second worst performing MSCI sector during April. The remainder of the Fund’s sector positions, however, all detracted slightly from performance. Overweight positioning in Communicatio
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2204-PTGEF-Monthly.pdfMarch, 2022
Global equity markets strengthened somewhat during March, however a stronger Australian dollar saw the MSCI ACWI decline by 1.28% in Australian dollar terms over the month. The performance of the PANTribal Global Equity Fund lagged on a relative basis, finishing the month down by 6.12%.
Consistent with Davis Advisors’ fundamental, bottom-up, stock-picking process, stock selection was the key driver of relative underperformance over the month. Stock selection detracted the most within the Consumer Discretionary sector as holdings such as JD.com (China), Prosus (Netherlands) and Coupang (South Korea) underperformed. Additionally, US companies Wells Fargo and Capital One Financial were the main laggards within the Financials sector as inflationary pressures started to weigh on investor sentiment.
At the sector level, the underweight to Consumer Staples contributed marginally to performance. However, this was overshadowed by overweight positioning in the Consumer Discretionary and Financials sectors, together with an underweight position to Energy (the best performing MSCI sector during March), all of which detracted from relative performance. Regional positioning further weighed on performance, with the Fund’s overweight to Emerging Markets, notably China, the main detractor. Both sector and regional positioning are an outcome of the Fund’s bottom-up positions in each individual company, and do not result from any top-down considerations.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2203-PTGEF-Monthly.pdfFebruary, 2022
Geopolitical tensions weighed heavily on equity markets in February with the outbreak of conflict in Ukraine. The MSCI ACWI fell by 5.42% in Australian dollar terms over the month, and the PAN-Tribal Global Equity Fund was down by 8.31% (net of fees).
Stock selection and sector allocation both detracted from relative performance over the month, with the former accounting for approximately two-thirds of the underperformance. This is consistent with Davis Advisors’ active investment approach whereby stock selection is expected to be the primary driver of returns in the portfolio and noting that both sector and regional positioning is a direct product of such bottom-up stock selection.
Positive stock selection was seen within the Information Technology sector (led by HollySys Automation, China) and to a lesser extent within Financials, Consumer Staples, and Materials, however, it was not of sufficient magnitude to offset the underperformance of holdings within the Consumer Discretionary, Health Care and Communication Services. The laggards within these sectors were Proses (Netherlands), Viatris (US), and Meta Platforms (US) respectively.
The portfolio’s underweight to Information Technology was favourable from a sector allocation point of view, however all other sector positioning detracted from relative performance during February. Overweight positions to Communication Services, and Consumer Discretionary.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2202-PTGEF-Monthly-1-1.pdfJanuary, 2022
The PAN-Tribal Global Equity Fund rebounded strongly during January, returning 3.81% (net of fees) against a backdrop where global equities pulled back and the MSCI ACWI in Australian dollar terms was down by 1.87% for the month. Davis Advisors employs an active, bottom-up investment approach, and this resulted in stock selection being the significant contributor to the Fund’s relative outperformance over the month. Sector allocation also contributed, whilst regional allocation was broadly flat, noting that both sector and regional positioning are a direct product of each of the individual holdings in the portfolio.
Stock selection within the Consumer Discretionary sector was particularly strong, with Chinese companies JD.com and Alibaba the largest contributors to relative outperformance within the sector. The Fund’s holdings within the Financials and Health Care sectors also contributed significantly with US companies Wells Fargo and Viatris, respectively, leading the way. There were no sectors with material underperformance from a stock selection point of view.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2201-PTGEF-Monthly.pdfDecember, 2021
The PAN-Tribal Global Equity Fund was down during the final month of the calendar year, returning -1.65% (net of fees) for December, with sentiment towards some of the portfolio’s Chinese holdings remaining depressed. The MSCI ACWI (in AUD) returned 1.43% over the same period. Relative underperformance of the Fund versus the MSCI ACWI was skewed towards stock selection, albeit sector and regional allocation were also contributing factors. It’s noteworthy that the Fund’s sector and regional exposures are the culmination of the bottom-up, stock-picking approach underpinning the Davis Investment Discipline, and they result from the positions established in each of the individual companies held by the Fund.
