Bell Global Equities FundPlatform lass Fund Summary … · longer term returns for a representative global equities strategy managed by Bell Asset Management with an inception date

Bell Global Equities Fund 1

Bell Global Equities FundPlatform Class Fund Summary - Period Ending 30 April 2018

Net Performance^Returns in AUD Fund Index*

1 Month^ 2.24% 2.75%

3 Months^ 2.06% 1.78%

6 Months^ 6.62% 5.08%

1 Year^ 10.07% 12.40%

3 Years (pa)^^ 8.25% 9.24%

5 Years (pa)^^ 16.18% 16.78%

Strategy Inception (pa)^^ 7.41% 6.55%

Strategy Inception - Total Return^^ 199.4% 164.5%

* Index is the MSCI World ex Australia in $A Unhedged with net dividends reinvested.^ Inception date of the Platform Class is 7 May 2015. Returns are based on the Platformredemption price and are net of fees.^^ The Bell Global Equities Fund - Platform Class has been operating since May 2015.To give a longer term view of our performance in the asset class, we have shownlonger term returns for a representative global equities strategy managed by Bell AssetManagement with an inception date of 1 Jan 2003. We have adjusted the returns toreflect fees representative of the Bell Global Equities Fund - Platform Class units.

Sector Exposure▬ Consumer Discretionary 14.8%

▬ Consumer Staples 14.2%

▬ Financials 6.7%

▬Health Care 20.9%

▬ Industrials 13.8%

▬ Information Technology 20.9%

▬Materials 4.4%

▬ Telecom Services 1.4%

▬ [Cash] 3.0%

Geographic Exposure▬Africa/Mideast 0.9%

▬ Europe 36.4%

▬ Japan 1.2%

▬North America 58.5%

▬ [Cash] 3.0%

Top 10 HoldingsCompany Sector Geography Weight

Alphabet Inc. Information Technology US 2.7%

Johnson & Johnson Health Care US 1.8%

Apple Inc. Information Technology US 1.8%

Roche Holding Health Care CH 1.7%

Siemens AG Industrials DE 1.6%

Nestle S.A. Consumer Staples CH 1.5%

Oracle Corporation Information Technology US 1.5%

Facebook, Inc. Information Technology US 1.5%

SAP SE Information Technology DE 1.4%

Unitedhealth Grp Health Care US 1.4%

Best & Worst Performers - 1 Month

Top 5 - Relative Contribution

Henry Schein, Inc. 0.12%

McKesson Corporation 0.09%

Unitedhealth Grp 0.08%

Publicis Groupe SA 0.07%

SAP SE 0.06%

Bottom 5 - Relative Contribution

SEI Investments -0.13%

Novozymes A/S -0.07%

Colgate-Palmolive -0.07%

PepsiCo, Inc. -0.07%

Ingredion Incorporated -0.06%

Investment MetricsPortfolio Index Relative

Risk

Total Risk 10.9 10.6

Number of Stocks 103 1,580

Active Share 79.3

Value

P/E 16.9 15.4 109%

PEG Ratio 1.6 1.3 122%

EV/EBITDA 11.3 9.9 114%

Growth (%)

Sales Growth 6.0 5.5 109%

EPS Growth 10.3 11.4 91%

Quality

Return on Equity 23.7 12.2 194%

Net Debt / EBITDA 0.8 1.3 62%



Ned Bell CIO / Portfolio Manager

Adrian Martuccio Portfolio Manager

Fund Overview

Asset Allocation Long Only Global Equities

Inception Date 7 May 2015

Fund Size $40.88mn

Entry Unit Price 1.3861

Index MSCI World (ex Australia) Index

Performance

The Bell Global Equities Fund delivered a positive return of 2.2% in April –marginally lagging the benchmark return of 2.8%. The index returns were flattered somewhat by the fact that the Australian dollar was quite weak in April. On a calendar year to date basis, the Fund has delivered a positive return of 3.7% -outstripping the benchmark return of 3.6%.

Market Activity

Global equity markets seem to be in a consolidation period at the moment, as we transition from a long bull market to a market that will be increasingly driven by economic consolidation, questions around inflation and rising interest rates. The U.S. earnings season kicked off towards the later part of the month and while earnings have generally been quite good, there has been some commentary from CEOs around inflation and the idea that we at a point of peak earnings (i.e. Caterpillar’s commentary). We suspect that forward looking commentary from U.S. corporates will echo some of these concerns over the coming weeks.

We saw quite a meaningful diversion in global style performance in April, as global Quality materially lagged the broader indices. Using the MSCI World Quality Index as a proxy – “Quality” actually lagged by 1.62% in April, which has been one of the poorest months for Quality in recent history. Against this backdrop, our relative performance of -0.6% in the month doesn’t seem quite as bad, especially as we would argue that we have a very strong Quality bias.

Market performance at a sector level was somewhat reflective of the style divergence was saw during the month. Energy was the standout +9.36%, while some of the traditional defensive sectors like Telecoms, Utilities and Health Care delivered positive returns.

