Global Strategy Fund: August 2023

Market Commentary

  • Global markets swung into the red during August with the MSCI World Index and MSCI Emerging Markets Index trading down around 2.2% and 5.4% respectively towards the end of the month. Sentiment was mainly dominated by two key themes, namely the rate hike path in the US and weaker-than-expected growth in China. While market participants are of the view that recent stimulus measures introduced by the People’s Bank of China (PBoC) are relatively conservative, Chinese authorities have promised to step up policy support and accelerate government spending as the post-Covid-19 economic growth trajectory has continued to disappoint.  US markets were under pressure for most of August but saw some reprieve towards the end of the month. The US economy remains resilient and hence policy rates are expected to remain elevated for the remainder of 2023 and into the first quarter of 2024.
  • All underlying equity sectors, except for Energy, produced negative returns for August.  Utilities and Basic Materials ended the month at the bottom of the pack with returns of -5.62% and -5.44% respectively. Global equities, as measured by the FTSE All-World Total Return Index returned -2.69%.
  • Growth stocks outperformed Value stocks in August and remains the outperformer on a year-to-date basis.
  • Global bond markets reacted on general market sentiment and the FTSE WorldBIG Index traded down lower to end the month at -1.20%.

Fund Commentary

  • The Ashburton Global Strategy Fund priced for the last time in August, returning -1.35% between 26 July and 30 August 2023. 
  • The hedge fund manager, Aurum provided necessary diversification and ended the month in the green, with a return of 1.14%.
  • The concentrated equity manager Mundane, protected for the period, falling only 0.17% for the month of August, significantly outperforming the FTSE All-World Total Return Index, which lost 2.69%. The Funds largest holding,, bucked the trend, adding 3.2% for the month.
  • The US deep value manager, Conventum Lyrical, returned -1.31% for the month, outperforming the FTSE All-World Total Return Index; with the fund’s exposure, to Technology, Healthcare and Energy, contributing to the fund’s outperformance of the index.
  • The core equity manager, Epoch, produced a return of -2.48%, marginally outperforming the FTSE All-World Total Return Index. The fund’s underweight position in Information Technology contributed to the outperformance, together with an overweight position in energy counters which were more resilient during the month.  
  • Colchester Global Bond Fund returned -3.1% for August, underperforming the FTSE WorldBIG Index. The overweight positions to Mexican and Colombian bonds and the underweight position to European bonds detracted from performance. 
  • The Ashburton Global Strategy Fund reflects the macroeconomic house view of Ashburton Investments.  August 2023 saw two Tactical Asset Allocation changes:  it was decided to increase the Global Bond TAA from 3% to 5% by reducing the Cash exposure from 4% to 2%; followed by a subsequent Tactical Asset Allocation decision to further increase the Global Bond TAA to 5.5% by reducing Cash to 1.5%. Global Equities remain underweight to its SAA at 61%.

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