C WorldWide Global Equity Trust (ARO0006AU) Report & Performance

What is the C WorldWide Global Equity Trust fund?

Carnegie Worldwide Equity Trust aims to achieve long-term capital growth exceeding the return of the market by investing in global equities and generate excess returns relative to the Benchmark over a 3 year period.

  • Invests in all types of ordinary shares and equivalents of US and non-US issuers.
  • Seeks to add value by using the Bottom-up Fundamental Research of MFS equity investment professionals to select equity securities that are expected to demonstrate superior long-term earnings growth.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For C WorldWide Global Equity Trust

C WorldWide Global Equity Trust Fund Commentary August 31, 2023

PERFORMANCE CONTRIBUTION

Global markets generated positive returns helped by one of the strongest August equity market performances on record. The Nasdaq Index had its best August performance since 2000 and the S&P500 Index since 1986. Much better than anticipated corporate results combined with very supportive liquidity and an improving economic environment provided tailwinds to investor sentiment. However, market leadership remained narrow with a handful of large cap Technology and Consumer Technology stocks having an outsized contribution to overall equity market returns.

While the portfolio has benefitted from the leadership of growth stocks since the stock market bottom in March, this leadership is now increasingly narrow – and with some signs of exuberance last seen in the final months of the technology bubble. Meanwhile, the reality for presumptive buyers of goods such as cars in the US is not as optimistic as share prices imply. In fact, consumer spending in the US has now been flat since the end of June. The macro-economic backdrop is positive though since the global economy is on a recovery course as countries are slowly opening again following lockdowns.

The largest contributors to investment returns in August were Visa, Microsoft, and Amazon.com.

Visa’s share price has lagged in this market recovery, but after reporting surprisingly strong card volumes in the June quarter with US payments volume up in the first three weeks of July, the shares have recouped some ground. The switch from cash to cashless payments seems to have accelerated during the Covid-19 crisis.

Microsoft and Amazon.com continue to see significant demand for both e-commerce and cloud computing services. This together with the positive IT rally led to the solid stock performance during the month.

The largest detractors from investment returns were American Tower, Keyence, and Unilever.

American Tower reported good quarterly results despite the impact of Covid-19, but the company also adjusted its growth estimates downwards. We continue to see American Tower as a key player in making wireless communication possible globally.

Keyence reported quarterly earnings that missed consensus estimates. Even though the company is affected by the Covid-19 pandemic, Keyence is working to maintain longterm growth by enhancing development and strengthening sales. This was also reflected in the stock price which did recover some ground during the month.

Unilever is experiencing some uncertainties in relation to the potential move of its headquarters from the Netherlands to the United Kingdom due to tax reasons but was mainly impacted by the underperformance in Consumer Staples during the month.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
C WorldWide Global Equity TrustARO0006AUManaged FundsForeign EquityLarge GrowthForeign Equity - Large Growth IndexDeveloped -World Index383.23 M0.99%0.00%0.6%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
C WorldWide Global Equity Trust-1.01%0.27%20.92%6.25%3.69%7.16%12.07%12.11%-1.73%-21.29%-63.81%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
C WorldWide Global Equity TrustForeign Equity - Large Growth Index-1.84%-3.44%NA%NA%NA%0.684.29%4.74%0.930.92

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
C WorldWide Global Equity TrustYes60 Castlereagh Street, Sydney, NSW 200061292168633https://www.bnpparibas.com.au/en/enquiries@au.bnpparibas.com

Product Due Diligence

What is C WorldWide Global Equity Trust

C WorldWide Global Equity Trust is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Large Growth Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The C WorldWide Global Equity Trust has Assets Under Management of 383.23 M with a management fee of 0.99%, a performance fee of 0.00% and a buy/sell spread fee of 0.6%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the C WorldWide Global Equity Trust has returned -1.01% in the last month. The previous three years have returned 6.25% annualised and 12.11% each year since inception, which is when the C WorldWide Global Equity Trust first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since C WorldWide Global Equity Trust first started, the Sharpe ratio is NA with an annualised volatility of 12.11%. The maximum drawdown of the investment product in the last 12 months is -1.73% and -63.81% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The C WorldWide Global Equity Trust has a 12-month excess return when compared to the Foreign Equity - Large Growth Index of -1.84% and -3.44% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. C WorldWide Global Equity Trust has produced Alpha over the Foreign Equity - Large Growth Index of NA% in the last 12 months and NA% since inception.

What are similar investment products?

For a full list of investment products in the Foreign Equity - Large Growth Index category, you can click here for the Peer Investment Report.

What level of diversification will C WorldWide Global Equity Trust provide?

C WorldWide Global Equity Trust has a correlation coefficient of 0.92 and a beta of 0.68 when compared to the Foreign Equity - Large Growth Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on C WorldWide Global Equity Trust and its peer investments, you can click here for the Peer Investment Report.

