07 Jun Munro Global Growth Fund Monthly Report – May 2019
The Munro Global Growth Fund returned -4.1% for May, comprising a return of -4.8% from equities and 0.8% from currency. The MSCI AC World Index (AUD) meanwhile returned -4.4% (-5.8% from equities and 1.4% from currency).
The global equity market weakness was broad based during May, with the US S&P 500 declining 6.4% and the technology-heavy NASDAQ Composite falling 7.8%. Asia was also particularly weak with the Japanese Nikkei declining 7.5% and Hong Kong’s Hang Seng falling 8.4%.
A few tweets from Donald Trump and the US-China trade war was re-escalated, leading to a strong sell-off in global markets as the likelihood of a full-blown trade war went from a tail-risk to a significantly higher threat.
In terms of stock specific highlights, the Fund’s investments in infrastructure-related names held up well with good results from Cellnex, the Spanish tower company that should benefit from the rollout of 5G. The Fund’s short positions and put options also offered good protection in a falling market.
On the negative side, Alphabet’s results disappointed the market with sales growth moderating and several stocks were caught up in the cross-hairs of trade war rhetoric, such as Alibaba and China Tower.
On currencies, the Fund is roughly 50% hedged back to AUD and 50% exposed to USD and hence the depreciation in the AUD resulted in 76bps of gains for the Fund. By comparison, the fully unhedged index gained 135bps from FX movements.