Europe in July

BY WILLEM VINKE

Monthly Fund Commentary
26 Aug 2015

BY WILLEM VINKE

The Greek bailout and better than expected economic data in both the US and the Eurozone, saw their respective equity markets rise in July. However, volatility remained elevated due to concerns regarding emerging market growth and the initial ‘No’ vote in the Greek bailout referendum. Meanwhile, the German 10yr moved to 0.64%, a fall of 12bps, and 10yr Treasuries similarly moved to 2.18%, down 17.3bps.

Gold reached five year lows and Brent fell to $52 from $61 as OPEC indicated there would be no cut in output, Iran and six others reached an agreement on nuclear power, and US oil production remained robust.

The Fund was up 6.14% in July, outperforming its benchmark by 2.14%. At the stock level, the biggest contributors to performance were Wolters Kluwer, Visa and Svenska Cellulosa, with SES, Diageo and GrandVision the biggest detractors. No positions were exited, nor new positions established during July.

While European economic data remains supportive, investors’ focus is now on the actions of the Federal Reserve and China. Expectations are that there will be a rate rise in the US before year-end but given the importance of China to global trade, developments here and in the emerging markets more broadly, will be carefully monitored.   

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the Fund as of 19/08/15 and are based on internal research and modelling.