The global economy is in critical care

Much has been said about the public health crisis that has been caused by the novel coronavirus and the COVID-19 disease. As dreadful as this pandemic will be (and already is) for so many lives around the world, the damaging effects on lifestyles has commenced. Let’s see some recent economic data.

Screen Shot 2020-04-09 at 3.17.12 pm

The above chart shows the global purchasing manager index. It is a diffusion index that summarizes conditions as expanding (above 50), contracting (below 50) or staying the same (50) as determined by a survey of supply chain managers across different industries. Not only does the PMI indicate an almost immediate reversal from steady expansion to contraction, but the depth and pace of decline is astounding. In a matter of weeks, the outlook from businesses has descended to near record lows seen in the GFC in 2008 and 2009.

It is perhaps not surprising, but still astounding that employment has immediately suffered as job losses mount. Take a look at the chart below showing the employment component of the global PMI survey.

 

Screen Shot 2020-04-09 at 3.17.52 pm

Employment conditions worldwide have plummeted to levels seen following the 9/11 terrorist attacks and coming through the tech bust at the turn of the millennium. The world’s largest economy has been a strong contributor.

In the last two weeks the US jobless numbers have totalled almost 10 million. This number is staggering compared to the typical weekly figure of around a quarter of a million, and even overwhelms the number of Americans losing their jobs each week in the GFC which peaked at around 600 thousand. The line is literally off the chart below.

Screen Shot 2020-04-09 at 3.18.10 pm

Source: Bloomberg

The global economy and employment conditions are in a dire state, notwithstanding announced support packages from governments and central banks worldwide. We think there is a high likelihood that there is more bad news to come as public health officials grapple with the coronavirus outbreak and the necessary tension between lives and livelihoods. Consequently we remain defensively positioned in the global portfolios.

Our Funds

The Montgomery Fund

  • AUSTRALIA/NZ
  • Concentrated high conviction equities
  • From $25,000
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Montgomery Global Fund

  • GLOBAL
  • Concentrated high conviction equities
  • From $25,000
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Montaka Global Access Fund

  • GLOBAL
  • Access long/short global equity portfolio
  • From $50,000
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Montgomery Global Equities Fund (ASX:MOGL)

  • GLOBAL
  • Concentrated high conviction equities
  • No minimum investment - see your broker limits
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Montgomery Small Companies Fund

  • AUSTRALIA/NZ
  • Concentrated high conviction equities
  • From $25,000
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Our Funds

Concentrated High Conviction Equities

Listed

Montgomery Global Equities Fund (ASX:MOGL)

Global
Available on the ASX as an Exchange Traded Managed Fund, invests in 15 to 30 quality global businesses for long-term capital growth with a target distribution yield of 4.5% per annum. Mirrors the strategy of the Montgomery Global Fund.
Unlisted From $25,000

Montgomery Global Fund

Global
Invests in 15 to 30 quality global businesses for long-term capital growth. Priced daily. Mirrors the strategy of the Montgomery Global Equities Fund (ASX:MOGL).
Unlisted from $25,000

The Montgomery Fund

Australia/NZ
Aims to provide long-term growth and income by investing in 20 to 40 high-quality Australian and New Zealand businesses trading at attractive valuations. Priced daily.
UNLISTED FROM $25,000

Montgomery Small Companies Fund

Australia/NZ
Aims to provide long-term growth by investing in 30 to 50 high quality, undervalued, Australian and NZ small and emerging companies with strong growth potential. Priced daily.
Unlisted from $1 Million

The Montgomery [Private] Fund

Australia/NZ
Seeks to deliver absolute returns from a portfolio of high-quality Australian and New Zealand businesses. Capital preservation is paramount. By invitation only.

Alternate Equity Strategies

New Fund

Montaka Global Extension Fund (ASX: MKAX)

GLOBAL
An ASX-quoted managed fund, typically, the Fund seeks to hold 15 to 30 long positions and partially offsets these with 10 to 40 short positions, operating with 130% exposure to its long portfolio and 30% exposure to its short portfolio, resulting in a net market exposure of around 100%. Features a target distribution yield of 5% per annum.
Unlisted from $50,000

Montaka Global Access Fund

Global
Aims to generate materially higher risk-adjusted returns, net of fees, than is generally available in the equities market over the medium term. Priced monthly. Provides retail investors access to the Montaka Global Fund.
Unlisted from $1million

Montaka Global 130/30 Fund

Global
Provides the opportunity to benefit from both the gains of extraordinary businesses and the declines of deteriorating businesses through a global equity active extension strategy, which has the potential to significantly outperform the broader equities market over time. Seeks to generate double-digit annual average returns, net of fees. Daily priced.
Unlisted From $1 Million

Montaka Global Fund

Global
Aims to generate materially higher risk-adjusted returns, net of fees, than is generally available in the equities market over the medium term. By invitation only.