How do I compare the C WorldWide Global Equity Trust with the Developed -World Index?

For a full quantitative report on C WorldWide Global Equity Trust compared to the Developed -World Index, you can click here.

Can I sort and compare the C WorldWide Global Equity Trust to do my own analysis?

To sort and compare the C WorldWide Global Equity Trust financial metrics, please refer to the table above.

Has the C WorldWide Global Equity Trust been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in C WorldWide Global Equity Trust?

If you or your self managed super fund would like to invest in the C WorldWide Global Equity Trust please contact 60 Castlereagh Street, Sydney, NSW 2000 via phone 61292168633 or via email enquiries@au.bnpparibas.com.

How do I get in contact with the C WorldWide Global Equity Trust?

If you would like to get in contact with the C WorldWide Global Equity Trust manager, please call 61292168633.

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the C WorldWide Global Equity Trust. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - December 31, 2022

The fund returned 4.9% net of fees in the quarter, whereas the MSCI AC World Index returned 4.1. 2022 was one of the most challenging years in a decade for investors, with large declines in both equity and bond markets. In the US, the S&P500 had the worst year since 2008 and its third-worst performance for over 40 years. President Xi strengthened his power as evidenced during China’s Party Congress in October. The same month, the US introduced wide-ranging semiconductor export restrictions to China. At the end of the quarter, the anti-lockdown protest turned so violent that the Chinese authorities decided to lift the restrictions and focus on opening the economy. In the US, the consensus now expects a forthcoming recession, while forecasts for global earnings growth next year stand at low single digits.

The top three contributors for the quarter were Novo Nordisk, HDFC Bank, and Siemens. Novo Nordisk finished the last quarter strongly with the marketing relaunch of its Wegovy obesity treatment in the US. The shares performed strongly all year as earnings continued to accelerate on the back of a strong reception of the company’s new drugs. For the first nine months of 2022, Novo Nordisk’s obesity care business grew 75%. Adjusted earnings per share are set to grow by 17% in 2022 and 25% in 2023, according to consensus estimates. Despite being one of the potentially biggest health issues globally, only 2% of the world’s almost 800 million obese people receive treatment today. Novo Nordisk has a current market share of 86%.

Performance Commentary - November 30, 2022

Among the top contributors to performance in November were Sony, ASML and Siemens. Sony, in addition to benefitting from being a cyclical, Asian-listed company with semiconductor exposure, issued a “beat-and-raise” quarterly report. Operating profit in the quarter grew 8% y/y and full-year guidance was raised due to strength in its Music, Movies and Sensor businesses. The company’s largest segment, Game & Network Services, with its key
PlayStation franchise, has struggled with supply of new consoles. Only 3.3 million units were sold during the quarter. Production was almost twice as high though, which bodes well for the upcoming holiday season and for subsequent sales of high-margin software.

ASML held its capital markets day in Veldhoven, Netherlands, and substantially upgraded its guidance for 2025 and 2030. The midpoint of the 2030 revenue guidance was raised more than 30%, due to stronger demand for chips from datacentres, the automotive industry, and industrial applications. Interestingly, ASML also suggested that the need for countries to achieve technological sovereignty will increase the need for semiconductor capacity.

This is expected to add a 1%-point to annual unit growth, and it is a concrete example that globalization is slowing. Atlas Copco, a key sub-supplier to ASML, also highlighted this trend at its recent capital markets day. In the long run, oversupply is bad for everyone, but in the medium term, semiconductor equipment manufacturers will benefit from what ASML expects to be a 10% inefficiency in global semiconductor manufacturing by 2030. Shares of ASML have surged almost 50% since mid-October due to a combination of lower rates, a strong Q3 report and the company’s upbeat long-term guidance.

Performance Commentary - October 31, 2022

Among the top contributors to performance in October were Visa, Novo Nordisk and ASML. Visa reported solid numbers with payment volumes growing 12%, the same pace as last quarter and thus not showing any signs of a consumer slowdown. Cross border travel, and the attributed high margin cross-border-payments, is still a long way below pre-Covid levels. Analysts at Morgan Stanley report that departures to Asia are 52% below 2019 levels and the corresponding number for Europe is 21% below. Visa direct, a key driver for Visa, beyond the cyclical recovery after Covid, grew 42% in the quarter, accelerating by 700 bps. The shares of Novo Nordisk, a key outperformer all year, continued to do well during the month as the European Medicines Agency, EMA, warned of supply shortages of Ozempic, due to increased off-label use for the treatment of obesity. The GLP-1 treatments, led by Novo Nordisk’s Ozempic have gone viral, with Ozempic getting north of 200 million views on TikTok. Supply shortages for its new drug Wegovy soon to be relaunched in the U.S., could continue to be an issue for the company, but the demand is clearly there. The order intake of lithography maker ASML, reached a record high in its third quarter at 8.9 billion EUR. This is up from a range of 1.5-2 billion just a couple of years ago and up 44% over last year. Meanwhile, the company claims that only about 5% of its backlog will be impacted by the new US export restrictions. Its EUV machines, now close to half of its systems sales, have been restricted for sale to China since 2019 and are not affected by the new ban.

