September, 2023
The Fund fell with the market in the September quarter and was unable to outperform the Index return. The key positive contributors to included Novo Nordisk and Pioneer Natural Resources.
Novo Nordisk - The Danish pharmaceutical company's popular treatments for diabetes and obesity continued to boost total revenues and, in turn, elevated the stock.
Pioneer Natural Resources - While the independent oil and gas company posted revenues that fell short of analysts' expectations,
quarterly earnings surpassed, with oil production close to the top end of management's estimated range.
The key detractors from performance included B3, AIA Group and Pernod Ricard.
B3-The securities and commodities exchange operator reported earnings where growth improved but investors remained concemed about the outlook on trading volumes. The long-term outlook for the stock is constructive and valuation remains attractive relative to its peers
AIA Group-Shares of this Hong Kong-based insurer remain depressed. The company has been reporting improvement in the value of new business booked, yet its stock continues to underperform. The overall bearishness around emerging markets stocks appears to be weighing on AIA shares as well.
Pemod Ricard-Shares of the spirits distributor of such brands as Mumm champagne and Absolut vodka moved lower on a mixed fiscal year report. While sales in China and the US are expected to decline, profits rose, and the dividend increased.
Notable purchases in the September quarter included Alphabet and NVIDIA while notable sales included Stellantis and AIA Group.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-1-5.pdfAugust, 2023
The Fund produced a positive absolute return in August in Australian dollar terms but was unable to outperform the index return.
The key positive contributors to performance included Novo Nordisk, Pioneer Natural Resources and Avantor.
Novo Nordisk - The Danish pharmaceutical company’s popular treatments for diabetes and obesity continued to boost total revenues and, in turn, elevated the stock.
Pioneer Natural Resources - While the independent oil and gas company posted revenues that fell short of analysts’ expectations, quarterly earnings surpassed, with oil production close to the top end of management’s estimated range.
Avantor - Shares of this scientific and technical instruments company bounced back in August as investors took advantage of a period of underperformance. The long-term investment thesis remains constructive. The key detractors from performance included B3, Marvell Technology and Pernod Ricard.
B3 - The securities and commodities exchange operator reported earnings where growth improved but investors remained concerned about the outlook on trading volumes. The long-term outlook for the stock is constructive and valuation remains attractive relative to its peers.
Marvell Technology - Marvell, which offers data infrastructure solutions in networking and storage, among other areas, reported disappointing quarterly sales and profit margins. Despite the result, the company continues to stand to benefit from its position in artificial intelligence and other high-growth markets.
Pernod Ricard - Shares of the spirits distributor of such brands as Mumm champagne and Absolut vodka moved lower on a mixed fiscal year report. While sales in China and the US are expected to decline, profits rose, and the dividend increased.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-26.pdfJuly, 2023
The Fund produced a positive absolute return in July but was unable to keep pace with the strong index return.
The key positive contributors to performance included Stellantis, Hong Kong Exchanges & Clearing and Marvell Technology.
Stellantis - The automaker’s stock rose during the month after management announced revenues for the first half of 2023 that beat consensus forecasts. The company reiterated its guidance for the remainder of the year.
Hong Kong Exchanges & Clearing - Shares rebounded after a period of underperformance. The stock remains under pressure given the lackadaisical trading activity for Chinese equities. The long-term growth thesis for the company remains intact and is tied to the opportunities around Shanghai-Hong Kong Stock Connect, which links investors in Hong Kong and mainland China.
Marvell Technology - Shares of Marvell, which offers data infrastructure solutions in networking and storage, among other areas, have benefited from the surge in investor interest in companies positioned to profit from increased spending and reliance on artificial intelligence. The key detractors from performance included FMC, CoStar Group and SBA Communications.
FMC - This agricultural science company reduced its revenue forecast for the second quarter and full year of 2023, driving its share price lower. Execution has been very uneven, and the company has disappointed on earnings over the last few quarters.
CoStar Group – The company’s share price fell following management’s lowering of revenue projections for the remainder of 2023 amid a weakening commercial real estate market.
SBA Communications - Shares trended lower as investors worried about slower US organic growth driven by industry churn and debt refinancing headwinds.
Notable purchases in July included Danaher and Advanced Micro Devices.
Danaher provides tools, consumables and services to the biotechnology and health care industries. A position was initiated after the company reported earnings that beat consensus expectations. Despite uncertainty around an inflection in China’s biotech demand, Danaher’s long-term growth drivers are attractive.
Advanced Micro Devices was purchased as it is expected to benefit from continued market share gains driven by sales of server CPUs and the anticipated ramp-up in its new graphics processing unit offering. The long-term outlook for cloud computing with a focus on infrastructure to support artificial intelligence should drive growth for the company.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-25.pdfJune, 2023
The Fund produced a solid absolute return in the June quarter but was unable to outperform the impressive index return.
The key individual contributors to performance included B3, Marvell Technology and CoStar Group.
