Offshore Trusts ManCo List Funds by Name Funds by Category Word Search FAQ

Ashburton Global Sterling International Equity Fund Ashburton (Jersey) Limited Ashburton Global Sterling International Equity Fund News Ashburton Global Strlng Intl Equity comment-Dec 11 Monday, 19 March 2012 Fund Manager Comment Review Global markets rallied into early December in anticipation of another summit of European leaders scheduled for 9 December. However, the MSCI World Index was unable to break out of its trading range as Draghi's categorical language on the ECB's limited role in the European sovereign debt crisis unsettled markets around the globe. This initially overshadowed the ECB announcement of a three-year unlimited funding facility for European banks and the commitment from Euro zone policymakers to embark on an arrangement towards fiscal union, together with an additional E200bn contribution to the IMF provided by a select number of European countries. Despite initial disappointment, markets managed to stabilise in time for the customary seasonal Christmas rally on the back of better than expected US macro data, including improved employment and housing statistics further helped by a larger than expected take-up of the ECB's funding facility which addressed bank refinancing concerns. Geopolitical worries towards the end of the month on the back of leadership change in North Korea and threats from Iran to close the Strait of Hormuz (which sent Brent back above $110/bbl) remained in the background as US policymakers decided to extend tax credits just before the year-end for at least another two months, and China reported better manufacturing data over New Year. Activity During the month the Fund decided to shift its bank exposure from India to China on the back of first signs of monetary easing from Chinese policymakers, while continuing to avoid European banks and remaining significantly underweight in the global financial sector. In our view, this leaves the Fund well positioned in other sectors to benefit from four thematic trends as we enter the year 2012: 1) Above average emerging growth, benefiting companies listed around the world but catering for increasingly affluent consumers in developing geographies as these economies mature. With monetary tightening in China coming to an end and European sovereign problems increasingly monetized this also includes commodity exposure. 2) Continued deleveraging in the West among governments (including the US from 2013 onwards), banks and consumers (particularly in Europe). As deleveraging goes into its most painful stages and unemployment peaks in Western geographies, we expect selective opportunities to arise from mispriced cyclical assets. 3) Supply concerns regarding energy (oil and increasingly gas) as the risk of potential conflict looms in Iran somewhat eased by increased self-sufficiency in the US. 4) Technological innovation including Smartphone adoption and mobile infrastructure build out should continue even in a lower growth environment. Outlook A rather cautious global outlook for 2012 from market commentators seems supported by a number of (geo) political tail risk factors, including the continued risk of an unmanaged default in the Euro zone, several political elections in Asia, Europe and the US and the potential for unrest in the Middle East. Nevertheless, some of this in our view is already reflected by entrenched overweight positions held by market participants outside of equities and in defensively perceived equity markets (such as the US), which in turn trade on premium relative valuations. How quickly the current risk aversion will subside enabling a return of focus to currently attractively priced structural growth opportunities will to a large extent depend on the ability of policymakers to machinate structural reform. As macro events unfold the fund will aim to adjust its current balanced positioning appropriately to benefit from related opportunities while at the same time limiting exposure to developing tail risks.   Ashburton Global Strlng Intl Equity comment-Sep 11 Thursday, 29 December 2011 Fund Manager Comment Review Once again we had a month dominated by the many macro and political concerns facing the global economy. Brutal is the best way to describe the selling pressure facing many equity markets. After holding up relatively well so far this year the US markets suffered a heavy fall, but not nearly as bad as MSCI China, which was off over 15%. With the European political elites seemingly continuing to struggle to get to grips with the ongoing crisis, the lack of firm leadership would seem to indicate that again Nero is fiddling while Rome burns. The response in the US to worries about that economy heading back into recession was the widely expected "Operation Twist", an unorthodox attempt by the Fed to bring down long-term interest rates to help the beleaguered homeowner. However the market's reaction was unequivocal with heavy losses in equities as investors worried about bank interest margins. Events in Europe and the US were further intensified by some particularly headline grabbing broker reports of an imminent collapse in China. When it rains it pours. In Sterling terms the global index lost over 4% on the month, whilst in US dollars the loss was larger at almost 9%. Both the International Equity Funds underperformed their respective benchmarks in September. Activity Broadly speaking we have kept our geographic bets unchanged over the month. We have reduced our small exposure to Russia and increased our exposure to South Korea, which is looking extremely cheap on a valuation basis. Sector/theme wise we have pared back some of our more cyclical and economically exposed sectors. In this we would include the sale of the US listed copper company Freeport McMoran, as well as the engineer Borgwarner. We have increased our weights to more defensive sectors, such as the addition of the giant German medical company Fresenius Medical care. Outlook Equity valuations are certainly getting more attractive by the month - that is if you believe we are not heading into Armageddon. Our view remains that the world is certainly facing multiple headwinds, but price action in the equity markets suggests the game is all but over. Whilst the situation in Europe will continue to make headlines in the coming months, we are still hopeful that some sort of sense will prevail. Individual stocks in most markets are now trading in many cases at cheaper valuations than the height of the Lehman's crisis. We are finding exceptional value but as ever the issue today concerns fear, and that is driving stock prices more than just fundamental research.   Ashburton Global Strlng Intl Equity comment-Jun 11 Monday, 12 September 2011 Fund Manager Comment Review For the most part of June global equities continued to sell off over the same concerns that have been bedevilling markets for a few months - namely the Greek saga, fears about the end of QE2 in the US, a growth slowdown in China and generally soggy global economic data. However, markets posted good gains into the end of the month with the Greek PM surviving a vote of no-confidence used as an excuse to buy extremely over-sold equities. The month end rally enabled the global index to post a modest gain in June in sterling terms, and a small loss in US dollar terms. Both of the International Equity Funds outperformed their respective benchmarks in June. Good performances from some of the larger holdings helped, including Hyundai Wia in Korea, Aggreko in the UK and Rockwood in the US. Activity There were no major changes to our global country/region weightings over June, with the US and other developed markets still accounting for over 80% of the portfolio. Sector/theme wise we have increased our exposure to the consumer discretionary space, primarily focused on growth in the emerging world (billion boomer theme). We took part in the successful listing of Prada, the Italian fashion giant that rose by nearly 20% into the end of June. We also have taken a position in a Japanese department store on expectations of a strong rebound in domestic consumption following the earthquake related freeze in spending. In addition, we added Volkswagen on the continuing impressive performance of the carmaker, particularly its Audi division. To make way for the increase in consumer discretionary, we have scaled back our technology exposure and slightly reduced our industrials and energy weights. We have also booked some profits in a number of successful positions, such as Rockwood Holdings in the US. Outlook Following our view last month that markets were taking an overly bearish view of the world, we feel somewhat more comforted that markets globally seem to have found their feet. With the Greek crisis seemingly averted for now, QE2 ending without a murmur and China indicating that it has its inflation under control, the global backdrop has become more constructive for equity investors. Whilst there are still undoubtedly many issues facing the global economy, with the imminent arrival of the earnings season it will make a pleasant change to focus once more on individual stocks rather than big picture macro events that we have all been wrapped up in. Expectations for earnings have fallen considerably recently, but hopefully the recent price declines in commodities will help alleviate perceived margin pressure.   Ashburton Global Strlng Intl Equity comment-Mar 11 Tuesday, 24 May 2011 Fund Manager Comment Review An eventful month saw a slight easing by Global markets as they suffered significant volatility from a number of shocks to the system. The very ugly side of the Qaddafi regime in Libya was seen, with the government mobilising its army against a largely unequipped opposition to crush the rebellion, whilst a huge earthquake off Japan's north east coast, and subsequent Tsunami, killed many thousands of Japanese. If the infrastructural and human tragedy was not enough, this was followed by a potential nuclear catastrophe at the Japanese nuclear facilities in Fukushima, as a potential meltdown was tackled. The Japanese market fell some 18% in fright, although it has made a remarkable recovery over the past two weeks by regaining half the loss. As the dust began to settle, relatively supportive news was seen in Libya, as a "no fly" zone was imposed by the United Nations, backed by the Arab League, and this quite possibly averted a civilian massacre. Further news regarding excessive radioactivity surrounding the Japanese reactors has also receded. The knock on effect of these events on future energy requirements, as well as further protests and political uncertainty in the Middle East, is there for all to see. An elevated oil price for the foreseeable future would appear to be a very likely outcome. With this news flow investors could be forgiven for feeling a little shaky. A divergence in economic news is also being seen as Europe stumbles through its debt crisis, and a Portuguese debt bail out imminent. In addition, we have a hawkish ECB threatening higher interest rates to tackle inflation. Although on the other side of the pond, US economic data has been supportive with manufacturing recording its fastest growth since 2004 and an improvement in unemployment being seen. There has also been an increase in corporate activity with a number of takeovers being seen, the largest being AT & T's US$39bn offer for T Mobile and, following further stress tests, a number of US banks have been permitted to raise their dividends. The latter suggesting that balance sheet repair amongst financials is now well underway, although, as ever, US housing remains a bugbear. Activity The asset allocation across country weightings in the Fund remained unchanged over the month. On an