You are reading: Progressive Global Fund – November 2021

The Progressive Global Fund (PGF) returned -5.9% for the month of November. This was a disappointing month. It compared to the ASX All Ordinaries which returned -0.7% and the MSCI World returned 2.9% (in AUD terms).

The Progressive Global Fund

November 2021

Markets were convoluted in November. The month started with calm and rational markets but became generally unhinged and mostly risk-off. The trigger to this was the discovery of, and uncertainty arising from, the Omicron variant. Of importance in explaining our poor performance over the month is that typical correlations broke down during the month. This can happen from time to time, and normally revert to normal in time.

Our investment approach is to invest generally in companies with high quality businesses, secular growth tailwinds and strong balance sheets. An example of one of our long investments is Playtika, an online entertainment company that specialises in free-to-play mobile games. Over the long term, the growing popularity of online gaming, and Playtika’s games, suggests growing earnings and strong returns for investors. In the short term that was November, it was the largest detractor from performance.

We have a tilt in the portfolio towards a belief that the world will eventually be able to get on living with covid and that economies will genuinely recover. For example, we have an exposure to oil & gas stocks. We believe they will benefit from a continued pick-up back in demand, and more importantly, an imbalance with supply resulting from years of under-investment to sustain supply combined with political and other difficulties in undoing the deficit. The Omicron development saw oil prices fall significantly on fears around near-term demand. Our investment in the portfolio in oil & gas stocks were hit accordingly.

We took the opportunity to add to our position in select stocks we view as attractive based on their fundamentals and which sold off over the month. As we did not add materially to our short positions, our net exposure increased over the month, to stand at 64% as at month’s end.

On the short side, we aim to bet against over-hyped, loss-making and overly popular stocks. There were some signs in November that the share prices of these types of stocks are starting to roll over, as seen in the graph below. We believe the shorts within our portfolio will help the fund’s performance if, as we expect, this trend continues.

In our view, there is a bubble in many of these stocks and that the bubble will ultimately deflate by the weight of their poor fundamentals. Included here are some of the ‘covid beneficiaries’. An example of one of our short positions has been Peloton, whose share price halved over the month as a result of a weak business update. This contributed positively to performance. We have previously written about our short thesis in respect of Peloton, with one example found at We believe there are more shoes to drop in our portfolio similar to Peloton.

In our view, risk markets including most global equities are being too complacent in considering downside risk. Whilst most of what we consider to be carelessness is within the over-hyped, loss-making and overly popular stocks, any fallout from a deflation of the bubble in these stocks could have broader ramifications across markets. Accordingly, from the start of December, we have started to reduce our position in stocks that present with market-related risks such as those that may in the future have issues with illiquidity. Alongside, we intend to reduce the net exposure of the portfolio to equities, mostly by reducing long positions but also by looking cautiously at increasing our shorts.

As always if you would like to learn more about investing in our fund please contact us –