B3 - Shares of this company boosted relative returns as B3 benefits from being the largest financial exchange operator in Brazil, where volatility continues to drive trading volumes.
Marvell Technology - Shares of Marvell rose following the release of quarterly earnings and revenues that beat consensus market expectations.
CoStar Group - This leading provider of real estate data and services recently raised its guidance for 2023.
The key individual detractors from performance included Catalent, MarketAxess Holdings and Hong Kong Exchanges & Clearing.
Catalent – The contract drugmaker weighed on performance after delaying its quarterly report twice. The company posted a decline in revenues, citing ongoing operational challenges. Full-year revenue guidance was also trimmed. The investment team fully exited the name during the quarter.
MarketAxess Holdings - Shares of the operator of bond trading platforms traded lower despite the company reporting solid volume statistics, including its best single day of credit volume and a solid rebound in new issuance in May.
Hong Kong Exchanges & Clearing - The Hong Kong-based bourse operator dampened relative returns. While global economic uncertainties have negatively impacted volumes, the company reported solid quarterly figures along with strategic initiatives to enhance operations.
Notable purchases in the quarter included Howmet Aerospace and ASML Holding while notable sales included HEICO.
Howmet Aerospace provides advanced engineered solutions for the aerospace and transportation industries. The company is a beneficiary of rising production rates at The Boeing Co. and Airbus. Given that a new management team has been restructuring the business, revenue growth is anticipated at high incremental margins.
ASML Holding was added to the portfolio on rising evidence that interest and demand trends in generative artificial intelligence will fuel incremental growth in the server/data centre market, which will in turn be a strong driver of future silicon wafer consumption. The company recently upgraded its end-market growth assumptions.
HEICO was fully exited with the proceeds used to invest in Howmet Aerospace. Shares of HEICO have rerated higher, and the potential risk/reward trade-off is less supportive.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-24.pdfMay, 2023
The Fund produced a marginally positive return in May but was unable to outperform the index return.
The key positive contributors to performance included Marvell Technology, Workday and B3.
Marvell Technology - Shares of Marvell rose following the release of quarterly earnings and revenues that beat consensus market expectations. In addition, a peer company’s strong earnings guidance driven by artificial intelligence-related demand for semiconductor chips further buoyed Marvell stock.
Workday - The developer of cloud-based human capital management software aided relative results as earnings for the first quarter of fiscal year 2024 exceeded analysts’ expectations, fuelling stock gains.
B3 – The company benefits from being the largest financial exchange operator in Brazil, where volatility continues to drive trading volumes. The key detractors from performance included Catalent and FMC.
Catalent - The drugmaker’s stock declined after the company lowered its full-year net revenue and core profit forecasts, citing operational challenges. The stock was sold during the period.
FMC - Shares of the crop chemical company fell after management announced disappointing revenues and profit margins. Quarterly earnings, however, beat analysts’ expectations.
Notable purchases in May included London Stock Exchange and American Water Works.
London Stock Exchange’s earnings are expected to continue to improve as the business realises synergies from its Refinitiv acquisition. The company has benefited from secular growth trends around rising data consumption, and it is working to improve its product experience through cloud migration and integration with Microsoft.
American Water Works is the largest independent publicly traded water utility in the US and its valuation has materially improved. The company’s sustainable growth is benefiting from two secular trends, the aging of US water infrastructure and the ongoing consolidation of water utilities.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-23.pdfApril, 2023
The Fund produced a positive return of 1.58% in April but was unable to keep pace with the strong index return. Calendar year-to-date, the Fund is marginally ahead of the strong index return.
The key positive contributors to performance included B3 and CoStar Group.
B3 - The Brazil-based financial exchange operator performed strongly as volatility continues to drive trading volumes. During the month, B3 and S&P Dow Jones Indices introduced the first two bond indices in a new series that will track corporate bonds in Brazil.
CoStar Group - The US-based provider of commercial real estate data reported quarterly earnings and revenues that exceeded analysts’ estimates, driving shares higher.
The key detractors from performance included Catalent, MarketAxess Holdings and NXP Semiconductors.
Catalent - The contract drugmaker’s stock declined after the company lowered sales expectations for 2023. Productivity challenges and higher costs at three of its plants drove the lowered estimates.
MarketAxess Holdings - Shares of the operator of bond trading platforms traded lower despite the company reporting monthly and quarterly credit volumes that improved versus the previous year.
NXP Semiconductors – Shares of the automotive chip designer and manufacturer moved lower amid relatively subdued revenue and earnings expectations for 2023. Flat automotive sales and an easing of chip shortages likely contributed to the anticipated slowdown in demand for NXP’s chips.
There were no new purchases or sales during April.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-22.pdfMarch, 2023
The Fund produced an impressive return in the March quarter and was significantly ahead of the index return. The key positive contributors to performance included Catalent, MarketAxess Holdings and Stellantis.
