Even in the toughest of markets earnings growth is rewarded

2022 has continued to be challenging for global share markets with the MSCI World index set to post its weakest March quarter in over a decade. The drivers of this volatility are clear and evident: escalating commodity prices, rising interest rates and exceptional geopolitical events have concerned investors as these factors combine to create peak uncertainty. And investors do not appreciate uncertainty, it clouds an already unknown future. What is appreciated is a clear path towards earnings growth, ideally one that a company can travel for a long time. Where that is happening a share price can rise even in the most challenging of environments, just like in the case of OFX Group, a position in our funds.

Chart showing OFX Group share price doubling despite volatile markets

OFX Group is a cross border payments business, which basically means that its customers have money that they want converted into a different country and currency and OFX helps them do that. Banks and Money Service Businesses (MSBs) are the two places that customers can go for that service. It’s a huge market, cross-border payments are expected to exceed $220 trillion in 2022. And it has been growing steadily at around 5% year on year. It should always excite an investor to find a business that has unlimited scope to grow its market share in a growing industry and OFX Group with a current market share of less than 0.05% definitely falls into that camp. OFX‘s market share is the tiny red dot in the diagram below.