INSYNC GLOBAL TITANS FUND

Attached is our most recently updated Fund Review on the Insync Global Titans Fund.

We would like to highlight the following:

• The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.

• Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.

• Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - August 2017 (pdf format)

Say or think what you like about him, but it's pretty obvious Donald Trump doesn't believe in the softly, softly approach! So the bold announcement to reduce US corporate tax rates to 20% certainly fits his style. Of course what remains to be seen is his ability to deliver, and if he manages to do so, what will be the flow on effects on both the US, and then the global economy.

Given this was a Trump announcement there was of course more rhetoric than detail, and the answer to the first question lies in the ability to deliver politically. We will leave the judgement on his political ability to others and take just a quick look his ability to deliver economically:

We're assuming Trump's working on the premise that a corporate tax rate of 20% will "make America great again" by incentivising US companies to invest in America, and subsequently to hire American workers, leading to growth. As a result he's hoping the circle will be complete, and the budget will balance. However that's not a fait accompli, and the question will be how's he going to pay for it?

From a market perspective the risk lies not in the potential that the equity market doesn't like Trump's lower corporate taxes, but that the bond market doesn't. Bond markets have a nasty habit of upsetting equity markets, so it's worth keeping a close eye out for higher than expected interest rates.

Domestically in Australia Trump's move has put our antiquated, overly complicated and damaging taxation and political position into stark relief. The current government aims to reduce the corporate tax rate to 25% over 10 years, and isn't even assured of getting that past the cross benches in the Senate.

As Hedge Clippings has banged on about for as long as we can remember (which isn't that long these days) Australia's taxation system is a dud thanks to successive governments of both political persuasions which have failed to grasp the nettle, preferring to dilly dally around the edges, and adding complication onto complication.

Where's Donald when we need him - or on second thoughts, let's not go there!

Markets are once again focusing on the potential for a rate rise after Janet Yellen's comments flagging a US tightening later in the year, with 12 out of 16 of the Fed's members expecting a rise by December. However it should be remembered that rate rises have been on the cards for some years now, but each time the expectations have not been met with actions, with markets, hooked on QE, unable to accept the effects of withdrawal. This time it may be a little different as there does seem to be a gradual robustness in the US economy - with the accent on gradual, and robust being a relative term.

Coupled with those comments from the US, the Reserve Bank governor also came out with the seemingly obvious statement that interest rates in Australia were unlikely to fall from here, while also issuing a caveat that rate rises when (and it is when, not if) they occur are going to bite hard on those who have extended themselves to borrow for Australia's housing market.

Meanwhile Australian equity markets continue to go nowhere, which can't be pleasing the passive index following funds - or their investors. YTD in 2017 to the end of August the ASX200 has risen just 3.88% on an accumulation basis, compared with the S&P500 which is up around 12%. Actively managed equity funds have fared slightly better on average, up 4.98% year-to-date to the end of August, although as we always point out, averages can cover a multitude of individual performances, both good and bad. Whilst almost exactly 50% of funds in AFM's database have outperformed the ASX200 (and therefore by definition 50% have underperformed) almost 25% have posted year-to-date performances of 10% or more, with the best performing fund up 30% year-to-date.

Finally a matter closer to home: Today's report on CNBC that fine wine has provided the best luxury asset price growth (+ 25%) over the past 12 months. In the same report jewellery has been a poor investment by comparison, only rising 4%, while coloured diamonds (which luckily she has never quite understood the attraction of) have not appreciated at all. Possibly connected with the increase in wine prices was the statistic that Chinese ceramics had fallen by 12% over the past 12 months.

Hedge Clippings is sad to admit that fine and collectible wines do not feature in the domestic cellar as a result of impatience, and rarely on the wine list of any establishment we visit as a result of the disparity between the budget and the bill. However we will be happy to avoid future purchases of jewellery and coloured diamonds on the basis that they're no better as an investment than the ASX200!