The Strategic Europe Value Fund returned 3.45%* in June, underperforming its index by 0.98%. The largest detractor to alpha was the Fund’s overweight to the Consumer Staples sector. This said, stock selection for this sector was a positive contributor.
June proved a better month for the MSCI Europe Index, with all sectors delivering positive returns except for the Real Estate sector. The best performing sectors were Materials, Consumer Discretionary, and Industrials, while Real Estate, Consumer Staples and Communication Services were the worst performing sectors.
At a single stock level the best performing stocks for the Fund were AstraZeneca, SBM Offshore and ABInbev; there were no significant detractors (> 50 bps) to return for the period. During the month, the Fund sold its position in GrandVision and initiated a position in Kone.
The Strategic Global Quality Fund returned 4.61%** in June, underperforming its benchmark by 1.98%. Similar to the European Fund, Consumer Staples was the largest drag on alpha, both due to the Fund’s relative overweight to the sector but also due to stock selection. Stock selection for the I.T. sector also constituted a minor drag on alpha. All sectors for the MSCI World Index were in positive territory, with Materials, I.T., and Consumer Discretionary being the best performing, whilst Real Estate, Utilities and Communication Services were the laggards.
The best performing stocks for the Fund were SAP, ABInbev, and Danone. There were no significant detractors (> 50 bps) to return during the period. The Fund initiated a new position in Nomura Research Institute in June.
According to the Investment Adviser, equity markets have been very strong during the first six months of the year on the back of the U-turn in interest rate policy announced by the Fed. While markets are on one side excited about more support from central banks, macro indicators globally do not paint a similarly rosy picture. Given this backdrop, the team is concerned about further volatility in H2 and will continue to maintain a defensive portfolio positioning.
* EUR Inst Class. Past performance is not an indicator of future performance.
** USD Inst Class. Past performance is not an indicator of future performance.
The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 17/07/2019 and are based on internal research and modelling.