US and European markets advance, due to expectation of growth acceleration in 2H 2015

BY WILLEM VINKE

Monthly Fund Commentary
23 Jun 2015

BY WILLEM VINKE

In May, US and European equity markets advanced cautiously higher, with US indices reaching new highs on expectations growth will accelerate in the second half of the year. Europe, Japan and India all reported GDP gains in May, in contrast with weakness in China and outright contractions in Brazil and Russia.

The US and European yield curves steepened, again reflecting expectations of higher growth, but also of the bottoming out of inflation. Oil and Gold remained stable despite the uncertainty of Greece’s position within Europe and the ongoing situation in Ukraine.

The Fund outperformed its benchmark index in May by 1.54%, benefitting from the Fund’s weighting in the consumer staples  and healthcare sectors, as well as a lack of exposure to energy. At the stock level, the biggest contributors to performance were Sage, Dixons Carphone, Galenica and UBS. During the month the Bolsas Mercados Espanoles position was exited.

Looking forward, investors cautiously await an outcome in Greece, the expected return of growth in the US, and continued evidence of the ECB’s QE impact on the real economy. 

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the Fund as of 08/06/15 and are based on internal research and modelling.