overall sector basis, weightings in Energy were increased, with the addition of Transocean, the US deep sea drilling group. Tullow Oil, the UK exploration and production group, and leading Russian natural gas company Gazprom have also been added. Transocean's shares have been depressed due to litigation fears and delays in further drilling in the Gulf of Mexico, but we believe worries have been overdone and, with permits now being granted, Transocean will remain a premier force in the oil service industry. These groups were largely at the expense of more consumer oriented companies. However, market conditions have been such that an opportunity to buy back into Las Vegas Sands was taken following a 10% correction in the share price. Macau, where the group has substantial interests (60% of revenues), continues to surprise with the strength of new visitors from China, and the latest statistics reveal a 43% increase in revenues from last year. One other addition to the Fund is China Overseas Land & Investments, a highly regarded Hong Kong property group investing in China. This is in anticipation of the end of the Chinese rate tightening cycle, which we believe is nearing a conclusion, and due to property shares now trading at trough valuations relative to the market. The company itself trades at a discount of 40% to its NAV, and has already achieved 70% of this year's sales targets. Outlook Whilst creating an increasingly uncertain outlook, we believe the events in Libya and Japan provide opportunities. Clearly, whilst it may be in tragic circumstances, infrastructure and energy projects will increasingly be back on the agenda and we believe the Fund is well positioned for this. There are some difficult imponderables over the coming month or so. How will the European debt crisis evolve? And will investors take this and the impending ending of US loose monetary policy in their stride? There have been concerns over the Federal Reserve's ending of Quantitative Easing (QE2) in June, as this has supported asset prices. However, we expect that as this date approaches, the monetary authorities will be on guard to ensure that US growth is not just a transitory illusion and so a softly softly approach may be adopted by future commentary from Ben Bernanke. The potential ending of Chinese monetary tightening, which has been to tackle domestic inflationary pressures, can also be viewed as relatively supportive. The fact that authorities in developing economies are mindful of the impact of overheating and inflation is of some comfort, and that steady but slower growth is preferred to boom and bust.   Ashburton Global Strlng Intl Equity comment-Dec 10 Thursday, 24 February 2011 Fund Manager Comment Review December was a fruitful month for equity investors, with most indices registering healthy gains. We are pleased to report the Fund had a good month performance-wise, ending a satisfactory year where we have registered significant outperformance versus our benchmark. News out of the US on the whole continued to improve, with economic data generally positive on the month. This, in conjunction with President Obama's tax compromise with the Republicans has led to many economists upgrading their forecasts for US growth in 2011. The situation In Europe for the moment has stabilised, after further expressions of support for the Euro from Germany and news that China is considering supporting Spanish government debt. Looking East, Japan had a particularly strong month in December, although newsflow was relatively quiet (perhaps because of it!). Global investors remain underweight this market and still uninterested. But inflows have picked up recently, partly as a consequence of a shift in preference for developed markets versus emerging markets. Emerging markets have strongly outperformed their developed peers since the lows of 2009, and now inflation fears are once again spooking markets, particularly China and India. Activity From a geographical perspective our overall strategy remained unchanged in December. Our largest country weight remains the US, where we have trimmed some of our more defensive names in favour of more growth orientated counters. For example we sold TJX (the discount retailer) in favour of Coach (luxury goods designer/retailer).This is a reflection of not only an improved macro outlook in the US, but also a proxy for emerging market growth. We increased our exposure to oil services in Europe with the addition of BW Offshore, and booked profit in a number of stocks that have run hard recently, notably Repsol the Spanish oil group. Our European names remain overweight oil services, industrials and materials as a continued reflection of the strong fundamentals our themes/equity clusters currently show, which we believe will be sustained into 2011. There was also some profit taking in Komatsu, the giant Japanese construction machinery maker. Whilst the company remains a compelling story in the long term, valuations have become somewhat stretched. This has enabled us to add some Japanese exposure to the booming Smartphone/tablet phenomenon via the purchase of Murata, a component supplier. Outlook As we close 2010 and head into a new year, we remain optimistic that the global growth recovery we have witnessed in 2010 will continue for a while longer. Of course nothing remains the same, and it is our belief that the main surprise in 2011 may be how well developed economies might perform. We have already begun to see markets pricing this in to some extent, as recent market performance illustrates. However we have not turned bearish on emerging markets, just that relative valuations look more attractive in developed markets for the time being. We remain convinced we are in the midst of a mini-inflation scare in China, and that by the second quarter inflation expectations should start to abate. Our thematic/equity clusters across all regions firmly reflect this view. We remain heavily invested in Global growth type names, both in industrials and materials. We also continue to like stocks geared into Asian consumer's seemingly inexhaustible demand for luxury goods. Corporates globally look in pretty good shape, both from a balance sheet and valuation perspective. But we are cognisant that these are volatile times, and remain vigilant to any changes in the macro outlook.   Ashburton Global Strlng Intl Equity comment-Sep 10 Wednesday, 27 October 2010 Fund Manager Comment Review The MSCI World equity index ($) rebounded powerfully in September, putting in an impressive 9.1% gain on the month. Following the Fed's strong intimation on further quantitative easing we are now in a curious phase of markets, where further disappointing data pushes equities higher. US data was no more than hit and miss this month. Durable goods orders (ex. Transportation) were much better than expected, but headline consumer confidence fell, and coupled with a stubbornly high unemployment rate, this spells danger for final demand. Ironically however, this environment is likely to prompt further Fed quantitative easing sooner rather than later and this is great news for equity markets. Farther afield concerns are rising over the Irish and Portuguese economies, and CDS spreads have blown out to near record levels this month. In Ireland, fears are focused on further huge write-downs and bail outs in the banking sector, whilst in Portugal there is mounting concern that sufficient measures have not yet been taken to rein in fiscal imbalances. Sovereign debt stresses are not new news, and markets have largely brushed off these concerns in the short term, but we should not be fooled into thinking these issues are now behind us. Activity We did not significantly change our regional weighting in the Funds in September, maintaining a significant overweight in Asia ex Japan. Whilst investable Chinese indexes essentially traded sideways relative to world markets, we saw a very strong outperformance from our Indian exposure (c.11% of the fund at month end). We have maintained a bias towards international companies with Asian exposure, and this has been reflected in the overweight to the industrials sector that we have had all year. This month we closed our underweight in the materials sector as we saw demand for raw materials including agro-chemicals starting to pick up again. In Europe we added Yara and K&S (agricultural fertilizers), and aluminium supplier Norsk Hydro with 10% of its revenues generated in Asia. We maintained a neutral 8% weighting in Japan this month, resisting the temptation to sell out of the region completely, though it seems other foreign investors have done exactly that. The yen has continued to strengthen despite the efforts of the Bank of Japan to intervene, and markets have not taken this well. However, Japanese data have actually been quite encouraging recently, not least in the housing sector, and we added a position in large cap real estate company Mitsubishi Estate. Outlook We have seen a powerful run up in equities over the last few weeks, as sentiment has turned positive again. Whilst this move is consistent with our own positive view on equities, there are still uncertainties short term that could weigh on investors' minds. Markets have quickly moved to price in QE and any hesitation by the Fed would be taken badly. There is still the risk that government intervention, perhaps by additional fiscal tightening, or protectionism, or pressure on monetary policy could rattle investors. As I mentioned previously we cannot rule out the possibility of further disruption in the peripheral European economies and their banks. These are all concerns that are likely to play their part in keeping volatility in equity markets relatively high in the shorter term. The third quarter reporting season is nearly upon us (Alcoa reports on 7 October), and we can expect all the attendant dramas that accompany every release. Analysts have been revising down third quarter estimates since July, despite strong second quarter earnings, and this may leave us skewed towards an upside surprise. Again however this is a short term consideration. We remain positive on China and are becoming more confident that the recent period of tightening in property markets is over. Long term there is a risk that we see a bubble in Chinese house prices, but as of now the authorities there are more concerned about maintaining growth in the face of slowing Western demand. The next Government 5 year plan is due to be announced shortly, and although we expect the authorities to play down growth expectations, they are also expected to reaffirm their commitment to raising living standards and providing housing for their newly urban population, and to continue to connect inner China to the more populous coastal cities. Longer term I would stress just how positive the environment should be for equities. Interest rates are likely to stay low for an extended period, and the Fed is committed to raising asset prices in order to shore up confidence and put a floor under property prices. US companies in aggregate are cash rich, and low interest rates mean they can borrow for capital spending, or buy growth through mergers and acquisitions (M&A), or can return cash to investors by raising dividends or buying back shares. All this is positive for equity investors, particularly considering the meager returns on offer for holding bonds and cash by comparison.   