Among the top detractors were AIA, Amazon and TSMC. Similar to last month the list of detractors had a geographical tilt, with several of the top detractors being listed in Asia. As the new semiconductor export restrictions were announced, many of our holdings related to this sector experienced further declining share prices. Amazon reported disappointing numbers across the board late in the month with operating income coming in 48% lower than last year, sales guidance weaker than expected and growth in AWS decelerating by 500bps from last quarter. Amazon is one of the companies in the portfolio with the longest-term thinking and the management team normally has a large degree of leeway to take the company through extended periods on increased investments. At the moment though, that long-term thinking, backed by significant investments, is coming up against a rapidly slowing consumer environment, especially in international markets where sales declined 5% over last year and a reversal of overearning during Covid. Amazon arguably overinvested and over hired coming out of Covid at the start of this year. While consumer demand could be weak for a couple of quarters, creating share price headwinds, the investments Amazon is making now will enable it to gain market share as the economy recovers. We have not seen convincing evidence that the shifts to online shopping or the move to the cloud are changing pace structurally.

Performance Commentary - September 30, 2022

In the quarter, the strategy’s return was negative 0.31%, above the MSCI AC World Index which returned negative 0.34%. The U.S. Federal Reserve hiked rates by 75 bps two times in the third quarter. In combination with U.S. money supply falling at an annualized rate of 1.6% over the last three months, the steepest drop in 84 years, this is starting to influence asset price volatility. The VIX, or “fear index”, increased from a relaxed 20 in mid-August to north of 30 by the end of the quarter. The real spike in volatility though has been seen in the bond and currency markets, where the MOVE index, measuring the volatility of Treasuries, reached close to 160, a level only seen at the Covid-lows and the financial crisis. Several sentiment indicators hit historic lows such as U.S. consumer confidence and the AAII Bull/Bear survey. This is usually a very good sign for subsequent 12-month market returns. On another positive note the second quarter earnings season surprised many investors as the technology giants, Microsoft, Alphabet and Amazon (all holdings in the fund), showed resiliency in an environment where demand clearly is waning and a sequential slowdown from last quarter is evident.

The top three list of contributors for the quarter was comprised of Amazon, Hoya and BCA. Amazon has had a tough 2022 navigating the demand swings during and after Covid. After a period of overinvestments and overstaffing, Amazon reported a strong second quarter report that showed that the company can handle an inflationary environment. Revenue accelerated to 10% growth, adjusted for currencies.

The top three detractors from performance were AIA Group, Sony and Novo Nordisk. On the top ten list of detractors this quarter, we find a lot of Asian names, and companies with sales related to semiconductors. Sony, having both attributes, as well as exposure to a weaker consumer through its gaming business has sold off since mid-August.

Performance Commentary - August 31, 2022

Global markets generated positive returns helped by one of the strongest August equity market performances on record. The Nasdaq Index had its best August performance since 2000 and the S&P500 Index since 1986. Much better than anticipated corporate results combined with very supportive liquidity and an improving economic environment provided tailwinds to investor sentiment. However, market leadership remained narrow with a handful of large cap Technology and Consumer Technology stocks having an outsized contribution to overall equity market returns.

While the portfolio has benefitted from the leadership of growth stocks since the stock market bottom in March, this leadership is now increasingly narrow – and with some signs of exuberance last seen in the final months of the technology bubble. Meanwhile, the reality for presumptive buyers of goods such as cars in the US is not as optimistic as share prices imply. In fact, consumer spending in the US has now been flat since the end of June. The macro-economic backdrop is positive though since the global economy is on a recovery course as countries are slowly opening again following lockdowns.

Performance Commentary - July 31, 2022

Among the top contributors to performance in July were Amazon, Home Depot, and Thermo Fisher. Amazon has had a challenging time navigating the demand swings during and after COVID. After a period of overinvestments and overstaffing, Amazon reported a strong second quarter report that showed that the company can handle an inflationary environment. Revenue accelerated to 10% growth, adjusted for currencies, and more importantly, the guidance for the next quarter of 17-21% growth points to an Amazon growing at the rates that we historically have come to expect. Amazon’s AWS-Cloud unit now has a yearly run rate of close to USD 80 billion, growing in excess of 30%. Perhaps more impressive is the surge in the backlog by 65% to USD 100 billion. The shares rose close to 25% during July.

