Dominion Global Trends Ecommerce Fund Outlook
2018 has been a year of market volatility often driven by macro concerns such the escalation of the US-China trade dispute and headline-driven sector pullbacks, such as the short-term panic in the technology sector after the (very) negative Facebook earnings (in which the Fund was not invested). Despite this we have seen the Dominion Global Trends Ecommerce +14.6% year to date – more than double the market returns.
Key to this strong performance is investing in companies exposed to the Ecommerce Megatrend with strong fundamentals and business models that grow not only sales, but also profits and cashflows. Considering the Dominion Global Trends Ecommerce Fund portfolio, we see both strong growth and attractive valuation. Using the Bloomberg Consensus Forecast – an average compiled by Bloomberg of all sell-side analyst forecasts on a given stock – the portfolio has an average 2018 sales forecast growth rate of 18% and pre-tax profit growth rate of 31.3%. This compares favourably against a free cashflow yield valuation (our core valuation metric) of 3.9%, meeting our core investment philosophy of Growth At a Reasonable Price (GARP).
Furthermore, the Fund has consistently outperformed Bloomberg Consensus expectations. Every quarter for the past three years the holdings of the Fund have, on aggregate, beaten (surprised to the upside) the consensus for both sales and earnings growth. 2Q followed this trend with the Fund reporting an average 17.2% earnings beat.
There will always be macroeconomic surprises, and headline driven events that will generate both market volatility and the expansion or contraction of a sector’s valuation, the timing of which will be unpredictable. However, by investing in good companies which grow profits and cashflows, the base to which the valuations are applied, the Dominion Global Trends Ecommerce Fund has consistently outperformed expectations, generating a return commensurate with the growth within the portfolio. Looking forward we see no reason why the trend of the past 4 years should abate.
All Performance figures listed are quoted as of 07.08.2018. Calculated using the EUR I Share Class.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.