Ashburton Global Strlng Intl Equity comment-Jun 10 Tuesday, 7 September 2010 Fund Manager Comment Review Equity markets continued to experience heightened volatility in June, finally closing down 3.6% on the month, despite a rally of over 7% intra-month. This last month has been an uncomfortable time to be an equity investor, and it seems 'double dip recession' is the phrase on every commentators lips. Latterly the mood has not been lifted by some less positive economic data out of the US, in particular a much weaker than expected consumer confidence reading on 29th which triggered a sell off of more than 3% on the day. June's ISM manufacturing data also disappointed, raising concerns that growth in the second half of the year might be more muted. Further a field estimates of the rate of Chinese growth in the first half of this year were also revised lower (though still very much positive), and this news was taken badly. By contrast, Germany continues to surprise to the upside, benefiting from a weaker Euro, and the latest industrial production, factory orders and PMI manufacturing data all showed an improving outlook for Europe's biggest economy. News of fiscal tightening across a range of Western economies has also grabbed the headlines this month, as governments begin to wrestle with ballooning deficits, and has raised concerns that such measures might choke of the nascent economic recovery. Activity We have continued to take some short term protective action in June, raising cash balances in the Funds whilst we look for opportunities to re-invest, and this has helped to offset our cyclical exposure. We have not however abandoned our procyclical stance, and we continue to overweight the industrials and consumer discretionary sectors. In the US we have taken profits in a couple of stocks sensitive to housing markets; Williams Sonoma and Stanley Black&Decker. Whilst there is evidence from the Case-Schiller index that house prices are stabilizing, the size and impact of the shadow housing inventory - foreclosed properties yet to hit the market - is uncertain. In Europe we have also moved to a somewhat more defensive stance, taking our profit on luxury goods retailer LVMH. Away from more general sector allocations, we continue to look for specific bottom up names which we believe have good prospects and play into our longer term themes. For example in Japan this month we added a holding in Horiba - a company that makes a variety of emission measuring instruments and environmental monitoring equipment - playing to our 'clean & green' theme where we believe Japan will be a global leader. Our recent decision to increase our weighting to Europe and Korea was rewarded in June on a relative basis, particularly so for the Korean ETF which outperformed the MSCI world by over 5% on the month. Outlook Last month we were still positive on the outlook for equities. Has anything happened this month that might change our view? Well first up, markets are lower, and there is a risk that this market decline becomes self feeding. If producers and consumers lose confidence because share prices are falling, then supply and demand will both fall and production will slow. Whilst this concern should not be dismissed we think that there is still sufficient value on offer to attract buyers at present. We cannot deny that economic data have been weaker than anticipated, and they are likely to moderate further through the summer as year-on-year comparisons start to become more difficult. That said, with a reading of 55.0, the Global manufacturing PMI is still comfortably above its average since 1998 of 51.6, and is still indicating continued solid economic expansion. Weaker Chinese data this month has fueled concerns that their economy is slowing, and that this will have negative ramifications for the broader global growth outlook. We think this misses the point entirely. China acted quickly around the turn of the year to cool a property market approaching bubble territory, and they have been largely successful. We believe this puts them near the end of a tightening phase, with the opportunity to turn the taps on again if necessary. Heavy handed fiscal tightening would most likely prove a headwind for the economy, but it is a little too early to be speculating on what the effects of the recently announced austerity measures might be. True, governments have a difficult balancing act over the next few quarters in maintaining fiscal credibility (and thus their sovereign ratings) whilst still encouraging growth. But set against this, monetary policy can remain ultra accommodative for an extended period to counteract the drag. In conclusion, we don't think much has changed that would cause us to become suddenly negative on equities, though sentiment has turned bearish very quickly. We certainly don't think the arguments for a double dip recession are very compelling. Second quarter earnings season is just around the corner and this should shed some more light on the trajectory for earnings growth over the next 6-12 months.   Ashburton Global Strlng Intl Equity comment-Mar 10 Wednesday, 12 May 2010 Fund Manager Comment Review Equities were up an impressive 5.9% in March, continuing the rally from the lows of February, since when we have seen gains of 11% on the MSCI World Equity index ($). Economic data continues to show a recovering global economy, but we expect a bumpier ride for markets in the second quarter. US data has been mildly positive. Industrial production data remains strong, the latest inflation figures reinforce that there is no pressing need to raise interest rates, and when the FOMC met they remained on hold, again reiterating that rates would remain accommodative for "an extended period". Unemployment data is set to improve over the coming months (in part due to government temporarily hiring staff to carry out the ongoing US census - 1.2m workers in the first half of this year), and consumer confidence showed a marked improvement, both in terms of the current environment and future expectations. House prices, still very fragile, have shown signs of stabilising, and the government is continuing to support this process, most recently by offering TARP funds for loan modification. In a slightly surprising move, Germany has managed to convince its European partners to support a joint EC/IMF approach to solving the Greek debt crisis. This approach has been successful in addressing the fiscal problems of Eastern European countries such as Hungary, Latvia and Romania, and all parties will hope that the safety net offered will be sufficient to attract debt investors without the need to actually lend from the pot. Greece (and other 'at risk' countries such as Portugal and Spain) have been addressing their fiscal deficits - once the 'noise' surrounding possible default has died down, it is to be hoped that sovereign spreads will start to tighten again. Nonetheless questions were raised about the sustainability of the Union over the longer term, given the economic imbalances evident amongst its members, a gloomier outlook may dog European equities for the time being. Activity Our regional allocation has not changed this month, and we maintain our significant overweight to Japan. Japanese equities recovered the relative underperformance they experienced in February, and the Topix rose 9.5% in local currency terms. This performance was certainly helped by the yen weakening 5% against the dollar and on a technical basis the yen now looks to have broken its strengthening trend. Within our Asia ex-Japan exposure, we have recently switched some exposure from China to India. This is not necessarily a long-term view on the relative merits of these two powerhouse economies, but rather an acknowledgement that whilst markets are rising we expect the higher beta Indian markets to out-perform. We are not much changed in our major themes this year, and we still favour industrials to maintain the relative outperformance they have shown over the last few months, benefiting from a 'perfect storm' of residual fiscal spending effects, inventory re-stocking, the improvement in credit markets (cheap funding), strengthening margins and the return of the capex spending cycle that was deferred in 2009. Outlook There are obviously still risks to be considered (alas, thus it was ever so), not least the poor state of the US housing market, the threat of disruptive banking regulation and even a possible bubble in commodities further down the line, and ultimately the central banks will decide that enough is enough in terms of the loose monetary policy that has been such a boon to equity markets. However, we believe that the weight of evidence still points to more equity strength over the coming months, though we expect volatility to start to rise from its currently very low levels. US companies will start to report first quarter earnings in April and perhaps for the first time in a long time they will find meeting earnings expectations a tough challenge, especially in terms of top line revenue growth, and this is likely to cause markets to become choppier. We are happy to continue with our overweight in Japan. We expect the yen to weaken further, and Japanese companies have traditionally performed well in a cyclical recovery (think cars - Toyota notwithstanding - and technology). However we note with interest that valuations in both Asia ex Japan and Europe have corrected significantly over the last six months.   Ashburton Global Strlng Intl Equity comment-Sep 09 Wednesday, 9 December 2009 Fund Manager Comment Review Equity markets continued to rally in September, the MSCI World index ($) gaining 3.8% and we are now very close to a 50% re-tracement of the whole bear market from October 2007 to March 2009. Conditions are still favourable for equities, but over the month end we saw a pick up in volatility as some less positive economic data hit the wires. Economic releases generally this month have been more mixed, and over the last few days we have seen firstly durable goods orders and very recently the ISM manufacturing data out of the US missing economists' expectations. Durable goods data is a very erratic series and one should not read too much into one month's figures, but the ISM data was more concerning, as it is a much watched leading indicator for the US economy. Of the latter, it is worth bearing in mind two things; firstly the index (with a reading of 52.6) is still signalling that the US economy is expanding, and secondly; it is a diffusion index, recording the rate of change on a month-by-month basis, so it was most unlikely the strong rate of change we had seen in the preceding months could continue. Moreover, it is possible the data series has been distorted by the 'cash for clunkers' scheme, a short-term fiscal stimulus measure that ended in August. Economists have been slow to acknowledge the strength of the global economic recovery this year, and equity markets have fed-off a wave of data that has surpassed expectations. We may now have reached a point where expectations will more closely match reality and markets will lose some of this tailwind for the time being. Activity Sectorally this month, we have tactically reduced our materials exposure short-term, switching a little into the energy space, where we favour oil services names. The oil price has traded broadly sideways since June, and more evidence of recovery will be needed to push demand expectations higher. There is also a threat of increased regulation hanging over futures markets. However, oil services companies should perform well even if the oil price stays put, benefiting from a reversal in the long-term trend of under-investment in the industry, coupled with a release of pent-up maintenance and replacement spend that was deferred during the financial crisis. Moreover, oil exposure generally will perform well if markets start to contemplate the return of inflation down the line. Whilst we have no more than a neutral weighting in Asia ex-Japan at the moment, we are still seeing opportunities to benefit from Chinese growth via Western equities. For example, we