Home Depot, which only reports in mid-August, saw its shares rebound as lower bond yields and mortgage rates have taken some pressure off the consumer. Late last year 30-year mortgage rates in the U.S. stood at 3%, only to move to 6% in June of this year and as of the end of July now stand at 5.3%. Thermo Fisher raised its full-year sales forecast for the second time this year, on the back of another solid quarterly report. While the clinical end-market declined by 20% due to less COVID testing, core organic growth came in at an impressive 13%. The strength was broad-based with China growing more than 20%, despite lockdowns, and the biopharma end-market growing in the midteens percent.

Thermo Fisher’s PPD, a clinical research services provider, is doing particularly well and the company raised guidance for this unit to 12% growth for the full year. This is pleasing since PPD, an acquisition that closed in December last year, is another testament to Thermo Fisher’s solid track record of inorganic growth. As the balance sheet shrinks below 2x Net-debt to EBITDA, this year, the company could be ready for another sizable acquisition, something the shares historically have reacted positively to.

Among the top detractors were AIA, Procter & Gamble and Bank Central Asia. None of the detractors this month made up a large negative contribution to performance. They simply failed to rise as much as a rapidly surging market. AIA, one of June’s largest contributors gave up some performance, possibly because they usually pause their buybacks one month ahead of the quarterly reports, which sometimes have led to a more volatile stock price.

Performance Commentary - June 30, 2022

MARKET PERSPECTIVES
The second quarter marked the end of the worst first half-year since 1970 for US equity markets and the worst first half-year for global equity markets since the launch of the MSCI World index in 1986. This has clearly been a six-month period full of negative catalysts, such as the war in Ukraine, draconian lockdowns in China, continued supply chain disruptions, higher inflation, and an aggressive hiking cycle by the US Federal Reserve (Fed) supplemented by quantitative tightening. There are some signs though that inflation is peaking with U.S. 10-year rates down close to 50bps from the high mid-month. Furthermore, many cyclical commodities are down substantially from their highs, copper for instance by 25% since the highs in March, signalling the anticipation of a weaker economy and rising chances of a Fed that need to become more dovish at the end of the year, a development that should support heavily de-rated growth stocks. There are also tentative signs that the Chinese lockdowns seem to be getting less restrictive something that supported Chinese equity markets during the month. If the lockdowns are eased further this would remove one dampening effect on the global economy.

PORTFOLIO PERSPECTIVES
In the quarter, the strategy marginally outperformed the benchmark. The top contributors for the quarter were AIA, American Tower, and Novo Nordisk. After a long period of transforming its agency network in China from a mass-market sales force to more modern distribution channels, AIA in May saw a development of increasing numbers of agents. While it is too early to tell if the transformation is complete, so far this year AIA has reduced its number of agents by only four percent and may now see increases in all regions in China. After very strong momentum all year in its obesity franchise, the market now expects another upgrade to guidance when Novo Nordisk reports results in early August. Furthermore, the third quarter is full of catalysts with phase 2 data on CagriSema in type two diabetes and supply updates for Wegovy among the most anticipated. The shares traded strongly ahead of these events. American Tower benefitted from investors flight-to-quality during the quarter.
The top three detractors were Amazon, Alphabet and ASML. Equity prices of technology companies with exposure to the digital ad market, such as Alphabet and Amazon suffered after the competitor Snapchat preannounced negative results and pointed to broad-based weakness in digital ads across regions and verticals. There are some reasons to believe that this could mostly be an issue for Snapchat and not the broader group of all digital ad companies. Snap has minimal exposure to the travel segment and with consumers shifting spending to travel away from buying merchandise, Snap could be a relative looser.

The semiconductor industry experiences a downturn every 3-4 years often triggered by GDP growth falling below 3%. Increasing pressure on more consumer-focused products such as PCs, 5G Phones and gaming cards and their related chips, could now also start to spill over into datacenter- and cloud-related semiconductors where demand still has held up. The average semiconductor downturn sees 12-month forward P/E-ratios falling on average by 26%. This downturn, however, has so far seen P/E-ratios falling by 42%, suggesting the bottom in semiconductor stocks could be near. While this does not consider high starting valuations, one supporting factor is the more structural growth we now see in the semiconductor sector as increasing penetration of chips in everything from smartphones, cars, and sensors are helping to offset the cyclical headwinds.

PORTFOLIO CHANGES
During the quarter we sold the investment in Unilever and added the industrial gas company Linde. Linde together with Air Liquide and Air Products forms an oligopoly in the western industrial gas industry. As these suppliers of compressed oxygen, nitrogen and other gases are highly integrated with their customers and as contracts are long-term in nature, the revenue streams are highly predictable. Unilever has a disputable track record in value creation, especially from expensive bolt-on acquisitions in recent years. In addition, the more recent debacle around the GSK Consumer Health bid has reduced our faith in the management team’s strategy on capital allocation.

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