Europe in July 2017

BY WILLEM VINKE

Monthly Fund Commentary
29 Aug 2017

BY WILLEM VINKE

The Funds benchmark returned -0.37% in July. NYMEX WTI CRUDE was up 8.97% in July MoM to finish at $50.17 despite ongoing disputes regarding production caps and inventory levels.

The US 10y treasury yield decreased 0.41% to close the month at 2.29% following further delays in the approval of Trump’s Healthcare proposal. This in turn led to concerns that other budgetary plans may not be met, negatively impacting US Rates. The German 10y treasury yield increased 16.34% to finish the month at 0.54%, while the Swiss 10y treasury yield increased by 300.50% to finish the month at 0.05%, closing in positive territory for the first time since March 2017. The UK 10y gilt yield decreased by 2.17% to finish the month at 1.23%, due to concerns regarding the lack of progress being made with respect to Brexit plans, the impact on the UK economy and the overall uncertainty surrounding interest rates. Gold increased by 2.24% to finish at $1,269.44 as investors looked for safe haven assets. Silver increased by 1.17% to finish the month at $16.83. Throughout the month, the Euro strengthened against the US$, finishing at 1.1842 (up 3.64%) and closing at 0.89608 against Sterling (up 2.16%).

The Fund outperformed its benchmark* by 1.33% in July. Materials, Financials and Telecoms were the best performing sectors in the benchmark, whilst the worst performing were Healthcare, Consumer Staples and Industrials. In terms of generating return, the Fund’s top performing stocks were Pandora, WorldPay & Nets, whereas the worst performing were Intertrust, BATS and Reckitt Benckiser.

During the month, the Investment Adviser exited positions in CTS Eventim and WorldPay and entered a position in AstraZeneca. Positions with CTS Eventim and WordPay were exited on valuation grounds. WorldPay’s share prices increased substantially after a bid from its competitor Vantiv. AstraZeneca reported negative results for a key drug trial. The subsequent market reaction then presented an attractive entry point for investment.

*Eur I Class

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the Fund as of 04/08/17 and are based on internal research and modelling.