March review: Cautious outlook remains

The Strategic Europe Value Fund returned 4.78%* in March, outperforming its index by 2.75%. The best performing sectors in terms of alpha were Consumer Staples and Information Technology. The Fund’s overweight to the Health Care sector also helped. The best performing sectors for the benchmark were Consumer Staples, Real Estate and Health Care; while the worst performing sectors were Financials and Consumer Discretionary.

Commentaire Mensuel
18 Apr 2019

The Strategic Europe Value Fund returned 4.78%* in March, outperforming its index by 2.75%. The best performing sectors in terms of alpha were Consumer Staples and Information Technology. The Fund’s overweight to the Health Care sector also helped. The best performing sectors for the benchmark were Consumer Staples, Real Estate and Health Care; while the worst performing sectors were Financials and Consumer Discretionary.

Whilst there weren’t any significant detractors (>50 bps) in March, the Fund’s best performing stocks were Worldpay, Reckitt Benckiser Group and Unilever. During the month, the Fund exited positions in ASR Nederland and Lloyds Banking Group.

The Strategic Global Quality Fund returned 4.80% in March, outperforming its benchmark by 3.49%. The Consumer Staples sector was the largest contributor to alpha, driven by both, the Fund’s overweight to the sector and stock selection. Information Technology also significantly contributed to the Fund’s outperformance, driven by stock selection, particularly Worldpay. The Fund’s zero weight to the Financials sector also helped. Real Estate, Information Technology and Consumer Staples were the best performing sectors for the benchmark; while Financials and Industrials were the worst.

The Fund’s best performing stocks over the period were Worldpay, Shiseido and Unilever, with no significant detractors (>50 bps) to performance to be mentioned. Over the period, the Fund sold its position in Intl Flavors & Fragrances.

The Investment Adviser maintains their cautious view on markets. Even though there has been a rebound year-to-date, the team do not believe the worst is over. They are still concerned about the pricing of risk assets given the overall tightening of global monetary policy and the amount of leverage in the current economic system. In this environment the Investment Adviser retains their preference for defensive portfolio positioning.

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 12/04/2019 and are based on internal research and modelling.