Global equities

Global equities – June 2022 results

19 Jul 2022 | 2 minutes read
Ted Alexander
Portfolio Manager
& Head of Investments


The Orca Global Fund launched 4 years ago, in July 2018, and following strong outperformance over the past 12 months has also generated positive returns and outperformance since inception (+8.9% p.a.1 since inception, outperforming benchmark by 0.4% p.a.). This follows on from the Orca Asia Fund, which launched in May 2018, and has also outperformed since launch, despite tougher Asian stock markets, with a return of +2.7% p.a.1 (since inception). This month the Orca Global Fund and Orca Global Disruption Funds also received “Investment Grade” ratings from Lonsec2 . The Orca Asia Fund will aim to go through the same rating process in the coming rating cycle.

The past month was negative for stocks globally, with a return of -5.0% in Australian dollar (AUD) terms. We continue to see concerns around the possibility of a global recession. Inflation is at record levels, and central banks are rapidly raising policy rates, resulting in much higher mortgage rates. The current economic climate is interesting, because in some senses it is nothing more than the decline and fall of an excessive consumption binge. Perhaps consumers returning to a more spartan existence is wise. Consider that Moody’s estimates US households are sitting on an extra $2.7 trillion of cash compared to before the COVID pandemic. GDP is ahead of the likely path pre-COVID. Employment is high, wages are strong, consumers are spending well.

High and persistent inflation was caused by a deliberate inflation of the economy: central banks took rates to zero and governments stimulated the economy with cash. The result of inflating the economy was inflation. Now the policy is to reverse the stimulus and we may see a recession – it depends how hard policymakers want to go. In truth, we could see a recession and consumers could still be better off than before COVID. In that sense, the recession isn’t that concerning. If we see asset price falls in luxury goods like NFTs, crypto, SPACs, meme stocks, but strong wages and employment, the economic shift should reverse some economic inequality, which would be an economic and social positive.

Companies will start issuing profit reports from the middle of July and we’ll see some hard evidence of the economic environment. We would expect to see persistent strong consumer spending, but also strong costs eroding profits, and company management teams worried about the rest of the year. We’d expect consumers to reallocate spend away from pandemic activities and luxuries to food, healthcare, and petrol. But we have to wait and listen to our companies for feedback about their customers and business, and then make any decisions about reallocating capital. We do remain cautious about the risks of a recession, even though at this point we don’t see the risk of a massive economic reversal. This caution helped the Orca Global Fund to outperform markets again this month, and we think current trends are likely to continue. On the other hand, we’re always looking for opportunities to buy good stocks at a discount, and we’re getting closer to taking new positions and increasing marginally the risk profile of the Fund. One thing remains constant: we view global equity markets as a strong long-term investment to access returns from economic growth. We hope clients have been happy with the returns from our funds and we hope to continue to outperform for unitholders in a complex and complicated market.


1. Fund performance is quoted net of fees and inclusive of reinvested distributions. Past performance is not a reliable indicator of future performance.

2. The rating issued 05/2022 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit for ratings information and to access the full report. © 2022 Lonsec. All rights reserved.

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