Catalent’s stock advanced after the company announced an expansion of its manufacturing partnership with COVID-19 vaccine maker Moderna.
MarketAxess Holdings advanced on the strength of quarterly earnings and revenues that beat analysts’ estimates. MarketAxess reported solid growth in its latest monthly credit volumes as well.
Stellantis recorded annual profit announced in February, with notable strength in sales of electric vehicles driving shares upward. B3 was a key detractor over the quarter. The Brazil-based securities and commodities exchange operator declined as management reported quarterly net profits below analysts’ estimates. The region’s macroeconomic environment, including high interest rates, led to higher expenses for the company.
Humana was added to the Fund during the quarter. Humana is a leading provider of health insurance in the U.S. We have initiated a position on evidence that the company has started to regain lost market share. Further, uncertainty around government reimbursement for Medicare Advantage has been clarified, thus removing an overhanging risk on the stock.
The investment team decided to fully exit Amazon given risks around near-term earnings growth. The company’s earnings profile is facing a combination of expense pressures at its online marketplace division and slowing demand at Amazon Web Services, its cloud computing segment.
The Fund continues to invest in companies where business fundamentals are improving and there is high conviction that improvement is sustainable. The investment team has a bias for companies that can deliver growth regardless of the cyclical environment and that benefit from idiosyncratic and/or secular tailwinds. Many companies have become less expensive and remain attractive, especially in an environment where economic growth will be increasingly challenged.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-21.pdfFebruary, 2023
The Fund produced a solid return of 2.13% in Australian dollar terms and was marginally ahead of the index return. The key contributors included Catalent, Stellantis and Marvell Technology. Catalent – The contract drugmaker’s stock advanced after the company announced an expansion of its manufacturing partnership with COVID-19 vaccine maker, Moderna. Stellantis – The Netherlands-based automaker announced a record annual profit in February, with notable strength in sales of electric vehicles driving shares upward. Marvell Technology – Shares outperformed during the month as investors anticipated favourable earnings driven by 5G, automotive and cloud-related demand. Results from peers like NVIDIA also supported share price gains.
The key detractors from performance included B3, SBA Communications and Pioneer Natural Resources. B3 – Shares of the Brazil-based securities and commodities exchange operator declined as management reported quarterly net profits below analysts’ estimates. The region’s macroeconomic environment, including high interest rates, led to higher expenses for the company. SBA Communications – This real estate company owns and leases cell towers and distributed antenna systems. Management reported that quarterly funds from operations rose strongly but missed analysts’ estimates, though long-term growth trends remain intact. Pioneer Natural Resources – The independent oil and gas exploration company reported quarterly earnings that beat analysts’ estimates, while revenue fell short. Pioneer’s strong free cash flow, focus on returning capital to shareholders, along with an anticipated healthy oil market, should bode well for the stock. There were no new purchases or positions liquidated during the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-20.pdfDecember, 2022
The Fund produced a solid return of 1.54% in the December quarter but was unable to keep pace with the strong index return. AIA Group was a top positive contributor in the quarter. The Hong Kong-based insurer remains well positioned to benefit across life insurance and financial products in its core markets, with shares rising over the quarter on indications that China’s economy would be reopening.
The key detractors included Catalent, Amazon and Marvell Technology. Catalent - The share price declined because of lower-than-expected revenue for the most recent fiscal quarter. The drugmaker also provided analysts with weaker guidance going forward. The market was disappointed with the firm’s outlook, especially given that COVID-19-related product demand has already been included in its forecast. Amazon - Economic conditions, including a challenging labour market and supply chain issues, have made for a difficult environment for the e-commerce giant. The big picture offers hope for investors in cash flow generation provided by the massive number of Amazon Prime subscribers and strong market position in online shopping.
Marvell Technology - The chipmaker is experiencing inventory-related challenges and has projected a slight decline in earnings for the near future. Management also pointed to a potential decline in demand from China, noting that market’s macroeconomic environment. New purchases in the quarter included Novo Nordisk and MarketAxess Holdings while sales included Alphabet and Lowe’s Cos. Novo Nordisk - A position was initiated in this drugmaker as it should benefit from the commercialisation of a drug that materially helps with weight loss (obesity). The drug could be one of the largest over the next five years, as obesity remains a large and costly health issue in the US and globally. MarketAxess Holdings – The stock was purchased because price/mix is expected to start to lap difficult comparisons, resulting in an acceleration in top- and bottom-line growth. The company should continue to grow its market share in bond trading. Alphabet – The stock was exited on rising concern that fundamental growth will be impacted by slower advertising spend, rising competition for its YouTube franchise and relatively high penetration in search. Further, the company is still adding headcount, which could potentially delay the recovery in earnings growth. Lowe's Cos - While fundamentals can continue to improve on restructuring initiatives, the stock was sold because the operating margin gap against The Home Depot has significantly narrowed, and earnings now face a tougher comparison and macroeconomic headwinds.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-18.pdfNovember, 2022
The Fund produced a solid return of 3.78% in November and outperformed the index return by 1.76%. The key contributors to performance included Hong Kong Exchanges & Clearing and GXO Logistics. Hong Kong Exchanges & Clearing – The stock exchange operator is globally diversified across multiple trading markets and asset classes and has benefited from an active market environment. GXO Logistics – The contract logistics provider reported a robust increase in third-quarter revenue year over year, and reiterated guidance for the fiscal year, boosting its shares in November.