Stock selection within the Health Care sector contributed positively to December’s relative performance, with US company Cigna being the strongest absolute contributor to the Fund’s performance over the month. However, this was more than offset by relative underperformance within the Consumer Discretionary, Industrials and Communication Services sectors as Chinese holdings such as JD.com, Didi Global and iQiyi weighed on performance within each of these sectors respectively
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2112-PTGEF-Monthly.pdfNovember, 2021
The month of November saw global equities down in local currency terms as uncertainties surrounding the COVID-19 Omicron variant dampened investor sentiment, notwithstanding generally positive economic data. However a depreciating Australian dollar saw the MSCI ACWI (in AUD) finish the month with a positive return of 3.38%. The PAN-Tribal Global Equity Fund was down by 0.90% (net of fees) over the period. Consistent with the fundamental bottom-up research based approach of Davis Advisors, the relative underperformance of the Fund over the month can be mostly ascribed to stock selection, although sector allocation also dampened relative returns for November. Negative stock selection was most pronounced in the Consumer Discretionary and Information Technology sectors with Chinese holdings Alibaba and HollySys, respectively, dragging on performance in each of these sectors. The Fund’s Health Care holdings, US firms Viatris and Cigna, both underperformed the broader Health Care sector, additionally weighing on performance from a stock selection point of view.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2111-PTGEF-Monthly.pdfOctober, 2021
Global equity markets delivered positive returns over the month of October with the MSCI ACWI (in AUD) up by 1.08% over the period. The PAN-Tribal Global Equity Fund likewise delivered positive returns, albeit to a lesser extent, returning 0.49% net of fees to investors during the month.
The Fund benefitted from sector allocation over the month, however this was offset by relative underperformance with regards to security selection. The Fund’s exposure to Alphabet (US) was the main driver supporting strong security selection within the Communication Services sector although this was overshadowed by underperformance from stocks within the Information Technology, Financials and Consumer Discretionary sectors. Among the main laggards in these sectors were US holdings such as Intel, Capital One Financial and Vroom respectively. In keeping with Davis Advisors bottom-up, stock picking investment philosophy, the expectation is that portfolio returns are predominantly derived from security selection decisions, rather than top-down macro decisions.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2110-PTGEF-Monthly.pdfSeptember, 2021
The PAN-Tribal Global Equity Fund underperformed slightly during September, returning -3.42% (net of fees) for the month. Globally, equity markets sold off due to various concerns including China, regulatory threats, inflation and COVID-19. The MSCI ACWI returned -3.00% in Australian dollars terms over the period. The Fund’s underperformance relative to the MSCI ACWI during the month was almost wholly attributable to stock selection, consistent with the bottom-up investment discipline adopted by Davis Advisors.
Security selection detracted from performance, driven by Chinese companies in the Consumer Discretionary sector, namely JD.com, Alibaba and indirectly Prosus (Tencent), as well as smaller contributions from US tech giants Facebook (Communication Services) and Amazon (Consumer Discretionary).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2109-PTGEF-Monthly.pdfAugust, 2021
The PAN-Tribal Global Equity Fund delivered positive absolute returns during August, returning 0.51% (net of fees) for the month. Globally, equity markets continued a strong upwards trajectory, in most part driven by positive sentiment as developed markets gained momentum in further ‘re-opening’ and easing of COVID-19 restrictions. The MSCI ACWI returned 3.09% in Australian dollars terms over the period.
