Global Equity Growth Fund: May 2024

Global equity markets rose in May. Overall, the FTSE All World Index gained 4.1% while the Ashburton Global Equity Growth Fund (I class USD) returned 4.8% Outperforming stocks held during the month included Nvidia (26.9%), Ambarella (26.7%) and Rexel (20.7%).

Delving into the Nvidia results, which were again ahead of consensus expectations, management’s positive outlook for AI spending helped explain such a big share price increase. Better-than-expected earnings were also reported by Ambarella though the positive share price reaction was more likely attributable to a major design win announced with a Chinese Partner. Yearly contributions from each new design win we forecast at $200m which is almost the current annual sales of the company. Earnings forecasts at Rexel climbed during the month in advance of the firm’s capital markets day on 7 June. Laggards included Tripadvisor (30.3%), Expedia (16.2%) and Duolingo (15.2%), who all posted declines. Our view on the travel sector remains positive. However, both Expedia and Tripadvisor disappointed the market with their results and additionally, the potential takeover of the latter by a related party fell through. Very impressive growth was reported by Duolingo who saw a 44.9% increase in revenue, however shares declined over the month. Expectations for the future growth rate of the firm have fallen modestly.

Fund activity was somewhat elevated with new purchases made by Chinese e-commerce firm PDD, Spanish cosmetics giant Puig Group, and total sales made of Argonaut Gold and Match Group. Rapid ecommerce growth from PDD has seen the firm take significant market share and the firm looks set to continue to experience growth levels which do not seem to be factored into the current share price. Olfactory giant Puig launched their initial public offering, and we considered the shares simply too cheap given the positive market share gains and their perfume brand ownership. Match Group had continued to disappoint both market and our own expectations with a declining userbase of Tinder and ever more expensive subscriptions; while Argonaut, as previously noted, is being taken over.

Justification of short-term market movements, as discussed last month, is a fool’s errand. Indicators in the long term remain generally positive for equites with companies generating aggregate earnings growth, liquidity remaining buoyant, and valuations not being overly stretched. Many elections will occur globally this year and while technically they are independent, central banks historically appear to have supported liquidity in election years. More cautiously, thinking longer term, equity market corrections have often historically been foreshadowed by high bond yields and low equity risk premia. Yields of bonds continue to be somewhat at odds with the earnings yields of equities, though this is not currently at levels to cause great concern.

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Disclaimer:

Waystone Management Company (Lux) S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF) (ref A00000395 & S00000734), Waystone Management Company (Lux) S.A. is a company located in Luxembourg, L-1273 Luxembourg at 19, Rue de Bitbourg. This document is issued by Ashburton (Jersey) Limited (The Investment Manager) which has its registered office at IFC1, The Esplanade, St Helier, Jersey JE4 8SJ, Channel Islands and is regulated by the Jersey Financial Services Commission. Ashburton Investments is a registered trading name of Ashburton (Jersey) Limited. In the event a potential investor requires material risks disclosures for the foreign securities included in a portfolio, the manager will upon request provide such potential investor with a document, outlining potential constraints on liquidity & repatriation of funds; Macroeconomics risk; Political risk; Foreign Exchange risk; Tax risk; Settlement risk; and Potential limitations on the availability of market information. The value of participatory interests and the income from them may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to the future performance. Where an investment involves exposure to a currency other than that in which it is denominated, changes in rates of exchange may cause the value of the investment to go up or down. CIS portfolios are traded at ruling prices and can engage in borrowing and scrip lending. A full detailed schedule of fees, charges and commissions is available from Ashburton on request and incentives may be paid and if so, would be included in the overall costs. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The manager has a right to close the portfolio to new investors in order to manage the portfolio more efficiently in accordance with its mandate. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton Investments is not authorised or permitted to communicate with potential investors, or to anyone who would be an unlawful recipient. The original recipient is solely responsible for any actions in further distribution of this document and should be satisfied in doing so that there is no breach of local legislation or regulations. This is a marketing communication. Additional information about this product, including brochures, application forms and annual or half-yearly reports, can be obtained from the Manager, free of charge, and from the website: www.ashburtoninvestments.com. In South Africa, the Fund(s) is/are approved for promotion under section 65 of the Collective Investment Schemes Control Act 2002. The Fund Prospectus, and further information including pricing and changes, may be viewed at the Fund’s representative office in South Africa: Ashburton Management Company (RF) Proprietary Limited (“Ashburton CIS”), 3 Merchant Place, 1 Fredman Drive, Sandton 2196. Ashburton CIS is an approved collective investment schemes manager regulated by the Financial Sector Conduct Authority and a full member of the Association of Saving and Investments South Africa.