added Wynn's Resorts in the US in September. This is a gaming and hospitality company with a significant presence in the island of Macau, the Las Vegas of China. The Chinese authorities have recently relaxed restrictions on the number of times a year its citizens may visit and we expect a sharp pick-up in revenues will result. Outlook Our outlook for equities in the coming months remains positive, and there are several factors which should continue to support businesses going forward: o The oil price is reasonably stable (though perhaps not especially cheap on a 5 year view), and well below the peak last year, and gas prices are very cheap, particularly in the US, and a key component in manufacturing. o It is cheap to borrow if willing lenders can be found, or otherwise easy to raise funds by new share issuance (in fact those companies issuing new shares have actually been rewarded by the markets this year). o Unit labour costs are low and falling (though it is to be hoped that these stabilise if end demand is not to be negatively affected). o The multiplier effects of ongoing fiscal spending plans are yet to be seen. Whilst these will be felt with a lag, they should translate to more jobs and more disposable income, supporting a pick up in demand. We expect the third quarter earnings season in the US will provide more evidence that these factors are starting to feed through into earnings in aggregate, though it is likely we have a volatile few weeks ahead of us as results play with investors' emotions. In the very short-term, several technical indicators have moved into overbought territory and we might expect a reasonable correction, or at least a period of sideways price movement. There are concerns about the prospects for global growth long-term. One can certainly debate the detrimental effects of higher tax rates to combat the high levels of public debt building up in the West, and at some point central banks will have to address the question of when to raise interest rates. These may in time become serious headwinds, but for now we believe equities offer the only real value in a globally stimulative, low interest rate environment.   Ashburton Global Strlng Intl Equity comment-Jun 09 Tuesday, 15 September 2009 Fund Manager Comment Review Investors took stock in May, the MSCI World Equity index ($) traded broadly sideways, falling marginally by 0.6%. If the first half of the year has seen markets correcting from extreme valuations, then the path for the second half will likely depend far more on the prospects for recovery in global growth. Investors have now concluded that we are not likely to see the new Great Depression, and the rally in equities (and corporate debt) since mid-March in large part reflects this. Moreover, the unsustainable gap between resilient demand and dramatic cutbacks in production has led to very low inventory levels and this has precipitated a sharp bounce back in production globally since the turn of the year. Figures released in June reinforced this trend in improving ISM industrial production and manufacturing data across the industrialised nations. On a positive note, China continues to confirm a return to economic growth, and the story of Chinese demand supporting broader economic growth is back in favour. This has been reflected in strong basic materials prices, and more generally in the performance of commodity currencies such as the Australian Dollar and the Brazilian Real. Less positive however, was the latest unemployment data out of the US. We had seen employment trends improving this year, but unfortunately the latest US non farm payrolls data were weaker and average weekly earning also fell, raising concerns for final demand. Activity In the Fund we are positioned for a continued recovery in economic growth in the second half of the year. We have stuck with our overweight in industrials, have increased our exposure to the early cyclical technology sector, and have increased our weightings in consumer discretionaries from underweight back to neutral. Last month, we reported that we had taken discretionaries to underweight; our decision to reverse this was in reaction to the speed of the sell-off in the sector, and the relatively attractive valuations we are now seeing in the short-term. We moved underweight basic materials in June as some of the steam came out of the sector. The consensus view is that prices, particularly copper prices have run ahead of themselves short-term, forced artificially high by Chinese stockpiling, and that we will see them come off somewhat over the summer. The surprise could be that demand from the rest of the industrialised world is stronger that anticipated, and we are monitoring news flows carefully for a signal to reengage. Regionally, we have taken the opportunity to add to our Asian exposure on some weakness. One area of particular interest to us in the region is Taiwan, and we are in the process of raising our exposure there to around 3%. The country looks economically solid, and should benefit from both a return of Western consumer demand, and closer relations with China that have developed recently. Outlook The US second quarter earnings season is nearly upon us, and we believe our view of the improving backdrop for equities will be reflected in an increase in the number of positive earnings surprises. US employers are far more able to cut headcount than their European counterparties, and though this has a negative effect on overall consumption, it also means that companies are more easily able to improve profit margins, because wages are typically the biggest cost to a business. We are expecting better profitability, tempered by cautious comments. There is still a great deal of skepticism over the likelihood of a "V" shaped recovery in equities this year. This is perhaps understandable given the tumultuous two years we have just experienced, and which many investors will have never experienced before. It can reasonably be argued that it will be difficult, maybe impossible near term, to predict the unintended consequences of the various non-conventional measures taken by the Fed and others to avert a financial meltdown. Nor is it easy to argue that equities still represent the bargain of a lifetime after the 40% rally we have just seen. Nonetheless even a return to modest growth would make equities better value than bonds or cash, particularly if inflation expectations pick up. In summary, markets are still expressing significant doubt about the sustainability of the rally this year. We think this caution represents a good opportunity to take advantage of valuations that are not yet reflecting a return to economic growth. We believe that emerging market equities are still in a position to outperform the broader markets, and that industrial stocks in particular will benefit from improving data in the second half of the year.   Ashburton Global Strlng Intl Equity comment-Mar 09 Friday, 15 May 2009 Fund Manager Comment Review Equity investors have finally found some shelter from the storm; the MSCI World Equity index was up 7.2% in March, and more impressively has risen over 23% from the lows recorded on 9 March. Given the moves we have seen over the last 18 months it is a little early to be calling a bottom in markets, but there may be reason to believe we are witnessing the first green shoots of recovery in the global economy as we move into the second quarter. Much has happened to improve sentiment in March. A Public-Private Investment Program (PPIP) was announced in the US involving $500 billion of government funding (potentially rising to $1 trillion), whereby private investors will bid to participate in the purchase of toxic from banks and other institutions. The G20 summit in London also delivered a positive conclusion, pledging $1 trillion to a global solution, including $500 billion in funding to the IMF to allow them to lend to struggling economies. In China, industrial production switched back into expansion territory, and we have also seen data out of the US and the UK which suggests consumer consumption has held up much better than expected this year. This last point is worth noting, because it suggests producers will have to increase output to meet demand, which would be a positive for markets. Activity In terms of sectors, the industrials, materials and consumer discretionary sectors have all performed strongly this month, implying that markets have started to price in an early cycle recovery, whilst defensive sectors - consumer staples, healthcare and utilities - have sold-off on expensive valuations. We do not have any big bets against the benchmark at the moment, but have started to drift towards names offering more exposure to a nascent recovery, such as auto maker Nissan Motor in Japan and China Petroleum and Chemical (Sinopec) in Hong Kong. Financials stocks have bounced hard, a combination of short covering and latterly, optimism over the PPIP plan to relieve US financial institutions of legacy assets. The KBW bank index (a US cap-weighted bank index) has risen 75% from peak to trough in March, albeit from very low levels. The sector is still a minefield whilst there is still so little visibility about the potential for write-downs, though for those banks with better balance sheets, the next 12 months might provide a fertile breeding ground for earnings from vanilla banking operations, certainly if we see a return to growth. It is probably still a little early to be sounding the all-clear on banks, and we expect some profit taking to occur over the course of the next few weeks, though we have reduced our underweight exposure as a trading measure, adding a unit in JPMorgan Chase in the US. Outlook Whilst there is much to be heartened by this month, we think it would be wrong to assume that it will all be plane sailing from here on in. There has been much done to stabilize the banking system, but it is not inconceivable another Lehman's style event could throw the sector into turmoil. The PPIP has initially been received well, but carries with it many risks, whether or not it succeeds. Political intransigence could yet see cash withheld from funding activities, and a rising wave of protectionism. From a technical perspective, the market has run up very far, very fast, and should be due a correction soon as still nervous investors take some short term profits. The S&P 500 is bumping up against some important resistance in the 850-870 level, and whilst a break above this would be bullish, it is likely we will see the rally fail initially. What we would like to see over the next month is for economic data to continue to improve, or at least not to deteriorate further. What we will see is the start of the quarterly earnings season in the US, and all the attendant volatility this has stirred up in equity markets over the last 18 months. We think it likely earnings will still come in on the low side of expectations in quarter 1, though company guidance on the outlook for the next 12 months should be telling. The Fund is pretty much fully invested as we move into the second quarter, and we will be looking at any pullback as an opportunity to increase the beta of the portfolio, switching from a defensive stance into more cyclical names.   Ashburton Global Strlng Intl Equity comment-Dec 08 Wednesday, 25 March 2009 Fund Manager Comment We have maintained our defensive stance in the Funds through December, but we have changed the focus. We are beginning to see some positive momentum in industrials stocks, specifically in those names which should benefit from a global round of infrastructure spending. As we move into 2009 we are becoming more optimistic on the outlook for equities. Lower mortgage rates are now stimulating mortgage refinancing activity and a low oil price boosts disposable real incomes.   