The Fund’s underperformance relative to the MSCI ACWI during the month was almost wholly attributable to stock selection, consistent with the bottom-up investment discipline adopted by Davis Advisors. Security selection detracted from performance across all sectors bar Consumer Staples, with Chinese companies Ping An Insurance and Alibaba being the most notable laggards across the Financials and Consumer Discretionary sectors respectively; these being the two sectors where relative underperformance was most pronounced
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2108-PTGEF-Monthly.pdfJuly, 2021
Performance for the PAN-Tribal Global Equity Fund was adversely impacted over the month driven by the Fund’s overall exposure to China. China was the worst performing country in the MSCI ACWI, falling by almost 12% in Australian dollar terms over the course of July. Additionally, the Fund’s holdings in the Chinese education sector (New Oriental Education & Technology and TAL Education) bore the brunt of revisionist policy change by the Chinese Government. These reforms, together with increased intervention across the technology sector and housing market in recent times have resulted in heightened volatility and oscillating investor sentiment towards Chinese investments. Notwithstanding, the Fund remains well positioned in keeping with Davis Advisors’ philosophy of seeking out durable businesses with robust earnings profiles at reasonable valuations. The average 1 year forward P/E is around 9.5x for the portfolio versus 14-15x for the Chinese market and 15.3x for the broader MSCI ACWI index.
Security selection across the board detracted from relative performance in July. With the Consumer Discretionary sector housing the Chinese education stocks previously mentioned, security selection detracted significantly within this sector. Also detracting was security selection within the Industrials, Communication Services, and Information Technology sectors, and to a lesser extent the Health Care and Financials sectors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2107-PTGEF-Monthly.pdfJune, 2021
The PAN-Tribal Global Equity Fund delivered a strong absolute performance closing out the financial year with a return of 34.46% (net of fees), while returning 1.70% (net of fees) in June.
Over the course of June, global equity markets continued their strong run, fuelled by positive sentiment as COVID-19 vaccination campaigns continued to gain traction across developed economies, particularly in Europe, and economic activity increased. The MSCI ACWI (in AUD) returned 4.46% in June, and 27.72% over the financial year.
From a relative performance standpoint (versus the MSCI ACWI), the most significant contributor to underperformance of the Fund during June was stock selection, particularly within the Consumer Discretionary sector. Chinese education providers New Oriental Education & Technology, and TAL Education were the main laggards as speculation reg
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2106-PTGEF-Monthly.pdfMay, 2021
Following strong performance in the early months of 2021, the PAN-Tribal Global Equity Fund retraced somewhat in May, declining by 1.97% (net of fees). In contrast the MSCI ACWI (in AUD) was up 1.35% over the month.
Davis Advisors manages the portfolio applying a benchmark agnostic, bottom-up, stock-picking investment philosophy. In keeping with this philosophy, it is not unexpected that almost all of the Fund’s relative underperformance throughout the month was attributable to security selection. Significant underperformance was seen within the Consumer Discretionary sector as holdings in Chinese companies New Oriental Education & Technology and Alibaba weighed on returns. In addition, Quotient Technology (US) was another sizeable detractor. Underperformance at the security level was also seen within the Financials sector with Danske Bank (Denmark) the main laggard.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2105-PTGEF-Monthly.pdfApril, 2021
The PAN-Tribal Global Equity Fund returned 3.66% (net of fees) to investors for the month of April, 75 basis points ahead of the MSCI ACWI (in AUD) which returned 2.91% over the same period. The significant outperformance of the Fund over the past twelve months when considered against the broader global equity market, as measured by the MSCI ACWI, is testament to the benchmark unaware philosophy that Davis Advisors applies in managing the portfolio using an active, bottom-up, fundamental approach to stock selection. Past performance should not be used as an indicator for future performance.
