February update

BY WILLEM VINKE

Monthly Fund Commentary
23 Mar 2018

BY WILLEM VINKE

In February, NYMEX WTI CRUDE was down 4.77% to finish at $61.64. The US 10y treasury yield increased 5.75% to close at 2.8606, following the last and hawkish testimony by outgoing Fed Chairwoman Janet Yellen, in which she signalled a less accommodative monetary policy.

This stance is likely to be continued by incoming Fed Chairperson, Jerome Powell. On 5th February the US market was subject to one of its biggest point falls in history, declining by 1,550 points (6.5%) and leading to a series of concerns regarding this mini-crash. Throughout the month the market however recouped this loss.

The German 10y treasury yield decreased 5.88% to finish the month at 0.656%. At the same time, the Swiss 10y treasury yield fell by 17.49% to close the month at 0.094%. The UK 10y gilt yield decreased by 0.65%, finishing at 1.501%.

In February, Gold decreased by 1.99% to finish at $1,318.31, with silver declining by 5.36% and ending the month at $16.415. The Euro weakened against the US$ to finish at 1.2194 (down 1.77%), but strengthened against the sterling, ending at 0.88617 (up 1.31%).

STRATEGIC EUROPE VALUE FUND

The Fund* outperformed its benchmark by 0.24% in February, which returned -3.86% throughout the month. Technology, Consumer Discretionary and Financials were the best performing sectors in the benchmark, whilst the worst performing were Real Estate, Consumer Staples and Telecoms.

The Fund’s top performing stocks were Criteo, Intertrust and Pandora, while the worst were Sophos, Reckitt Benckiser and Liberty Global. During the month the Investment Adviser exited Livanova and Sophos on valuation grounds and established a new position in Safran. The team expects the Company’s cash generation to double in the next three years underpinned by strong aircraft demand, the successful launch of the LEAP engine, as well as accelerating aftermarket sales profitability. The Investment Adviser also anticipates Zodiac, the group’s latest acquisition, to contribute to Safran’s growth over the coming years. The team thinks that these highly favourable prospects are currently not fully reflected in Safran’s share price.

*EUR I Class

STRATEGIC GLOBAL QUALITY FUND

The Fund returned -5.46% in February. Information Technology, Consumer Discretionary and Financials were the best performing sectors in the benchmark, whilst the worst performing were Consumer Staples, Real Estate and Telecoms. The Fund’s top performing stocks were Criteo, Safran and MasterCard, while the worst were Reckitt Benckiser, British American Tobacco (BATS) and Altria. During the month the team established a position in Safran.

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the Fund as of 07/03/18 and are based on internal research and modelling.