Ashburton Global Strlng Intl Equity comment-Sep 08 Thursday, 30 October 2008 Fund Manager Comment The MSCI world equity index fell 12.1% in dollar terms in September, the worst single month performance for 10 years, and the fourth worst since 1970. No market has been spared, and there is little by way of sector leadership, outside of large cap, defensive stocks. A more general risk aversion has seen a flood of funds out of equities and into US Treasury bonds. On 15 September, Lehman Brothers went bankrupt after reporting the biggest loss in their history, precipitating another fire-sale of structured products and further massive write downs in the banking sector. To add to the misery, the flow of economic data over the last few weeks has been unremittingly bleak. Manufacturing growth in the US, Germany and Japan has turned decisively negative, and we are probably in a technical recession in most Western economies. In response to the deepening crisis, the US Treasury proposed a Bill to provide a $700bn rescue package to the finance industry, to secure the confidence of depositors. It came as quite a surprise when the Bill was defeated in congress on its first reading. The Bill was subsequently passed in a watered down form, but lacked the power to sway sentiment, and markets have sold-off again since. In the Fund we have maintained our underweight in financials and energy, and have increased our exposure to consumer staples as a defensive measure. We are tending to favour large cap names, especially in the financials space (HSBC, BNP Paribas, JP Morgan). We do not think that a new cyclical bull market starts here, but a tradable rally is in the offing. We do believe that we should see the start of an extended bottoming process over the coming months. We expect the Bank of England to cut rates very soon, possibly by a significant amount, and it is now likely that the ECB will start to cut before the year end.   Ashburton Global Strlng Intl Equity comment-Jun 08 Tuesday, 26 August 2008 Fund Manager Comment The persistently high price of oil and attendant inflation concerns drove world equity markets sharply lower in June, and the MSCI world index was down 8.2% on the month in dollar terms. We are now within touching distance of the January lows. It is very hard to see past the oil price at the moment. Oil has risen by over 40% this year and technically still looks to be in a healthy uptrend. This may be the result of excess speculation, or it may be the result of a fundamental shift in the supply-demand structure of oil prices; either way we are now approaching the psychologically significant $150 target, identified by the influential oil hedge fund manager, Boone Pickens, a couple of months back. The Fund is currently underweight energy stocks in anticipation of a correction around these levels, though we would see any meaningful pull back as an opportunity to get nearer to the benchmark. Fears about inflation stem from the high oil price and from high food prices. The concern is that higher input costs will be passed through into higher prices for goods and services. If this translates into higher wage demands, then we will have the start of an inflation problem. This is possible but unlikely given rising unemployment rates in the US. Ultimately a global slowdown and deflation in the West may prove to be more of a risk. We reduced our exposure to India last month, on concerns about inflation and prospects for weaker growth as the result of interest rate rises. Our discipline has now forced us to cut Asian exposure more generally, as the region has underperformed significantly. We have however increased our Japanese exposure as an offset to this.   Ashburton Global Strlng Intl Equity comment-Mar 08 Monday, 19 May 2008 Fund Manager Comment We saw continuing weakness in equity markets in March and the lows of mid January were re-tested. Thankfully these lows have held, at least for now, and markets have staged something of a rally into the month end. The MSCI world index was down 1.25% on the month in dollar terms. The Fed cut rates by 75 basis points on 18 March, and has now cut rates by 3% since last September. More importantly, they stepped in to stop the collapse of Bear Stearns, the (then) fifth largest US investment bank. The Fed has clearly signalled that it will act to protect large financial institutions from collapse and markets have been comforted by this realisation. We expect that a combination of liquidity and a lessening of risk aversion will particularly benefit emerging Asian economies. We believe they now offer good value and we have increased our exposure in this region, concentrating on industrial names. In Japan the smaller cap indexes (the Mothers index and more especially the Jasdaq) have started to outperform the Topix on a relative basis. This early sign of broader participation has often signalled a period of strength in Japanese markets generally. Europe has performed relatively well recently, but it now faces the same sort of problems that the US faced 12 months ago, in the form of slowing growth and weakening property prices. Whereas the Fed has cut rates aggressively in the US, the ECB is unlikely to do so, and a strong euro currency is likely to weaken the euro-zone economy still further. There is some evidence to suggest equity markets have bottomed, but technically the outlook for equities is not clear-cut. In this volatile climate we remain vigilant for a meaningful shift in the weight of evidence back towards equities.   Ashburton Global Strlng Intl Equity comment-Dec 07 Monday, 18 February 2008 Fund Manager Comment December is traditionally a good month for equities, but markets failed to deliver a Christmas rally this year. The MSCI World Equity Index in US dollar terms was down 0.9% on the month, as economic data continued to point to a possible recession in the US in 2008. We still hold a positive view on equities over the medium term. Global indices still look fair value at worst and there is still a lot of money sitting on the sidelines. Unless company earnings really do collapse in the coming months, equities should still offer the best returns of all asset classes in 2008. In the short-term, however, there are negatives which markets have yet to fully price in. We are concerned about the lack of liquidity in inter-bank markets, poor market breadth, a stubbornly high oil price and in particular, falling house prices in the West. Our hope is that, in the face of a possible recession, the Fed will cut interest rates aggressively. The markets have all but priced in a cut at the January meeting of the FOMC. Two or three cuts in the first half of 2008 would get interest rates to a more neutral stance, and would be very positive for equities. In the Fund we ended the year in defensive mode, maintaining our underweight benchmark exposure to financials and cyclicals, and indeed to equities in general. We increased exposure to gold stocks toward the end of the month to benefit from uncertainty in currency markets. In summary, we are positive for the outlook on equity markets, but would prefer to wait for bad news to be priced in before significantly increasing equity weightings. We will continue to look for evidence that a bottom has been made and are hopeful that the trigger for this will be decisive action from the Fed.   Ashburton Global Strlng Intl Equity comment-Sep 07 Wednesday, 24 October 2007 Fund Manager Comment The quarter has been extremely turbulent. At the start of the quarter, bond yields were rising in response to a perceived acceleration of growth. Around mid way through, the US sub prime endemic caused global equities to fall substantially and at the end of the reporting period, equities have once again regained ground dismissing the longer term effects that credit issues may pose. Performance has been pleasing, outperforming all reference points with less volatility. From a regional perspective, we dramatically reduced Europe. The strong euro, a comparatively resilient ECB and cyclical growth bias persuaded us that the region could struggle. We switched much of this to America, which, although apparently at the centre of the present malaise, will benefit from high earnings abroad and a falling US dollar cost base. Moreover, the Federal Reserve has shown its willingness to resolve short-term credit worries by cutting interest rates. The sector performance is telling. We continue to focus on capital spending themes. There has been a glaring absence of investment in infrastructure over recent years with some industries more deplete of investment than others. The longer-term beneficiaries continue to be resources with industrial and technology sectors at the interface of the two. We have been cautious on financials for some time as earnings appeared fragile and the tightening interest cycle was challenging. We had not forecasted that a credit crunch was imminent but the manifestation of rising rates and slowing housing markets are likely ingredients. Having a large proportion of our currency exposure unhedged was beneficial. The pound is in a broad topping process and the US dollar continues to fall, albeit there may be a reprieve in the months ahead.   Ashburton Global Strlng Intl Equity comment-Jun 07 Wednesday, 26 September 2007 Fund Manager Comment June finished off a very good quarter for equity markets around the world. Economic growth looks to be reaccelerating and equities pushed higher accordingly. The disparity between regions was not significant albeit Europe and Asia managed to outdo America and Japan. Both Europe and Asia have better growth prospects and remain at a valuation discount to the overall market and future gains from these regions are expected. On the same theme, Energy, Technology and Industrials proved the better industries confirming key themes of infrastructure spending and a squeeze on energy prices due to persistent supply constraints. Fear of contagion from collateralised housing debt structures weighed heavily on financials. We expect the banking sector to take a little time to resolve these issues. In contrast, insurance continues to be the beneficiary of favourable developments - with valuations so discounted insurance appears to be a comparatively low risk. Currency markets were quiet as the high yielding currencies continue to strengthen, consistent with investors' apparent high-risk appetite. The overall risk environment is not as muted as it seems. Substantially higher borrowing costs are not consistent with higher equity valuations. We expect a consolidation in the market over the next few months, albeit the structural condition for equities continues to look favourable.   Ashburton Global Strlng Intl Equity comment-Mar 07 Wednesday, 20 June 2007 Fund Manager Comment The first quarter of 2007 has been another turbulent time for financial markets as news that some of the most over borrowed American consumers are no longer able to make interest payments on their mortgages. This has caused widespread concern amongst the financial community causing many to sell companies in order to reduce risk in their portfolios. Such events have a tendency of being extrapolated to their worst possible extent and so many investors are forecasting a general collapse in the property market and its consequent negative impact for consumption. Yet, history shows that such events seldom reach their worst extreme - markets do what they can to make sure this does not happen. The widespread selling of shares has made valuations even more reasonable, interest rates have broadly fallen, providing a further incentive for merger and acquisitions and there are many more people out of the market than there were only a matter of weeks ago - these investors are now latent buyers. This is good news. Moreover, we feel assured that increasing prices for Nickel, Lead and Copper are signs of widespread demand, as are the high levels of freight volume across the world. Consequently, the portfolio has taken a buoyant tone. We are notably overweight Europe where exports are still robust and demand is emerging from hibernation and we continue to have a large exposure to commodity related companies.   