The key detractors included Catalent, B3 and Pioneer Natural Resources. Catalent – Shares were down after the company reported fiscal 2023 first-quarter earnings, which declined year over year. Management attributed the drop to a mix of factors, including inflation and unfavourable foreign exchange rates. B3 – Shares underperformed as investors reacted to disappointing earnings driven by transitory issues. Additionally, investors locked in gains following a positive market reaction to Brazil’s presidential election. Despite recent share price performance, fundamentals at B3 remain supportive. Pioneer Natural Resources – The stock remained under pressure following the company’s third-quarter earnings announcement in late October. While the oil and gas exploration firm’s profits exceeded analysts’ estimates on the strength of crude oil prices, investors reacted negatively to a dividend cut. Air Products and Chemicals was added to the fund in November. The company is a beneficiary of global decarbonisation due to its expertise in hydrogen production and carbon capture technology. These global trends are expected to continue to drive significant growth opportunities for the company in coming years. CRH was fully exited during the month given an increase in cyclical risks that could impact the company’s organic growth. Demand, especially from private construction activity, is expected to inflect lower in conjunction with economic growth.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-17.pdfOctober, 2022
The Fund produced a solid return of 3.85% in October but was unable to keep pace with the strong index return.
The key contributors to performance included B3 and CoStar Group. B3 – Brazil’s local equity exchange contributed to performance. The company has had consistently strong earnings growth, and trading volumes have been significant in recent periods. CoStar Group - The provider of online real estate marketplaces, information and analytics is expected to continue to expand its earnings, and the stock performed strongly in October, contributing to portfolio returns. Even though it does not pay dividends, the firm is highly regarded because it reinvests positive cash flow.
The key detractors included Hong Kong Exchanges & Clearing, Catalent and AIA Group. Hong Kong Exchanges & Clearing - The stock exchange operator provided a weak near-term outlook, sending shares lower. Despite the near-term outlook, the company’s mutual market access initiatives, enabled via the Shanghai and Shenzhen Stock Connect program, should continue to be a foundational driver of volume growth over the long term. Catalent - The maker of drug delivery technologies declined ahead of its quarterly earnings report in anticipation of weaker-than-expected revenue growth. The company has experienced lower demand for COVID-19-related products and has not yet replaced the decreased revenue through growth in its other segments.
AIA Group - A disruption in operations caused by COVID-19 continued to adversely affect the Hong Kong-based insurer, however, the company remains well positioned to benefit from the long-term penetration of life insurance and financial products in its core markets. There were no new purchases during the period. Sales included ServiceNow, which was fully exited because fundamentals are expected to be negatively impacted as enterprise spending softens.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-16.pdfSeptember, 2022
The Fund fell by 1.13% in the September quarter and was unable to outperform the index return.
The key contributors to performance included Cheniere Energy, B3 and CoStar Group. Cheniere Energy - High natural gas prices drove share price appreciation for the liquefied natural gas company. Further supporting stock gains were second-quarter earnings that surpassed analysts’ consensus estimates and management’s decision to raise the full-year earnings guidance. B3 – Shares were higher for the Brazil-based financial market infrastructure provider as investors speculated that Brazil’s elections would result in capital markets volatility and higher trading volumes in the local equity exchange.
CoStar Group - Better-than-expected second-quarter revenue and news that management had raised full-year earnings guidance lifted shares of this provider of online real estate marketplaces, information and analytics. Additionally positive for the stock was its recent addition to the S&P 500 Index. The key detractors included Avantor, Catalent and Hong Kong Exchanges & Clearing.
Avantor - This provider of products and services to the health care sector continued the decline that began earlier in the year when quarterly earnings reporting was slightly lower than expected. This trend continued as guidance in September was lower than expected. Catalent - The company’s shares declined as a result of lower-than-expected earnings for the most recent fiscal quarter. The drugmaker has experienced lower demand for COVID-19-related products and has not yet replaced the decreased revenue through growth in its other segments.
ong Kong Exchanges & Clearing - As growth stocks came under pressure amid investors’ flight to safety, the Hong Kong-based trading platform that hosts many technology stocks, lost ground. There were no new purchases during the period. Sales included: AMETEK - Despite continued strong operational execution, the position was fully exited on concerns that earnings growth may be negatively impacted by potential slowing end-market demand over the next 12 to 18 months. Ping An Insurance Group Co. of China - The position was exited on concerns that the recovery in the growth of new business will be delayed further. Sales of new policies have been impeded by pandemic-related lockdowns and challenges around recruiting.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-14.pdfAugust, 2022
The Fund fell with the market in August and was unable to outperform the index return. The key contributors to performance included Cheniere Energy, Workday and B3. Cheniere Energy - Soaring natural gas prices drove share price appreciation for the liquefied natural gas company. Further supporting stock gains were second-quarter earnings that surpassed analysts’ consensus estimates and management’s decision to raise the full-year earnings guidance.
