Europe in May 2017

BY WILLEM VINKE

Monthly Fund Commentary
16 Jun 2017

BY WILLEM VINKE

The Fund’s benchmark returned 1.53% in May. NYMEX WTI CRUDE was down 2.05% on the month to finish at $48.32 as discussions regarding oil production caps from OPEC and US Inventory levels caused concerns. The US 10year treasury yield decreased 8bps to finish the month at 2.20% following mixed economic data and the prospect of US rate increases.

The German 10year treasury yield decreased 1bp to finish the month at 0.30% and the Swiss 10year treasury yield also decreased by 6bps to finish the month at -0.17%. The UK 10year gilt yield decreased by 4bps to finish the month at 1.05% as the UK election got closer and the Conservative lead, which at the time the election was called was in excess of 20 points according to polls, began to shrink. Gold increased by 0.05% to finish at $1,269 as political concerns surrounding the upcoming UK Elections and concerns over whether President Trump had shared classified information with Russia and the threat of him being impeached, saw investors continue to buy safer assets. Silver increased by 0.65% to finish the month at $17.33. The Euro strengthened over the month against the US$ up 3.2% at 1.12 and strengthened against sterling, up 3.68% to 0.87.

The Fund outperformed its benchmark by 1.82%* in May. Utilities, Telecoms and Consumer Staples were the best performing sectors in the benchmark whilst the worst performing were: Materials, Consumer Discretionary and Financials. The Fund’s top contributing stocks were: Sophos, Wirecard & Nestle and the largest detractors were: Pandora, Criteo & Shire.

During the month the Fund exited the position in Legal & General and bought Convatec, NETS & Orkla. Legal & General was sold to further reduce exposure to financials. Orkla’s strategy of focussing on efficiencies and capital allocation is a step change and in time will transform the company. Convatec is a medtech company which came to the markets recently. There have been significant changes at the company and underperformance in some divisions which meant, in the Investment Adviser’s opinion, the shares were too cheap. NETS is a Nordic focussed digital payments and related solutions provider. This is a structurally growing sector favoured by the Investment Adviser and which the Fund already has exposure to.

* 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 14/06/17 and are based on internal research and modelling.