During April, relative outperformance of the Fund may be attributed mainly to security selection and sector weighting. Security selection was very strong in both the Financials and Communication Services sectors, with companies such as Capital One Financial (US) and Wells Fargo (US) bolstering returns within the Financials sector, and Alphabet (US) and IAC (US) likewise outperforming within Communication Services. Tempering these returns was underperformance within the Consumer Discretionary and Information Technology sectors as companies such as JD.com (China) and Intel (US), respectively, were among the laggards.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2104-PTGEF-Monthly.pdfMarch, 2021
The month of March saw global equity markets generally continue to trade higher as investor sentiment remained buoyant on the back of continuing COVID-19 vaccination programs in the US and UK, coupled with US President Biden’s significant stimulus package (equivalent to 9% of US GDP). The exception being Asia, with the MSCI AC Asia ex-Japan index down almost 2% in local currency terms over the month, primarily due to weakness in China with investor uncertainty surrounding moderate monetary policy tightening and concerns regarding potential regulatory headwinds that certain sectors (e.g. like China Tech) may face, in the short term. The PAN-Tribal Global Equity Fund returned 1.52% (net of fees) to investors during March, whilst the MSCI ACWI (in AUD) was up by 4.36%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2103-PTGEF-Monthly.pdfFebruary, 2021
Global equity markets rallied over February, with sentiment buoyed by COVID-19 vaccine rollouts gaining momentum across major economies. The PAN-Tribal Global Equity Fund performed very strongly over the same period, returning 5.51% (net of fees), versus the MSCI ACWI (in AUD) which rose by 1.40% over the month.
The predominant source of relative return for the portfolio during February was security selection, consistent with the active, research-driven, bottom-up investment philosophy adopted by Davis Advisors. In particular, the price appreciation of Applied Materials (US) underpinned outperformance within the portfolio’s Information Technology holdings. Strong security selection was also seen in the Communication Services, Consumer Discretionary and Financials sectors with companies such as Alphabet (US), JD.com (China) and Wells Fargo (US) all making a positive contribution to relative returns in their respective sector.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2102-PTGEF-Monthly.pdfJanuary, 2021
The PAN-Tribal Global Equity Fund delivered 3.23% (net of fees) for investors over the month of January. This was against a backdrop of benign performance from global markets, with the MSCI ACWI (in AUD) returning 0.12% over the same period. The Davis Investment Discipline is founded on the belief that a fundamentals-based, bottom-up research process can be used to estimate a business’s intrinsic value. In keeping with this active philosophy, the key driver of relative outperformance of the portfolio over January was security selection.
Security selection was strongest within the Consumer Discretionary and Financials sectors with companies such as Meituan (China) and Capital One Financial (US), respectively, leading the way. US holdings Applied Materials and IAC also contributed strongly to relative performance within the Information Technology and Communication Services sectors. Sector weighting was flat overall. The portfolio benefitted slightly from its overweight position to Consumer Discretionary and underweight position to Consumer Staples however this was counteracted by the overweight to Financials detracting from relative returns. The portfolio’s overweight to China contributed to performance at a regional level.
In addition to companies already mentioned above Consumer Discretionary stocks Alibaba (China) and Naspers (South Africa) were among the Top 10 contributors at an individual stock level, whilst New Oriental Education and Technology (Consumer Discretionary, China) was the largest detractor. The Fund added US Communication Services company Liberty Media Corporation to its holdings during the month. The company owns a suite of media, communications and entertainment businesses including Formula One. In addition, the Fund participated in the IPO of Kuaishou Technology (Communication Services, China) on the HK stock exchange. Kuaishou is a Chinese shortvideo sharing mobile app, akin to TikTok.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2101-PTGEF-Monthly-1.pdfDecember, 2020
In Australian dollar terms, performance of the global equity market was down marginally in December, declining by 0.08%. Appreciation of the Australian dollar over the month tempered the returns of global markets which strengthened as news of COVID-19 vaccination approvals buoyed investor sentiment. The PAN-Tribal Global Equity Fund returned 0.08% (net of fees) for December.
Stock selection over the month was broadly neutral for performance, whilst sector weighting was marginally positive. The Davis Advisors bottom-up research driven investment process contributed to strong stock selection within the Financials sector over December (led by Capital One Financial), complimented also by outperformance within the Communication Services sector. However this was mostly offset by underperformance within the Consumer Discretionary sector as Alibaba in particular weighed on returns.
At the sector level, the Fund’s overweight to Financials, together with an underweight to both Health Care and Consumer Staples combined to contribute to the relative performance of the portfolio. Detracting from relative returns were the underweight positions in Information Technology and Materials. The Fund’s regional exposure also detracted as a result mostly of the overweight position in China. It’s important to note that both sector and regional positioning do not result
from top-down macro views, but rather are a direct output of Davis Advisors’ fundamental company research process.