Workday - The human resources and financial software company advanced on news of quarterly earnings results that beat analysts’ estimates. Highlights included a 23% increase in subscription revenue.
B3 - Shares of the Brazil-based financial market infrastructure provider moved higher as investors speculated that Brazil’s elections would result in capital markets volatility and higher trading volumes in the local equity exchange. The key detractors included Catalent, Marvell Technology and Avantor.
Catalent - The company’s shares declined due to lower-than-expected earnings for the most recent fiscal quarter. The drugmaker has experienced lower demand for COVID-19 related products and has not yet replaced the decreased revenue through growth in its other segments.
Marvell Technology - The semiconductor maker slumped in recent trading after it issued a weaker-than-expected sales forecast from the coming quarter. The company has experienced supply chain challenges as well as revenue weakness from sales into its data centre channel.
Avantor - The chemical agents manufacturer’s stock continued the decline, which began at the end of July, when quarterly earnings reporting was slightly lower than expected.
Sales in August included AMETEK which was sold despite continued strong operational execution. The investment team decided to fully exit the position on concerns that earnings growth could be negatively impacted by expectations of slowing end-market demand over the next 12 to 18 months.
There were no new purchases during the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-13.pdfJuly, 2022
The Fund produced an impressive return of 7.59% in July which was ahead of the index return by 1.19%.
The key contributors to performance included Marvell Technology, NXP Semiconductors and Amazon.
Marvell Technology - The leader in infrastructure semiconductor solutions benefited from robust demand for its technology, which is used in
fast-growing markets such as data centres, automotive and enterprise networking. Its strong first-quarter earnings were driven by
particularly high demand from the data centre market.
NXP Semiconductors - Strong customer demand for new chips benefited the automotive chip designer and manufacturer. The company
reported second-quarter results that included a 28% year-over-year increase in sales and noted signs of improvement in the automotive
end market.
Amazon - The e-commerce and cloud computing company’s stock rallied after management reported better-than-expected second-quarter
revenue growth driven by strength in its cloud computing business. The company attributed the growth to stronger consumer demand.
The key detractors included Ping An Insurance Company of China and Hong Kong Exchanges & Clearing.
Ping An Insurance Company of China - China’s largest insurance company saw its stock dip as tensions between China and the West
increased during the period as the US Speaker of the House of Representatives, Nancy Pelosi, visited Taiwan.
Hong Kong Exchanges & Clearing - As growth stocks came under pressure amid investors’ flight to safety, the Hong Kong-based trading
platform that hosts many technology stocks lost ground in July.
There were no new purchases or liquidations during the period.
June, 2022
The Fund fell in the June quarter with the market and was unable to outperform the index return. The key contributors to performance included AIA Group and Hong Kong Exchanges & Clearing. AIA Group - The stock of AIA Group climbed higher as the company reported an increase in the value of new business and launched a $10 billion share buyback plan. The Pan-Asian life insurer also declared a higher dividend. Hong Kong Exchanges & Clearing - Shares were higher as investors reacted positively to strong net buying flows and improving sentiment on the stock. The firm is expected to continue to benefit from the stock interconnect program allowing investors to easily access both mainland-listed and Hong Kong- and China-listed stocks.
The key detractors included Workday, GXO Logistics and B3. Workday – The enterprise software maker lost ground after falling short of first-quarter earnings estimates. The company cited the delay of several deals, which were pushed back to the second quarter. However, quarterly subscription growth grew and fiscal 2023 guidance increased slightly.
GXO Logistics - Shares were lower on investor concerns around weakness in consumer spending. The company is a leading contract logistics provider, and its growth profile is supported by secular tailwinds such as supply chain outsourcing, warehouse automation and e-commerce growth.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-10.pdfMay, 2022
The Fund fell by 1.19% in May in Australian dollar terms and was slightly behind the index return. The key contributors to performance included Pioneer Natural Resources and NXP Semiconductors. Pioneer Natural Resources - The oil and gas company posted positive returns after beating quarterly earnings estimates. Pioneer’s free cash flow has been strong, and its variable dividend payouts have also boosted the stock. NXP Semiconductors - The semiconductor company’s growth across several product lines and in those industries’ end markets helped it beat earnings estimates for the first quarter. Demand outpaced supply, however, as inputs were limited by continuing shortages and transport issues.