Ashburton Global Strlng Intl Equity comment Dec 06 Wednesday, 28 February 2007 Fund Manager Comment The year end finished off in very bullish tone as global equity markets surged ahead. Over recent weeks, the weight of all available information has improved and so too has the net equity weighting in the strategy, which has been beneficial for performance. In particular, interest rates have remained off their highest levels causing the trend in equities to resume. This together with lower energy costs, has surely been the main catalysts for this move and the consequent broad based rally we have seen. As you might expect, it is not all plain sailing and we do have some concerns. The rate of this move is beginning to wane at a time when investors are becoming more complacent about the soft landing scenario. This level of optimism will only be corrected over time with frustrating market moves. Broadly speaking, both sector and regional allocation has been on the button. The overweight stance towards cyclicals, utilities and communications at the expense of non-cyclicals, healthcare and technology has served us well as have the over-weighted positions in Asia, Europe and Japan at the cost of America. As we stand today, 2007 should be a good year but it will be more challenging as earnings growth slows and the path for interest rates becomes a little clearer.   Ashburton Global Strlng Intl Equity comment Sep 06 Wednesday, 29 November 2006 Fund Manager Comment The falls in world markets at the end of the second quarter marked a significant change for financial markets. Whilst many believe that these falls were enough to discount the many risks that had built up in the last three years, unfortunately we take a different view. The most commonly cited reason for optimism is robust earnings growth. As a fact this is certainly true but there are two questions that must be asked. Does robust earnings growth mean that it will continue ad infinitum and does robust earnings growth equal an advance in prices? Studies show that significantly above average earnings growth precede periods of equity market weakness. The early '80 and early '90 are prime examples of this. Secondly, we observe that growth rates in excess of 25% of trend are consistent with some of the slowest periods of growth in the next two years. Yet, while earnings were being revised higher and monetary policy was reasonably accommodative, we were happy to have an aggressive strategy to maximise wealth. Today, earnings are being revised lower and monetary policy looks restrictive. Together these factors are likely to induce slower growth and a fall in prices as observed historically. The weight of evidence is neutral and the strategy has been accordingly defensive over the quarter. Wealth maximising strategies sometimes require caution, which in our opinion is suitable in the present environment.   Ashburton Global Strlng Intl Equity comment Jun 06 Thursday, 24 August 2006 Fund Manager Comment The Equity markets were mixed this month giving modest respite from the losses during the month of May. Our indicators however, remain more cautious indicating that the risks associated in the market are not worth embracing in entirety. Equities remain cheap and from a short-term perspective sentiment entered extreme territory consistent with a counter trend rally. Similarly the long-term trend for equities, although challenged, remains up both in real terms and against bonds. On the other hand, the cost of capital around the world continues to edge higher and despite much conjecture there are no signs of this tailing off any time soon. We have also seen a negative shift in earnings' revisions which come just before the next reporting season. From a technical perspective, the structure of the market has changed as the average stock is in a far worse technical position than the overall market. Most significantly, companies and sectors that have good fundamental merit are declining in price whereas those with questionable merit are being bought by investors. Risks remain high and are being managed accordingly. We are cautious at this time and have employed a defensive position. Under such conditions it is important to focus on the real return of the portfolio, not what the overall market is doing. We are aiming to deliver growth in common sense terms which from time to time requires us to adopt preservation strategies. If the weight of evidence becomes more supportive then so will strategy - not before.   Ashburton Global Strlng Intl Equity comment Nov 05 Tuesday, 13 December 2005 Fund Manager Comment All major regions of the world enjoyed robust Equity markets in November. Japan continued to lead the way and the weight of information continues to support an overweight position to Japan, albeit we continue to moderate that position by moving funds towards America. Sector strategy was on the button with continued emphasis towards Financials, Industrials, Technology and Materials at the cost of Utilities and Communications. The US dollar is at a very important juncture. Interest rate momentum has supported the currency for the last year but we are starting to see that dynamic move in favour of the euro. However, for the moment we remain with the trend of a stronger US dollar. Stock selection has been good in November with the companies we are invested in, on aggregate, outperforming the market. In particular, Apple Computer, CSR and Old Mutual have been especially beneficial to the portfolio. The weight of evidence for further equity market advance has swung considerably in recent months but by and large remains supportive. We recognise that our longer term indicators have failed to confirm the recent strength but it is unwise to fight the weight of evidence. Under these circumstances, if robust hedging strategies are required in coming weeks, rest assured that they will be implemented.   Ashburton Global Strlng Intl Equity comment Sep 05 Monday, 21 November 2005 Fund Manager Comment We warned last month that our shorter term indicators were showing signs of deterioration, but the longer term outlook remained positive. The longer term indicators certainly showed the way forward with equity markets rallying strongly. The weight of evidence favoured a modest increase in the Japanese equity allocation with a gradual reduction in the overweight positions to Europe and Asia. Our position in Gold shares had a positive impact on the portfolio, as the price of bullion rallied strongly in spite of the strong US dollar. Energy companies were a key beneficiary of the hurricanes, but their valuation looks extended - a neutral position is maintained. We did increase exposure to healthcare which tends to be non-cyclical and insensitive to a poor liquidity environment. We added to Japanese banks which are enjoying improved asset quality as the market rallies. We took profit on the Canadian dollar position and increased the allocation to the US dollar. Although we remain underweight the US dollar, this position is now only modest recognizing the attractive upward interest rate momentum. Key performing companies over the month were CSR Plc (yet again), MEMC, Newmont Mining and Nippon Steel. The weight of evidence remains broadly positive while we are watching for deteriorating breadth, emerging market and small cap underperformance and bond yields breaking higher to warn of any impending change in trend.   Ashburton Global Strlng Intl Equity comment-Aug 05 Thursday, 15 September 2005 Fund Manager Comment August saw broad based weakness in global equity markets with the notable exception of Japan. This poor market action has damaged some of our shorter term indicators but the weight of information is still largely supportive. Loyal to our approach we have altered strategy to reflect this, moderately increasing our hedged position. From a macro economic perspective, we are increasingly concerned about the effects of the high oil price and dwindling liquidity. At what point these two negative developments begin to take their toll is uncertain, but we believe some caution is merited. Over the course of the month we reduced our American exposure further adding to Europe and Asia. We have adopted a more underweight position to the US Dollar preferring the value of the Yen, Swiss Franc and Swedish Krona and commodity driven Canadian Dollar. We maintained our underweight to Consumer Staples and Financials preferring Industrials, Basic Materials and Healthcare. Over the month, the recently acquired Korean holdings in Hyundai Department Store, KT&G and Samsung Fire and Marine were amongst the best performers, as were Apple Computer and MMO2. In summary, we remain moderately optimistic and vigilant of any deterioration in our long term indicators.   Ashburton Global Strlng Intl Equity comment-Jul 05 Friday, 26 August 2005 Fund Manager Comment Equity markets were modestly positive throughout June as bond yields remained low and the attractive valuations in Asia and Europe serve as a floor under the market as a whole. From a relative perspective, bonds are looking increasingly overvalued relative to equities, encouraging some investors to switch from bonds to equities. Whilst the earnings cycle looks mature and profit margins are under attack, these considerations appear to pale in significance in light of a benign inflationary environment and interest rates at levels which still invite capital investment. While this dynamic continues, all will be well. However, we have taken some precautionary steps as the markets are displaying signs that lead us to be less than 100% optimistic. Specifically, we have maintained a large capitalization focus, raised cash levels, introduced hedges and are especially vigilant that the companies we are invested in are the best of the best. Over the coming weeks, it is likely that the more cyclical theme of the portfolio will be adjusted, reflecting the mature stage of the economic cycle and, for now, we remain optimistic that the general slow down in the global economy does not herald something more pervasive. While breadth remains robust, valuations reasonable and interest rates low, the weight of information continues to suggest further upside in equity markets in the medium-term.   Ashburton Global Strlng Intl Equity comment-Mar 05 Monday, 6 June 2005 Fund Manager Comment After a slow start to the year most global equity markets, except the US, continued in a strong vein during the first quarter. Europe continued as the best performing region, on a broad based rally buoyed by continuing strong global demand from the Far East, with some bourses reaching multi-year highs before light profit-taking into the quarter-end. On Wall Street, market action was very choppy as investors digested the prospect of an acceleration in interest rate hikes, the inexorable rise in the oil price and mixed economic data finishing the quarter down around 2.5%. Having lagged the major markets last quarter, Japan saw increased money flows and was up over 4% by mid-March. However, a weakening yen and volatile economic figures led to a healthy sell-off into the fiscal year end. The fund remains underweight Wall Street and took profits in Europe to add to our aggressive overweight position in Japan/Asia, where valuations remain compelling and the technical picture continues to look constructive. Having benefited from the strong performance of energy and basic materials stocks, the fund locked in some profits in these sectors and adopted a more defensive stance by also lightening up in financials and increasing exposure to healthcare.   