InvestNow News – 19th June – Morphic Performance Report – May 2020
Ethical Investing in Focus
During the month, The Australian Centre for Corporate Responsibility (ACCR) released a report that found that eight members of the Investor Group on Climate Change supported less than 50% of climate related proposals between 2017 and 2019. A number of funds also don’t release their voting records.
As both an active manager and an ethical investor, we believe your active shareholdings should be voted and where there is an issue that we disagree with management that we vote against that and let you, the investor, know why. If the world is to change the behaviour of companies, not voting or simply voting along Chair recommendations won’t see companies face any pressure. As a reminder, your Fund votes its shareholdings and investors can read our voting instructions on our website
Portfolio review
The Fund rose 3.8% in May, outperforming global markets which rose 2.9% in AUD terms. Global equities rose 4.1% in USD terms, as markets continued their strong April performance through May with signs of re-openings driving more cyclical stocks. The strong rise in the AUD dampened returns.
The Japanese market performed best (+5.9%) with the USA (+5.0%) not far behind. Asia Ex Japan (-0.6%) lagged as fears over a China-USA escalation over Hong Kong sovereignty rose. The Technology sector resumed its leadership (7.4%), though industrials (+5.8%) rose reflecting increased confidence in the economic recovery. Defensives, such as Staples (1.8%), lagged.
Reflective of the strong performance of Software and Tech for the month, Logitech, our Swiss based technology hardware provider, was one of the largest contributors. Reporting earnings during the month, the “Working from Home” demand for their peripherals drove strong sales and the company gave margin guidance that was ahead of expectations.
The largest detractor for the month was our position in Tencent. Despite reporting an excellent result with upgrades to sell-side forecasts, the stock lagged in a strong up market, its weight in the Hong Kong market which fell being the primary issue. The Fund remains a holder.