07 Aug Munro Global Growth Fund Monthly Report – July 2018
The Munro Global Growth Fund returned -0.4% for July, comprising a return of -0.2% from equities and -0.2% from currency. The MSCI AC World Index (AUD) returned 2.4% (+3.0% from equities and -0.6% from currency).
China continued to struggle as a result of trade concerns, with the Hong Kong HSI closing down 1.3% and the China Enterprises Index closing down 0.4%. Towards the end of the month, there was a significant market rotation out of growth stocks into value stocks, largely due to relative positioning and the contagion of the poor Facebook results.
On a stock level, Microsoft, Alphabet and Amazon all posted very strong second quarter results, with all three companies commenting on the strength of their cloud businesses. Facebook was the key detractor for the Fund as management significantly downgraded revenue and profitability guidance. Netflix also gave back a small portion of its significant year to date gains after subscriber growth numbers were slightly below market expectations. On currencies, given the Fund’s 37% holding in USD, the small appreciation in the AUD resulted in 22bps of losses. By comparison, the fully unhedged index lost 59bps.