Ashburton Global Strlng Intl Equity comment-Dec 04 Wednesday, 23 March 2005 Fund Manager Comment The narrow trading ranges which had been firmly in place for over nine months were decisively broken in the fourth quarter, with most global equity indices moving to new multi-year highs. The major catalysts behind the breakout were the removal of uncertainties over the US election, the sharp reversal in the oil price and a more positive trend in economic data in the US and China. Although the interest rate cycle has bottomed, expectations were for a less aggressive move in rates than earlier forecasts, which provided additional support for equities. After a poor relative performance for much of the quarter, Japan played catch up in the last few weeks of the year and saw the Nikkei break up through important resistance levels. Strategically, the Fund remains very overweight Japan and Asia, which continue to offer the best value and growth prospects, and overweight Europe, given reasonable valuations and a firm currency. The Fund is therefore significantly underweight the US. Emphasis continues to focus on the economically sensitive sectors such as basic materials, energy and industrials, as the "soft patch" in economic growth seems to be coming to an end. Exposure to financials, particularly in Asia (notably Japan) has been increased substantially during the quarter. Cash balances remain low, given that the positive momentum in the markets is expected to continue into the New Year.   Ashburton Global Strlng Intl Equity comment-Nov 04 Monday, 3 January 2005 Fund Manager Comment Most major global indices, with the notable exception of Japan, finally broke out of their narrow trading ranges that have been in place since the end of 2003. The principal catalysts being the end to uncertainties over the US election after President Bush was re-elected, the sharp sell-off in the oil price coupled with better than expected US employment data and a rebound in US consumer confidence. In addition, despite another increase in US interest rates, investors are now expecting a less aggressive interest rate policy. The Japanese market ended the month largely unchanged, as the positives from a lower oil price and better economic fundamentals domestically and for the US and China were overshadowed by the strength in the yen. The fund’s overweight position in the Asia Pacific region was slightly increased by adding to Hong Kong, Malaysia and Taiwan. The exposure to Europe, the high beta play on Wall Street, was also added to. These changes have further increased the Fund’s underweight US stance, principally on a valuation basis. The recent ‘soft patch’ in economic growth seems to be coming to an end and, as a result, the sector allocation has a heavy bias to the more economically sensitive sectors. Exposure to the financial sectors, primarily in Asia and non-core Eurozone, were also increased at the expense of US and core-Eurozone financials. Cash balances remain low, given the view that the markets are likely to be strong into the New Year.   Ashburton Global Strlng Intl Equity comment-Sep 04 Thursday, 18 November 2004 Fund Manager Comment The overall environment has been less equity-friendly than we had envisaged. Although China has defied analysts' worst expectations, its continued success has, in turn, helped to push up the oil price. US interest rate expectations have eased, witnessed by renewed falls in US bond yields, mainly because of the mid-cycle growth pause, itself a product of the high oil price. The net result has been that most stockmarkets have remained stuck in their previous trading ranges and the global equity index ended the quarter marginally lower. Whilst the broader Asian region has done well, Japan has been disappointing as slower economic growth and a record high oil price have taken their toll on sentiment. Elsewhere, Europe has been one of the better performers on a relative basis, as it has become increasingly evident that economic conditions have improved pretty much everywhere, with the exception of Germany. After the recent weakness the principal focus of the fund's investment strategy during the quarter has been to increase exposure to the Asia Pacific region, which at the end of the quarter stood at almost 30% of the fund. Other geographical changes have been to overweight Europe, given improving fundamentals and its higher beta, at the expense of US which is further underweighted. The Fund continues to overweight the economically sensitive areas, of basic materials, industrials and energy, given our positive view on China.   Ashburton Global Strlng Intl Equity comment-Aug 04 Friday, 17 September 2004 Fund Manager Comment The weakness in global equities in July continued through into mid-August, with many major indices revisiting or even breaking their May lows. The markets were dominated by the volatility in the oil price and the deterioration in economic news during the summer, which coincided with the Federal Reserve increasing interest rates by 0.25%. However, oil touching USD50 marked the turning point for the markets. Technically, the oil price was looking very overbought and in need of a correction and the subsequent sharp move back to the USD40 level provided the catalyst for an oversold rally in equities. The main geographical strategy change was to rebuild exposure to the Asian region, particularly Japan, after the recent sell-off. The outlook for the Japanese economic recovery finally looks to have more solid foundations than in the past and valuations remain very compelling, particularly when compared to western markets. The Fund continues to overweight the economically sensitive areas of basic materials, industrials and energy, given the view that the current slowdown in economic growth rates are temporary and is a normal occurrence in the recovery cycle. Exposure to healthcare and consumer staple sectors have been reduced further, given their poor relative performance. Click here for original article   Ashburton Global Strlng Intl Equity comment-Jun 04 Wednesday, 1 September 2004 Fund Manager Comment Global equities experienced a particularly volatile second quarter. The markets initially experienced a sharp sell-off due to sharply higher oil prices and a dramatic shift in expectations towards the outlook for US interest rates and concerns that the Chinese authority's attempt to cool their overheating economy might result in a hard landing. The Asian markets were hit the hardest, given the region is most sensitive to all three factors. The major global indices remained under pressure until the middle of May, before rallying strongly into the end of the quarter to finish marginally higher, on a swift reversal in the very negative sentiment. Apart from the markets being very oversold on a short-term basis, sentiment improved after reassuring statements from Greenspan that any increase in US interest rates would be measured and on the announcement that OPEC would increase oil production, which saw the oil price fall back below the USD40 level. The main strategy changes during the quarter have been to reduce the very overweight exposure to Japan due to its strong relative outperformance and also to pare back the exposure to Europe, principally for stock specific reasons. The weightings to financials and utilities have been reduced given both sectors tend to underperform in a higher interest rate environment. The fund, however, remains overweight the economically sensitive areas such as basic materials, industrials and energy, as the positive outlook for the global economy remains intact.   Ashburton Global Strlng Intl Equity comment- Mar04 Wednesday, 19 May 2004 Fund Manager Comment After a firm start to the year, many major indices made new 52-week highs but then began to falter as investors' confidence was severely tested by the tragic terrorist attack in Madrid. As a result, European markets experienced increased volatility and inevitable profit taking. In the US, the S&P ended marginally higher whereas the Dow and Nasdaq finished in negative territory as additional concerns grew over the visible lack of job creations. In contrast, the Japanese markets began to rebound due to a series of strong macro economic data releases, finishing the quarter with their biggest fiscal year gains since 1973 (Nikkei +9.73%/Topix +12.99% on the quarter). Within the Fund, we used the correction in markets as an opportunity to increase equity weightings by about 12%, leaving cash at 3%. With improving investor sentiment and strong fundamentals, we moved to overweight Japan by investing 6% predominantly in Japanese domestic orientated stocks. Being underweight exporters, the Fund also benefited from yen appreciation as reports revealed that the Bank of Japan would end sales of its currency, no longer needing a weaker currency to bolster exports. The remainder was split between the US and Europe where we reduced our underweight position. Within Europe, we increased exposure to cyclicals and higher beta stocks in anticipation of market recovery. A bias was given to US energy stocks that have been buoyed by geopolitical tensions and supply shortages, as OPEC plan to cut production quotas. The Fund increased by 1.1% over the quarter.   Ashburton Global Strlng Intl Equity comment- Dec03 Tuesday, 10 February 2004 Fund Manager Comment During the final quarter of the year, global equities continued to build on the gains of the rally that started from the March lows. The American and European markets closed at their highs for the year, whereas the Far Eastern markets initially suffered a bout of profit-taking following the very strong third quarter performance but did rebound into the year-end. The main driver behind the upward momentum continued to be stronger than expected economic data, primarily in the US and China, as the huge reflationary measures by the world central banks took hold. As a result, the recovery in corporate profits also exceeded expectations. The fund manager's continue to be of the view that the global equity markets are likely to experience a corrective phase given the recent strong performance and that investor sentiment has reached extremely positive levels. The fund therefore remains defensively positioned and any profit-taking has been used to increase cash balances, which now stand at 15%. Geographically, exposure to the US market has been reduced, primarily on valuation concerns, and the fund is now very underweight. Asia Pacific still remains the favoured region but some short-term profits were locked in during November. After increasing exposure to Europe at the start of the quarter, some profits were taken during December. In terms of the sector positioning, the fund is focused on economically sensitive sectors, notably basic materials and industrials, though consumer related issues and financials have been reduced. The fund increased by 5.6% over the quarter.   