The Equitile Resilience Fund (UK-domiciled) aims to deliver capital growth by investing in large, growing companies in the developed markets. It is managed according to our core investment principles and uses the Equitile Fair Fee Model.
The Equitile Global Equity Fund (Ireland-domiciled ICAV) follows the same strategy and principles as the Equitile Resilience Fund. The lastest update and other documents can be found here.
We are pleased to report August has been another month of solid positive progress for your portfolio. It has also been a month in which technology stocks reasserted their claim to market leadership; your two largest holdings, ASML and Nvidia, were the largest positive contributors to returns, closely followed by Hoya corporation. The laggards were all in the mining sector, which was adversely affected by concerns over iron ore demand from China. Despite an already strong pace of anticipated revenue growth, we are encouraged to report that around 20% of your companies have further increased their guidance in this latest quarterly reporting season.
Nvidia’s Omniverse software, a reality simulation system, is showing strong growth, already accounting for 8% of revenue, which is exciting both for the company and also because it is an enabling technology for many other technology companies: see how Omniverse is being used to improve manufacturing at BMW. Developments like Omniverse are increasing the fraction of economic value-added attributable to the technology sectors, helping drive their outperformance. In turn, this is increasing demand for high performance silicon chips leading to improved pricing power through the semiconductor supply chain. This month, industry sources have reported TSMC – your fourth largest holding – to be increasing the price of their processed wafers by between 10% to 20%. We see this as a symptom of both technological progress and a more traditional inflationary process caused by monetisation.
In an inflationary environment our job is to keep you invested in the price-maker companies which create and benefit from inflation rather than the price-takers, which have their margins squeezed by rising costs. ASML, the company making the vital X-ray lithography machines necessary for Nvidia’s Omniverse software, currently enjoys especially strong pricing power – hence its position at the top of your portfolio.
During the month, we have been involved in a direct exchange with one of your investee companies concerning their standards of reporting around working conditions for their employees. We are pleased to say we are impressed with the planned improved reporting standards and the quality of engagement. We have upgraded that company’s ESG score in our PrISM system.