6/8/2021 12:00:00 AM

Fund Reviews: Global Growth

Written by Guy Thornewill, Head of Research UK & Europe and Senior Investment Analyst

Global Growth Fund 

The Global Growth Fund rose 1.5% in May, after strong gains in March and April.

Global smaller company indices were little changed during the month, as investors digested recent gains across most equity markets.An environment where equity returns are less volatile and interest rates are stable is generally favourable for our stock-picking style, which was the case this month. However, the risks remain clear, with the pandemic once again gaining ground in Asia, and concerns around commodity price inflation still high.Therefore, we believe the relative calm seen in May is quite fragile.

The fund benefited from several good performers with no significant losers.Holdings that should benefit from economies reopening did especially well. These included the rental car company Sixt, where we took some profits at the end of the month, and premium salmon farmer Bakkafrost. More travel and restaurants opening in the US and Europe will continue to benefit both companies. Our holding in Biesse, the Italian tool manufacturer, performed well after posting continued strong order growth, and we also took some profits in this holding as the shares are up more than 50% since our initial purchase. Finally, Philippine food manufacturer Century Pacific Food had a good month, rising 17% as it posted strong sales growth and other investors began to appreciate its low valuation as an opportunity.

In terms of activity, we added two new positions and exited two others. Firstly, we bought into the new listing of hGears, a German gear manufacturer serving the electric bike, electric power tool and electric vehicle markets. The company has a high-quality product, high market shares, good margins, a strong management team and a long runway for growth. In short, it ticks all the boxes for our investment criteria. It also builds on our exposure to the bike theme, which shows no signs of slowing yet. Secondly, we started a position in Douzone Bizon, a Korean software company that we have followed for some time. These purchases were funded by the sales of Fashionette and Webcash, which were smaller positions. 




Written by Toby Woods, Senior Investment Analyst

Growth UK & Europe Fund

The Growth UK & Europe Fund rose 1.7% in May, adding to the gains made in April.

The fund continued to deliver positive returns driven by Biesse, Nexus and Belvoir, while NFON and Avon Rubber were a drag on performance. We hold Biesse to have exposure to industrial production and since our purchase of the stock towards the end of 2020 it has performed strongly, up more than 50%, as orders have accelerated as it comes out of the Covid crisis. Nexus is a German software company that supports hospitals and clinics. It is seeing improving demand as the delivery of the €4.3bn German medical stimulus fund, set up in October last year, starts to make its way into the real economy. This will continue to give a long runway for growth. Belvoir, a stock we only added in April and has delivered 30% performance since, announced a strong trading update. However, we have started to take some profits as we feel that the UK housing market is nearing its zenith as the stamp duty holiday starts to recede in June.

NFON has underperformed since we first purchased it in March. It is a European leader in cloud telephony where the market is under penetrated verses the US and UK, so we see the potential for a lot of growth. However, management have guided to deliver no earnings while it looks to step up the growth rate. While we think this is a good strategy, the market has some concerns about when it will be a profitable company. We will continue to hold it but will sell if we think the strategy is not being executed efficiently. Avon Rubber has been weak following interim numbers and the announcement that its well-respected CFO will step down. We think that the underlying development looks robust and a replacement CFO will be well managed, so we added to our position on the weakness.

We bought one new position in the month, hGears. This was a new listing of a German gear manufacturer that supplies the electric bike, electric power tool and electric vehicles markets. It is typical of the ‘Mittelstand’, a reference to mid-sized German companies that are known for their successful engineering capabilities. It also increases our exposure to the bike theme which continues to evolve positively.

Overall, we are happy with the holdings in the fund. We continue to have a good split between reopening trades, thematic sectors and structural winners. We are consistently rebalancing our positions, taking advantage of shares that have performed strongly, and adding when we see opportunities.




Written by Guy Thornewill, Head of Research UK & Europe and Senior Investment Analyst

Global Growth 2 Fund 

The Global Growth 2 Fund fell 1.5% in May, losing a portion of its April performance.

Global stock markets consolidated their recent gains during May, with good news from company earnings results offset by commodity price inflation concerns and some resurgence of the pandemic in Asia. Our stock-picking style, with its thematic overlay, should generally perform well in calmer markets, although unfortunately we had more losers than winners this month.

One notable aspect of the first-quarter results season was that a strong result was not always enough to satisfy the market, especially for some highly valued technology stocks. This was the case for Etsy, which reported good results above expectations. However, the shares fell as investors started to become concerned about a demand slowdown, as well as tough comparisons with the strong growth in 2020. Similarly for Alibaba, where results were good but increased investment was seen as a negative. Happily, both were small holdings and we increased Alibaba on the weakness as we believe the valuation is now compelling given its leading position in e-commerce. We recognise that growth rates for some e-commerce companies will slow over 2021, but we are typically not buying these positions with the next quarter in mind. We are trying to pick long-term winners with high barriers to entry that will perform well over time, and we are happy to retain such companies in the portfolio even though there will be some periods of underperformance.

On the other hand, if we think the fundamentals have deteriorated, we won’t hesitate to sell a position. This was the case with Autohome, where it seems competition in the Chinese automotive online classifieds market is increasing and the company is shifting strategy. We made good initial gains with this investment, but we did not take profits and were slow to see the changes which was a mistake.We have now exited this holding.

On the positive front, the portfolio saw good gains in its holding of Cellnex, now the largest position in the fund, as well as from Novo Nordisk, a global leader in diabetes and obesity treatments. Finally, car rental company Sixt also performed well as reopening started in the US and Europe, but we took some profits at the end of the month as the valuation looks stretched in the short term.

Overall, we believe the fund is well-positioned in current markets, with good upside based on our fundamental valuation analysis.


Information is current as at 31 May 2021. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.