Ashburton Global Strlng Intl Equity comment- Sep03 Friday, 14 November 2003 Fund Manager Comment During August, global equities broke out of the narrow trading range established in mid-June to hit new highs for the year, buoyed by further confirmation that economic recovery was gaining traction and increased earnings expectations. This move higher, however, proved to be short lived as the combination of the G7 comments on 'flexible exchange rates' and the surprise cut in OPEC oil production severely dented the bullish sentiment and resulted in the Western markets giving back most of their gains in the closing weeks of the quarter. However, the Asian markets, despite some profit-taking towards the end of the quarter, performed very strongly. They benefited from a general improvement in investor sentiment on the back of the region's better fundamental outlook. Although the next major peak in global equity markets is not expected until the first half of 2004, the fund manager's feel that global equities are entering a corrective phase that should last a month or so and could see them give up as much as half of the gains registered in the rally since March. As a result, the fund will continue to retain its defensive strategy. Europe is expected to lead the way lower, however, if the euro rallies to new highs versus the US dollar, which is the fund manager's expectation. It will exert great pressure on the authorities to ease policy aggressively and this could result in Europe being the best performing market in the recovery, despite the lacklustre short-term outlook. This fund increased by 3.9% over the quarter.   Ashburton Global Strlng Intl Equity comment-Jun 03 Friday, 15 August 2003 Fund Manager Comment The second quarter of 2003 saw the global equity index register its largest quarterly return since 1999. This impressive rally was driven by a combination of factors, including the end of the conflict in Iraq, further cuts in short term interest rates coupled with a sharp fall in bond yields and better than expected first quarter earnings. European equities led the charge higher given they had been sold off the hardest ahead of the war. This was despite the strong euro and some pretty unattractive economic fundamentals, indicating that investors were taking the view that all the bad news was already fully reflected in the region's low valuation. Wall Street, supported by the weak dollar and very low interest rates, only under performed Europe by a small margin. Early in the period, the SARS virus hit Asian equities but its adverse economic impact proved to be transitory - resulting in Asian equities playing catch up into the end of the quarter. The main strategy change during the quarter has been the reduction in the weighting to the US, which has been looking very overbought for sometime. The proceeds have in part been switched into Japan and the balance has been used to increase cash levels. The major global equity indices continue to look very overbought on a short-term basis and a correction can therefore be expected. The fund in looking to add to the Far Eastern region on any pull back.   Ashburton Global Strlng Intl Equity comment-Mar 03 Wednesday, 28 May 2003 Fund Manager Comment The first quarter of 2003 saw global equity markets resume their downtrend. The euphoric rally in the first weeks of the New Year was short lived and was no more than an oversold rally after an unseasonably weak December. The markets have been dominated by uncertainty over the Iraq situation and its particular impact on the oil price and business and consumer confidence. The sharp increase in the oil price and the declines in business and consumer confidence have subsequently fed through to renewed weakness in economic data. Following on from the March lows, the rallies in the US and European markets were based on hopes of a quick victory for the coalition forces. However these proved to be overly optimistic and saw some of the initial gains been given back into the end of the quarter. The war in Iraq will continue to drive the markets. The longer it lasts, the more negative the impact will be on global economic growth and the outlook for corporate profits. Against this uncertain background and the resulting high level of volatility, the fund continues to take a largely defensive approach. The major changes to sector strategy have been to increase exposure to energy and healthcare and also US Technology stocks on improved short-term earnings expectations. Geographically the European exposure has been reduced in favour of the UK and the US.   Ashburton Global Strlng Intl Equity comment-Jan 03 Tuesday, 25 February 2003 Fund Manager Comment The global equity markets' euphoric opening to the New Year was short lived and proved to be no more than an oversold rally after the month in negative territory. The correction saw the US and European markets break through the lower end of their recent trading ranges. The European markets were particularly weak and closed near their October 2002 lows. Further negative domestic and US economic data plus the persistent strength of the euro only compounded the significantly increased level of uncertainty over the Iraq situation. Asia also had a poor start to the year with the Japanese market declining very close to 20 year lows on additional concerns over the unwinding of cross shareholdings. The prognosis for global equities continues to hag in the balance, with attractive valuations being offset by short-term geopolitical risks. The fund remains defensively invested with no aggressive allocation to any particular sector. The major change in terms of sector weightings has been to reduce the very underweight exposure to technology, where the short term outlook has improved particularly in the US. The overall focus has continued to be on stock selection in the defensive and value sectors. Geographically the exposure to the UK and Japan has been further reduced with the proceeds switched into the US to take exposure to nearer a benchmark weight. The cash balances have been marginally reduced to 7.5%.   Ashburton Global Strlng Intl Equity comment-Dec 02 Friday, 14 February 2003 Fund Manager Comment The powerful rally in the US and European equity markets off the early October lows ran out of steam during December and effectively halved the fourth quarter's return. The MSCI world index in local terms rose 7.3% on the quarter. The principal reasons for the pull back in the markets were deterioration in economic data and the sharp rise in the oil price, due to mounting concerns over Iraq and the impact of the Venezuelan oil strike on production. While the Asian markets generally traded off the moves on Wall Street, the Japanese market had a disappointing quarter which saw the Nikkei 225 index plunge to a 19-year low before a small rally into the year end. Sentiment in Japan was hit by continued political wrangling and renewed weakness in economic data. The relatively defensive positioning of the fund during the quarter has seen some deterioration in relative performance, as lagging stocks were the main beneficiaries of the October/November rally. Cash balances were increased during December as the fund continued to reduce its exposure to US to underweight. During the quarter, the fund also took the exposure to the UK and Japan to underweight, whilst increasing Europe to overweight to take advantage of the strengthening euro. Sector wise, while profits were taken in the technology, consumer cyclical and energy sectors after their strong moves into December, exposure to financials, beneficiaries of lower interest rates and economic recovery, has been taken to slightly overweight.   Ashburton Global Strlng Intl Equity comment-Oct 02 Monday, 18 November 2002 Fund Manager Comment World equity markets enjoyed a healthy bounce off recent lows, with the European markets leading the way closely followed by the US and UK. The better than expected US third quarter earnings reports provided the catalyst for the rally, despite the poor economic background in both the US and Europe. Aggressive selling by investors of the technology and telecom sectors appears to have given way to strong buying over the month. There are signs of improvement In the economic figures emanating from Euroland, albeit from very low levels. The Japanese market did not participate in the recent strength and disappointingly It was down on the month. The fund continues to be overweight both the basic material and utility sectors. The energy sector has been reduced and part of the proceeds switched into interest rate sensitive financial stocks. However, the fund is still underweight the telecommunication sector and marginally in the technology sector. Geographically, the fund is now overweight the USA against the world index and underweight the Eurozone region as well as the Japanese region. The cash level has risen slightly over the month to 6%. The fund rose +2.71% on the benchmark against its relative World Equity benchmark of +7.83%.   Ashburton Global Strlng Intl Equity comment-Sep 02 Tuesday, 12 November 2002 Fund Manager Comment Global equities experienced one of their worst third quarter performances on record, with most major indices hitting multi-year lows at the end of the quarter. The principal factor behind the weakness has been the steady deterioration of economic data and confidence indicators in both the US and Europe, raising concerns over a potential double dip recession resulting in sharply reduced earnings expectations. The policy paralysis in Europe has meant that the European markets have been hit the hardest. The concerns over a global economic slowdown took their toll on Japanese equities but the region continued to perform well on a relative basis. The move by the BOJ to buy back banks' shareholdings was unprecedented and is considered as the first step In the much-needed reform of the banking system. Sectorally, both the basic materials and utilities sectors in the fund are now overweight against the benchmark, whereas the fund continues to be underweight technology and telecommunications. This stance reinforces the underlying focus on solid sectors with consistent earnings. Geographically, the USA weighting has been increased to a neutral stance against the world index while the Eurozone exposure has been reduced to underweight. The fund continues to be overweight in the Japanese region. Cash level has been halved to 4.58% given the fund managers view that the markets are nearing an important bottom. The fund was -15.80% on the quarter against its relative World Equity benchmark of -21.18%.   Ashburton Global Strlng Intl Equity comment-May 02 Wednesday, 26 June 2002 Fund Manager Comment The rebound in the major equity indices in America and Europe, after April’s weakness, proved to be short-lived. Recent rallies continue to be restricted by the increasing level of concern over the strength and sustainability of the economic recovery, after data during May indicated a stalling in growth rates. The lack of clear earnings guidance any further out than the second quarter also put the optimistic expectations for the second half of the year in doubt. The Asian markets, however, continued to build on their relative outperformance. In Japan, the Nikkei 225 moved higher on the back of better economic data and upward earnings revisions to briefly break through the 12,000 level before profit-taking set in. The Funds continue to be defensively positioned, in terms of sector allocation, and have seen exposure to consumer staples, utilities and financials increased. The weighting to telecoms has been reduced further and some profits were taken in the consumer cyclical sector, with some of the proceeds being switched into the basic material sector. In terms of the geographical allocation, the overweight positions in Japan and South East Asia have been increased on a switch out of the US. The current cash weighting stands at 5.5%. The Sterling and the US dollar Funds increased by 0.4% and 1.0% on the month, both outperforming their relative World Equity benchmarks. The Sterling benchmark decreased by -0.4% and the US dollar benchmark remained unchanged on the month.

Site Last Updated: 17 May 2012 © 1999-2006 Profile Media . All rights reserved. JSE and the JSE logo are trade marks of the JSE. Legal Notices | PAIA Manual