Portfolio review
The Fund rose 0.4% in May, ahead of global markets (-0.1%). Global markets fell -0.2% in USD terms, with a small fall in the Australian dollar proving the difference.
May saw markets rise only to then fall back, unable to break definitively in either direction. The politics of Italy dominated the headlines as investors feared the new coalition in Italy would reignite the Euro crisis of 2012.
Unsurprisingly, Europe was the worst performing market over the month (-4.0%). Emerging Markets continued to underperform (-3.8%) and the US market performed the best (2.2%).
The largest contributor for the month was the long-held position in Open House. Open House reported another set of excellent quarterly earnings, beating guidance. More importantly, they issued guidance for the coming year that is substantially ahead of market expectations. We remain holders, but to reduce market risk, we have started shorting Iida Group, which has rallied back since we closed the short in December. We believe Iida remains an inferior business to Open House.
The biggest detractor for the month was our long-held position in Japanese market research company Macromill. Taking into consideration the impact of Yen weakness and a recent acquisition, recently reported quarterly results were unexpectedly weak and management indicated that meeting their full-year guidance will be challenging. Our risk management framework resulted in a reduction of the position.