The key detractors included Workday and GXO Logistics. Workday – The enterprise software maker lost ground after falling short of first-quarter earnings estimates. The company cited the delay of several deals, which were pushed back to the second quarter. However, quarterly subscription growth grew and fiscal 2023 guidance was slightly increased.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-9.pdfApril, 2022
The Fund fell by 4.65% in April and was unable to outperform the index return. Mastercard was a top contributor as the credit card company saw its stock continue to rise as cross-border travel surpassed 2019 levels and the company beat earnings estimates for the quarter. The impacts of lower European economic activity and inflation on Mastercard’s growth is being monitored, although the investment team believe the credit card company will continue to lead its peers. The key negative contributors to performance included Amazon and Teleflex.
Amazon - The online retailer reported its first quarterly loss in seven years. A reversal of pandemic-related shopping trends that saw increased in-store purchases and a decrease in online purchases resulted in the slowest revenue increase in two decades. Teleflex - Shares of the global medical device manufacturer declined amid an increase in UroLift procedure cancellations. UroLift is a key growth driver for Teleflex and rising COVID-19 cases have caused patients to defer their UroLift procedures. There were no new purchase or sales during April.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-8.pdfMarch, 2022
The Fund fell by 7.75% in the quarter but outperformed the index return by 0.67%. The key positive contributors to performance included Cheniere Energy, B3 and Pioneer Natural Resources. Cheniere Energy - Shares of the US liquefied natural gas (LNG) producer benefited from high energy prices and President Joe Biden’s the announcement that the US will increase LNG exports to Europe to help replace the LNG that was received from Russia. B3 - The stock exchange operator reported an increase in recurring net profit for the fourth quarter of 2021. The company attributed the solid results to high trading volumes on its platforms.
Pioneer Natural Resources - Recovering economies and higher crude oil prices buoyed the energy sector. After Russia’s invasion of Ukraine, Europe began cutting its ties with Russian oil and gas companies. The key negative contributors to performance included Aptiv, ICON and CRH.
Aptiv - Shares were lower as the company dealt with supply chain issues, which were compounded by the war in Ukraine. The company appears to be addressing these issues successfully and moving capacity out of the area. The investment thesis remains intact, and the company continues to enjoy a secular growth tailwind.
ICON - The provider of clinical research to the pharmaceuticals industry saw its stock decline on confusion surrounding forward guidance. Despite the confusion, the long-term outlook for the company remains intact and the investment team used the pullback in the stock price as an opportunity to buy more shares in the company.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-7.pdfJanuary, 2022
The Fund fell by 1.15% in January but was ahead of the index return by 1.04%. The key positive contributors to performance included B3 and Pioneer Natural Resources.
• B3 – Investors are finding good value in Brazilian stocks that were hit hard in 2021. Although political concerns still loom, the investment team believes the capital markets company will benefit from the influx of capital and will continue to monitor the situation.
• Pioneer Natural Resources – Higher crude oil prices and increased output continued to bode well for Pioneer Natural Resources, one of the largest explorers and producers in the US market. The company’s free cash flow has supported growing dividends, signalling strong future growth. The key detractors from performance included Cellnex Telecom and Aptiv.
• Cellnex Telecom – UK regulators expressed concerns that the Spain-based telecommunications infrastructure firm’s proposed acquisition of a UK tower company could hamper competition. Longer term, Cellnex should benefit from the rising trend of consolidating cellular tower assets in Europe
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-6.pdfDecember, 2021
The Fund produced solid return for the quarter but was unable to outperform the impressive index return.
The key positive contributors to performance included Lowe’s Companies, Schneider Electric and AMETEK.
• Lowe’s Companies – Amid the pandemic-driven surge in home improvement projects, Lowe’s has seen revenue growth in its professional contractors segment. Lowe’s reported strong third-quarter earnings and raised its full-year guidance, affirming for investors that its strong sales momentum continues.
• Schneider Electric –Organic revenue growth trends continued to accelerate as a restructuring and sales mix drove expanding margins. Revisions have been rising, and fundamentals are driven by secular trends.
• AMETEK – The maker of electronic instruments reported record sales and operating income for the third quarter, driven by strong organic sales growth and contribution from strategic acquisitions. The company also raised full-year 2021 guidance. The key detractors from performance included Teleflex and PayPal Holdings.
• Teleflex – The global medical device and technology maker saw its stock fall after reporting a revenue miss as patients delayed urological procedures on concerns about rising COVID-19 cases in hospitals. Further pressuring the stock was the recent recall of its medical device for dialysis interventions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-1-3.pdfNovember, 2021
The Fund produced a positive return in Australian dollar terms but was unable to outperform the index return. The key positive contributors to performance included NXP Semiconductors and Lowe’s Companies.
• NXP Semiconductors – A global shortage of chips and strength in the automobiles industry drove sales for NXP, a maker of chips that connect vehicles to the internet. Third-quarter revenue increased impressively and expectations of growth in the interconnected electric vehicles continues to bode well for the company.