At a geographic level – while all developed markets delivered positive returns in April, European equities materially outperformed North America and Asia Pacific, while Emerging markets lagged

materially.

Performance Attribution

The aforementioned weakness in Quality as a style arguably has the most material impact on our relative returns during the month. At a more granular level, our lack of exposure the strongly performing Energy sector and our overweight in the weaker Consumer Staples sector collectively dragged on our relative returns during the month. On the positive side – we did manage to generate strong returns across our Health Care, Industrials and IT positions.

Our better performers were Henry Schein, McKesson, UnitedHealth, Publicis and SAP, whilst our laggards were SEI Investments, Novozymes, Colgate Palmolive, Pepsico and Ingredion.

Research Focus

While earnings season is always a busy period for the investment team, our current focus is preparing for several research trips. During May and early June, three members of the team will be embarking on separate research trips across Europe and the U.S. Collectively, we will be meeting with well over 100 companies, which represents a combination of current holdings, stocks on our watch list and companies were are building theses on. At a broader level, we will be looking to gauge management perspective on inflation, economic conditions and earnings sensitivity to rising interest rates amongst other issues.

Trade Activity

Our trade activity during the month was relatively benign – other than the normal positional adjustments, we did introduce positions in McDonalds and Cerner.

McDonalds is a company that meets our process well and we feel that the initiatives introduced by the current management team will have the effect of supporting strong same store sales growth and improving ROIC trajectory – both which should support the stock price. When compared to the broader Consumer



Discretionary & Staples universe, we also feel that strong restaurant franchise companies like McDonalds face fewer structural challenges and are able to consistently generate returns on capital in excess of 20%, which is the case for both McDonalds and Starbucks (which we also own).

Cerner is one of the world’s leading health care IT companies that has been on our radar for several years. From a financial perspective they have an excellent track record and have been able to grow revenue every year since 1987 – more recently they have managed to grow revenue & EPS at 13% CAGR & 19% CAGRE respectively. Some recent negative news around a contract delay drove the stock lower –thereby providing us with an excellent opportunity to build a position at an attractive price. Cerner is a great example of the type of Quality SMID cap names that we watch closely and opportunistically introduce to our portfolios.

Outlook

Our overall market outlook hasn’t changed much of late and while we feel constructive about the global economic backdrop and general corporate health, we do feel that some of the market imbalances that have been building will need to revert in the next 12-18 months. The prospect of inflation returning and rising interest rates will pose challenges for markets in general and earnings at a corporate level. From our perspective, our portfolio is very well positioned for this scenario as we have minimal exposure to companies with much leverage and our quality bias means that we invest in strong franchises with pricing power that are less susceptible to inflation.

Important Information: Bell Asset Management Limited (BAM) ABN 84 092 278 647, AFSL 231091 is the responsible entity for the Bell Global Equities Fund (the Fund). This report has been prepared by BAM for information purposes only and does not take into consideration the investment objectives, financial circumstances or needs of any particular recipient – it contains general information only. Before making any decision in relation to the Fund, you should consider your needs and objectives, consult with a licensed financial adviser and obtain a copy of the product disclosure statement, which is available by calling BAM on 1300 305 476 or visiting www.bellasset.com.au. No representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained in this report. Past performance is not necessarily indicative of expected future performance.

Key Features Investment Objectives Outperform the index* over rolling three year periods*Index is MSCI ex Australia

Asset Allocation Long only global equities, no gearing, no derivatives

Investment Style Fundamental bottom up approach ‘quality at a reasonable price’

Investment Highlights

• Global equity portfolio• ‘Quality’ focus - consistently high returning companies• Long-term horizon - typically 3-5 year holding periods• Benchmark agnostic• Diversified portfolio structure• Maximum cash position10%• Fund inception 2007 (strategy inception 2003)• Highly experienced investment team

Benchmark MSCI World (ex Australia) Index

Currency Exposure Unhedged

Investment Timeframe At least 5 years

Number of Holdings 90-110

Fund Terms Fund Inception Date December 2007

Product Structure Wholesale Registered Managed Investment Scheme

Investment Manager Bell Asset Management

Responsible Entity Bell Asset Management

Custodian National Australia Bank

mFund Code BLL01

Unit Pricing & Liquidity

DailyPublished on www.bellasset.com.au & market data servicesApplications using application form attached to the PDSRedemptions typically paid out within 10 days

Minimum Investment Minimum investment - $25kMinimum transaction - $1k

Indirect Cost Ratio 0.9%p.a

Buy / Sell Spread +/-0.21%

ReportingTransaction confirmations upon transacting, half yearly transaction and valuation statement, annual periodic statement, tax statement, distribution statement & Annual Financial Report

Income Annual distribution of taxable income

Contact Details Xanthe Virtue Head of WholesaleTelephone: +61 2 9255 7281Email: [email protected]

Documents

Bell Global Equities FundPlatform lass Fund Summary … · longer term returns for a representative global equities strategy managed by Bell Asset Management with an inception date