International Share
International Share Fund Update
June Quarter 2007
|
Download the International Share Fund Update
|
|
|
|
The performance shown in the Fund Update is the gross performance of the fund. To view the net performance of the fund or of the different unit classes of the fund download the Fund Performance Report or visit Fund Performance.
Gross performance returns and benchmark performance shown do not include expenses, fees or tax. Net performance returns are prepared on an exit-to-exit fee basis which includes all ongoing fees and expenses.
Market outlook
- We believe that the global economy is in a mid-cycle slowdown with growth likely to slow close to long term trend levels.
- The US economy is evidently slowing, however growth in Europe, Asia and Emerging Markets remains relatively robust and, should continue to drive the global economy.
- The liquidity environment should remain favourable and central banks should not be forced to raise interest rates aggressively as core inflation should remain stable and at relatively low levels, which should support sustained corporate profit growth, albeit at a slower pace than in recent years.
- Reasonable aggregate valuations appear to support a constructive outlook for equities but returns are likely to be lower and more volatile than in recent years.
- As aggregate market earnings growth slows, companies with sustainable above market earnings growth should command a premium. This is reflected in our stock selection.
- The Fund is overweight Telecommunications, Semiconductors, Food, Beverage & Tobacco and Oil services.
- We find few attractive opportunities in Consumer Discretionary, Industrials and Utilities.
|
|
Composition may not total 100% due to rounding. Please note that due to an operational error the Fund had a negative cash position as at 30/06/07. This issue has been subsequently rectified.
|
Portfolio review
Positive contributions for the quarter:
- Our holdings in the Utilities and Materials sectors contributed strongly to relative performance. Within Utilities, the French integrated utility company E.On rose after delivering better than expected earnings. Within Materials, Rio Tinto rose following rumours of a possible bid from rival BHP Billiton to create the world’s largest resources company.
- The Financials sector also contributed positively, where French bank BNP Paribas rose on the back of strong capital markets and quarterly results which allayed fears over the slowdown in the French retail business. In addition, results from the Belgium bank KBC, exceeded expectations as they continued to have a solid foothold in the faster growing Eastern European economies. A further positive came from M&A activity and speculation across the sector with ABN Amro in particular benefiting from rival bids from Barclays and a Royal Bank of Scotland led consortium.
Detractors for the quarter:
- The main stock specific drag on relative performance came from the UK advertising company Yell after they announced a profit warning early in the quarter. The US market was expected to be a key driver of earnings growth over the next few years, but near-term expectations were tempered as the competition appear to be adopting a more aggressive approach to pricing in order to protect their market share. We sold our holding as this development impacted upon our original investment thesis.
Performance review
|
|
Gross returns
|
Benchmark returns#
|
Out-performance*
|
3 Month
|
2.17%
|
1.31%
|
0.86%
|
6 Month
|
2.22%
|
1.13%
|
1.09%
|
1 Year
|
9.56%
|
7.77%
|
1.79%
|
2 Year (pa)
|
13.57%
|
13.66%
|
-0.10%
|
3 Year (pa)
|
9.51%
|
8.93%
|
0.58%
|
5 Year (pa)
|
5.30%
|
4.68%
|
0.62%
|
Past performance is not necessarily a guide to future performance.
#MSCI World ex Australia Index
*Shows the difference between Gross return and Benchmark return.
Gross performance figures quoted are calculated with no allowance for management fees, operating expenses or tax on income. Long-term performance shows the potential volatility of returns over time.
Wholesale International Share Fund Portfolio as at 30/6/2007*
|
|
|
Top 10 International shares
|
British American Tobacco
|
Consumer Staples
|
United Kingdom
|
Cisco Systems
|
Information Technology
|
USA
|
Wyeth
|
Health Care
|
USA
|
Siemens
|
Industrials
|
Germany
|
Nestle
|
Consumer Staples
|
Switzerland
|
Imperial Tobacco
|
Consumer Staples
|
United Kingdom
|
Man Group Plc
|
Financials
|
United Kingdom
|
UBS
|
Financials
|
Switzerland
|
United Technologies
|
Industrials
|
USA
|
Conocophillips
|
Energy
|
USA
|
*This composition is representative of the composition of the Wholesale International Share Fund. Slight variations however do occur between the Funds.
Investment objective
The Fund aims to achieve capital growth over the medium to long-term by investing in a portfolio of international shares. We aim to achieve this goal by outperforming the MSCI World Index ex-Australia (unhedged in AUD).
Fund strategy
The Fund is managed by our specialist Global Equity Team based in London. Our process is driven by global sector research and is based on bottom-up stock selection.
- Up to 10% of the Portfolio can be invested in cash, both domestic and international.
- Currency is generally unhedged, however, from time to time currency hedging may be undertaken.
Designed for investors who…
- Seek an international share portfolio.
- Accept the risk of fluctuations in global share markets and currencies.
- Have a longer term investment horizon.
|
