Insync Global Titans Fund – August 2014

US equities quickly recouped losses from the earlier mid-summer sell-off to push through 2000 and close at new all-time highs; buoyed by a dovish Fed and solid macro data which continues to suggest economic recovery. The Nonfarm Payroll grew by a further 209,000 jobs in July, while the ISM Manufacturing report was a robust 57.1. In Europe, ECB President Mario Draghi recently re-affirmed his commitment to “use all available instruments needed to ensure price stability”, seemingly opening the way for further stimulus including ABS and possibly even QE bond purchases before year end.

The Fund’s unit price increased by 0.8% in August. Key positive contributors for the month came from our holdings in Express Scripts, Sanofi, Gilead Sciences, Nestle and Disney. The main negative contributors were Reckitt Benckiser, Zimmer, Deutsche Boerse, Rolls-Royce and BSkyB. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside.

Insync’s philosophy is to invest in the more predictable growth companies and to include downside protection strategies. This can occasionally result in short term underperformance of equity benchmarks but our strategy has delivered positive absolute returns during previous market downturns. We look for exceptional businesses with high ROIC, strong free cash flow, solid balance sheets and a long track record of returning cash to shareholders through growing dividends and/or share buy-backs.

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