IAC (US, Communication Services), New Oriental Education & Technology (China, Consumer Discretionary) and AIA Group (Hong Kong, Financials) were among the top individual companies (not previously mentioned) contributing to the Fund’s performance during December, whilst US Communication Services companies Alphabet (Google) and Facebook were among the laggards. Two additional holdings were purchased in the portfolio over the month; these being US Health Care companies Cigna and Viatris.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2012-PTGEF-Monthly-1.pdfNovember, 2020
The month of November saw the PAN-Tribal Global Equity Fund return 6.56% (net of fees) in absolute terms. This strong performance was however shy of the broader global equity market, with the MSCI ACWI (in AUD) returning 7.05% over the month.
The source of relative underperformance for the Fund can be attributed mostly to stock selection, in line with the benchmark agnostic investment philosophy of Davis Advisors. Whilst the Fund enjoyed strong stock selection within the Financials and Information Technology sectors (led by Financials such as DNB (Norway) and Wells Fargo (US), and US Information Technology company Applied Materials), this was overshadowed by relative underperformance within the Consumer Discretionary sector. Chinese holdings Alibaba and Meituan Dianping were the main contributors to underperformance, both pulling back after rallying in the month of October.
Sector weighting was positive for the Fund during November however, as highlighted above, was overshadowed by stock selection. The portfolio’s overweight to Financials and underweight to Health Care and Consumer Staples was beneficial, whilst the overweight to Consumer Discretionary and underweight to Energy both detracted.
At a regional level the overweight to China also detracted from performance, noting that regional positioning, as with sector positioning, is derived purely from the underlying stock positions, and not with a top-down macro view in mind.
The major individual stocks contributing to and detracting from performance have previously been noted in the commentary above. The Fund did additionally benefit from its holdings of Raytheon Technologies (Industrials, US) and DBS Group (Financials, Singapore) whilst Quotient Technology (Consumer Discretionary, US) was a further laggard over the month.
There were no new companies purchased, nor positions exited during November.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/2011-PTGEF-Monthly.pdfOctober, 2020
The PAN-Tribal Global Equity Fund delivered strong returns to investors over the month of October, returning 4.51% (after fees). This was against a backdrop of weaker global equity markets, weighed down by concerns surrounding rising COVID-19 infections, particularly in Europe, and the US presidential election. The MSCI ACWI (in AUD) returned -0.42% for the month.
In line with Davis Advisors’ fundamental, bottom-up approach to research, security selection was the significant driver of relative outperformance over the month. Security selection within the Consumer Discretionary sector was particularly strong, with Chinese holdings Meituan Dianping and New Oriental Education and Technology leading the way with regards to relative outperformance. This was further augmented by strong security selection within the Communication Services sector.
Notwithstanding the above, sector weighting also contributed to relative returns. The portfolio’s overweight to the Consumer Discretionary and Financials sectors, together with its underweight to Health Care and Information Technology all added over the month. The portfolio’s overweight to China additionally bolstered performance, noting that both sector and regional positions are derived from underlying company holdings (rather than a top-down macro approach).
File:ticker: ETL0419AU
commentary_block: Array
factsheet_url:
http://www.pantribal.com.au/pan-tribal-global-equity-fund/#
release_schedule: Monthly
fund_features:
Pan Tribal Global Equity Fund seeks to outperform the MSCI ACWI (in AUD), over the medium to long-term, by investing in companies with attractive long-term growth potential in both developed and developing markets.
- Managed using the ‘Davis Investment Discipline‘, an unconstrained buy-and-hold approach that seeks to generate excess returns over multi-year periods.
- A focus on buying businesses rather than trading stocks.
- Suitable for investors seeking long term capital growth with investment horizon of 5-7 years.
- Maximum 10% cash allocation.
manager_contact_details: Array
asset_class: Foreign Equity
asset_category: Large Growth
peer_benchmark: Foreign Equity - Large Growth Index
broad_market_index: Developed -World Index
structure: Managed Fund