Q4 2023 Global Fund Newsletter

Investment objective

The investment objective is to generate superior returns for Unit holders by investing in global markets, with a focus on reducing risk and preserving capital. More information can be found in the Information Memorandum located at the Fund website.

Applications available here.

Investment Strategy

The Defender Global Fund (Fund) provides investors with exposure to global markets through a long and short strategy.

The Fund starts with the Managers global macroeconomic and market outlook, then overlays key thematics which the Manager believes will effect future performance and combines this with a bottom-up investment decision criteria.

Performance Summary


The Defender Global Fund returned +3.4% in Q4 CY2023.

The macro level in Q4 CY2023 saw continued declines in inflation in the developed world, solid employment outcomes (especially in the USA) and generally positive economic data (relative to expectations). As a result, financial conditions loosened (with US 10yr bond yields falling considerably from 5.02% to 3.88% over the quarter – almost in complete contrast to Q3 CY2023) and equity markets were positive overall.

This creates a constructive macro setup for CY2024 as we move into an environment with more favourable financial conditions – a return to solid earnings growth in the USA (Factset forecast +11.8% earnings growth for the S&P500 in 2024 vs +0.6% in 2023) and improving liquidity conditions globally. Historically this has provided supportive ground for active management.

In Q4 we added opportunistically to our thematic in Technology, Artificial Intelligence and Special Situations, with additions to Alphabet Inc (Google), Pershing Square Holdings Ltd and Legacy Property– Orchard Hills.

Pershing Square Holdings (PSH.L) – Special Situations

Our Pershing Square Holdings position was established in Q3 CY2023, and pleasingly we are up ~16% to date. Their underlying equity portfolio has performed well (which includes Alphabet, Universal Music Group, Chipotle’s Mexican Grill, Restaurant Brands International Inc, Hilton Worldwide Holdings, Lowe’s Companies Inc,
Canadian Pacific Kansas City Limited, Howard Hughes Holdings Inc) and in particular, Chief Executive Officer and major shareholder Bill Ackman timed to perfection the exit of his large interest rate swaptions position, exiting at considerable profit when the US 10yr bond yield was briefly at ~5%.

The Pershing Square portfolio continues to trade at an ~30% discount to NAV – we expect this discount to close over time, in addition to continued underlying portfolio performance, and therefore anticipate we will add to this position on any weakness.

Alphabet (GOOG.NASDAQ) – Artificial Intelligence/Technology

In Q4 CY2023 Google continued the rollout of its Ai tools to advertisers, merchants and Google Cloud customers with the launch of Gemini 1.0, a powerful Ai tool built for multimodality – reasoning seamlessly across text, images, video, audio and code. This is expected to drive revenue (and increase stickiness/renewals) across the three business units mentioned above (https://blog.google/technology/ai/google-gemini-ai/#performance).

For example, one of Google Cloud’s new products, Conversational Commerce Solution, allows retailers to embed GenAi-powered agents on their websites and mobile apps. The agents interact with shoppers in natural language and then provide tailored product suggestions based on shoppers’ individual preferences.

This is expected to drive revenue for Google’s largest revenue line – Google Search – which is expected to rise to US$170BN in CY2023, and US$190BN in 2024.

Alphabet (Google) is expected to continue the rollout of its Ai enhanced products over the course of 2024 to its customer base of billions of monthly users.

Our two largest listed positions are currently Microsoft and Alphabet (Google).

We continue to have meaningful exposure to other Ai beneficiaries (Nvidia, Apple, Amazon, AMD, Meta (Facebook) and Tesla) via our currency hedged Nasdaq and S&P500 positions, which cumulatively are our third largest listed position.

Legacy Property – Orchard Hills – Special Situations

Having successfully exited earlier in 2023 our position in Legacy Property – Rouse Hill Heights at an ~24% return over 12mths, we were pleased to have been offered an opportunity to invest in the next project from the Legacy Property team.

This project is a residential development in western Sydney, consisting of approximately 1200 lots over 13 stages, a new neighbourhood retail centre, new primary school and 19 hectares of new playing fields, local parks, open spaces and a central lake creating a new community for residents. We like this project given the anticipated surge in immigration Australia is seeing and the associated housing shortage. We like this investment given it comes with an expected 17%pa return per annum, compounding annually for a period of 24mths, and has guaranteed principal repayment. We also have a high opinion of the Legacy Property team having invested alongside them in projects over a number of years.

CHC Litigation Fund III Update

In an update to our investment in CHC Investment Fund III (a litigation fund with a highly experienced management team that are co-investors, a forecast return of 20%pa, guaranteed repayment of principal and a diverse range of cases across commercial, insolvency and class action), we are pleased to report that CHC III has acquired 5 mature litigation projects from CHC I (following independent review from barristers confirming the strong prospects for each case). This is expected to result in expedited outcomes for CHC III and therefore faster return of capital and attractive returns to us.

Key Information

Strategy Inception

January 2023

Portfolio Managers

James Manning, Nick Hughes Jones

Net Asset Value

$0.8344 AUD (December 31)



Management Fee

1% p.a.

Performance Fee

(subject to high water mark)

Sector allocation

As at 24 Jan 2024

Recommended for you

Put Yourself in the Right
Lane For Success.

Contact one of our Financial Professionals Today.

Apply Now

By clicking submit you agree to the Terms & Conditions.

Contact us

By clicking submit you agree to the Terms & Conditions.

+61 2 8624 6101

+61 2 8624 6101