• Lowe’s Companies – The home improvement retailer reported strong third-quarter earnings, affirming for investors that it continues to enjoy strong sales momentum. A key driver of momentum has been an increase in home improvement projects during the pandemic. The company raised its full-year outlook for 2021.
Detractors included global medical device and technology maker, Teleflex, which saw its stock fall after reporting a revenue miss as patients delayed urological procedures on concerns about rising COVID-19 cases in hospitals. We continue to believe that the slowdown in procedures is transitory, and our investment thesis for Teleflex remains intact.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-5.pdfOctober, 2021
The Fund declined slightly in October and was unable to keep pace with the strong index return.
The key positive contributors to performance included Aptiv and Lowe's Companies.
• Aptiv — The automotive parts maker continued to benefit from a strong demand outlook for electric vehicles. Aptiv is a leader in green, connected and safety technology for the automotive industry.
• Lowe's Companies — Amid the pandemic-driven surge in home improvement projects, Lowe's has seen solid revenue growth in its professional contractors' segment, leading to optimism that it's gaining market share in this important space. This segment accounts for approximately 25% of Lowe's total revenue.
The investment team continues to invest in companies where business fundamentals are improving and there is high conviction that improvement is sustainable. Though the outbreak of COVID-19 has been disruptive, the portfolio's major themes highlighted below are structurally unchanged. Maintaining our fundamental investment process. The Fund remains balanced across economic reopening beneficiaries and secular growers. Opportunities are being sought in stocks where fundamentals are in the early stages of inflecting higher, helped by economic normalisation. Top-line growth for many of these companies is expected to reaccelerate and potentially revert to pre-COVID-19 levels. In certain cases, earnings will also be boosted given that many of these companies have also improved their cost structures during the pandemic.
The Fund's exposure has been increased in certain businesses levered to travel, leisure activity and cyclical economic expansion. Secular growers remain well represented. The COVID-19 crisis reinforced the sustainability of many secular trends, such as digitisation, cloud computing, 5G network rollout and data centre expansion. Other opportunities, such as the trend toward vehicle electrification and autonomous driving, continue to gain momentum. Many of these investment opportunities remain highly attractive.
Opportunities seen in the potential for increased infrastructure spending. While the final US investment plan continues to work its way through the legislative process, select companies exposed to improving physical infrastructure assets and the electric grid are expected to be beneficiaries. Impact of rising interest rates and inflation expectations potentially positive. The Fund has exposure to businesses within the financials sector that would benefit from higher interest rates. The impact of higher rates on other aspects of the Fund, such as REITs and housing, should be able to offset inflationary headwinds via sustained revenue and earnings growth.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-4.pdfSeptember, 2021
The Fund produced a solid return of 2.09% for the quarter but was unable to keep pace with the impressive index performance. The key positive contributors to performance included ICON, Avantor and Cheniere Energy.
ICON – The pharmaceutical research and development firm saw its stock advance as it continued to report strong improvement in its backlog due to net new business won. Organic growth and the recent acquisition of PRA Health Sciences should drive continued improvement in fundamentals.
Avantor – The specialty chemicals maker’s stock gained ground as it beat quarterly earnings and revenue estimates. Avantor’s COVID-19 tests have become more widespread, and the market reacted positively to its plans to buy Masterflex, a bioprocessing business that supports medicine and vaccine development, including messenger RNA. Cheniere Energy – A recovering economy and higher liquefied natural gas prices drove gains for Cheniere. Supplies were low industrywide as reopening economies ramped up demand. The investment team expect an acceleration in earnings growth for Cheniere Energy as new liquefaction facilities should increase production volumes and capacity.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-1-2.pdfAugust, 2021
The Fund rose in August but was unable to outperform the strong index return.
The key positive contributors to performance included HDFC Bank, ServiceNow and The Charles Schwab Corp. • HDFC Bank – Contributing to gains for the digital lender was the Reserve Bank of India’s decision to partially lift the digital ban on HDFC Bank, which will allow it to issue new credit cards. Investors are optimistic the bank will recoup lost market share with high credit card issuances after a nine-month ban.
• ServiceNow – Helping to support stock gains for the digital workflow company were better-than-expected second-quarter earnings. ServiceNow reported a substantial year-over-year increase in revenue growth from subscriptions and raised its full-year guidance.
• The Charles Schwab Corp. – The financial services company reported monthly key performance indicators that affirmed the investment thesis. Net new money grew at an annualised rate of 7%, while average interest earnings assets grew at a healthy pace.
Detractors from performance included Fidelity National Information Services, Aptiv and Ping An Insurance Group Co of China.
• Fidelity National Information Services – Although second-quarter earnings surpassed consensus estimates, the financial technology firm’s stock fell after management provided third-quarter guidance below expectations.
• Aptiv – The automotive parts maker detracted as supply chain interruptions caused automobile plants to close.
• Ping An Insurance Group of China – The insurer reported a worse-than-expected decline in profit for the first half of 2021. Management attributed the decline to weak sales of motor and life insurance policies and substantial provisions for impairment losses.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-3.pdfMay, 2021
The Fund produced a solid absolute return of in May which was ahead of the index return. For the 12 months to 31 May 2021, the Fund is comfortably ahead of the index return.
The key positive contributors to performance included Stellantis and Cheniere Energy. • Stellantis – The car manufacturer recently reported strong first-quarter results, including a notable jump in revenue and total vehicle shipments. Stellantis has proven adept at navigating the global shortage of semiconductor chips used in automobiles.
• Cheniere Energy – A recovering economy and higher crude oil prices buoyed the energy sector, where this liquefied natural gas company was a standout performer. The investment team expects an acceleration in earnings growth for Cheniere Energy as new liquefaction facilities increase production volumes and capacity beyond consensus estimates.
Detractors from performance included ServiceNow, Teleflex and Booking Holdings.
• ServiceNow – The software company saw its stock decline as its outlook for second- and third-quarter billings was lower than expected. Management’s acquisition and divestiture announcements did not help buoy investor sentiment.
• Teleflex – Shares of the medical products maker struggled, despite better-than-expected first-quarter earnings results. We believe revenue growth will accelerate due to the steady growth in Teleflex’s core end markets, the contribution from recent acquisitions and the successful commercialisation of new products.
• Booking Holdings – Booking Holdings saw its stock fall as analysts questioned whether its revenues could support its climbing valuation in the face of postCOVID-19 economic recovery and increased travel planning.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-1-1.pdfApril, 2021
Global stocks delivered strong gains in April, supported by an improved economic outlook and stronger-than-expected corporate earnings growth. Progress on vaccine distributions also raised hopes for a return to normal despite elevated COVID-19 rates in some regions.
Reduced virus fears, improved job growth and additional measures implemented as part of the American Rescue Plan drove US stock gains. Meanwhile, close to a record number of US companies posted better-than-expected earnings results. Stocks in Europe and the UK also rose as the vaccine rollout accelerated and countries eased lockdowns.
Stocks in Japan declined, as disappointing earnings reports and virus concerns weighed on sentiment. Nevertheless, Japan’s manufacturing sector grew at thestrongest pace in three years. Elsewhere, emerging markets stocks underperformed developed markets equities, as COVID-19 continued to challenge several regions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0617AU-fund-focus-1.pdfDecember, 2020
The Fund produced a strong return of 6.56% in the quarter which was ahead of the index return. For the 12 months to December 2020, the Fund is substantially ahead of the index.
The key contributors to performance included Peugeot, HDFC Bank and The Charles Schwab Corp.
• Peugeot – The automobile manufacturer’s stock continues to climb in response to investor enthusiasm surrounding its planned merger with Fiat Chrysler Automobiles. Further supporting stock gains was the rollout of Peugeot’s electric car, which is viewed positively as European regulators add requirements for a green recovery.
• HDFC Bank – Improving economic conditions contributed to strong quarterly earnings growth for the India-based banking services holding company.
• The Charles Schwab Corp – The financial manager saw its stock climb steadily throughout the quarter, driven by its TD Ameritrade Holding acquisition and its resulting net asset growth. The investment team expects Schwab to realise cost synergies from the acquisition. The company should also benefit as interest rates continue to rise.
Detractors from performance included Alibaba Group Holding, Boston Scientific and Equinix.
• Alibaba Group Holding – The e-commerce giant saw its stock price fall as Chinese regulators investigate its financial services arm, Ant Group. Ant Group’s initial public offering cancellation last month followed founder Jack Ma’s criticism of China’s increasingly heavy financial regulations.
• Boston Scientific – Despite higher-than-expected earnings and revenues, the medical device maker saw its stock dip deeply during the quarter, as recalls and legal battles plague management. As a result, the investment team decided to sell the position in Boston Scientific and invest the proceeds in a higher conviction opportunity.
• Equinix – The data centre operator reported earnings in line with expectations and continues to expand worldwide. Although the stock price has dipped, the company’s fundamentals remain strong and it should continue to lead the field.
asset_class: Foreign Equity
asset_category: Large Growth
peer_benchmark: Foreign Equity - Large Growth Index
broad_market_index: Developed -World Index
manager_contact_details: Array
ticker: ZUR0617AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
Download Latest Fund Focus Report
fund_features:
Zurich Investments Concentrated Global Growth aims to provide investors with long-term capital growth by investing in securities listed on international stock exchanges. The fund aims to outperform the MSCI World (ex-Australia) Accumulation Index in $A (net dividend reinvested) by 3% to 4% over periods of five or more years. The fund invests in a concentrated portfolio of securities with high growth potential that are primarily listed on international stock exchanges. The fund will be fully unhedged at all times, providing investors with exposure to foreign exchange fluctuations as well as underlying share movements.
structure: Managed Fund