Defensives outperform cyclicals

The Strategic Europe Quality Fund returned 1.28% in July. Stock selection was the main contributor to return, being particularly strong for the Communication Services and Industrials sectors. Stock selection in the Financials sector also contributed.

MONATLICHER FONDSKOMMENTAR
18 Aug 2021

The Strategic Europe Quality Fund returned 1.28% in July. Stock selection was the main contributor to return, being particularly strong for the Communication Services and Industrials sectors. Stock selection in the Financials sector also contributed.

Sector allocation and stock selection in the Consumer Staples sector were the biggest drag on performance. The best performing sectors for the benchmark over the period were Information Technology and Real Estate, while Energy was the bottom performing sector.

The best-performing stocks for the European strategy were Nordic Entertainment Group, Wolters Kluwer and Qiagen. The largest detractors were Smith & Nephew and Reckitt Benckiser Group.

The Strategic Global Quality Fund returned 3.52% in July, outperforming the benchmark by 1.73%. Stock selection was the main contributor to return over the month, particularly the Industrials, Healthcare and Communication Services sectors. Sector allocation to Energy also contributed to outperformance due to the Fund’s relative underweight to the sector.

The largest detractors to performance over the period were stock selection and allocation in the Consumer Staples sector, and the Fund’s relative underweight to the Information Technology sector. The best performing sectors for the benchmark over the month were Health Care, Real Estate and Information Technology, while Energy and Financials were the bottom-performing sectors.

The best-performing stocks for the Global strategy were Wolters Kluwer, Nordic Entertainment Group and Otis Worldwide, with Reckitt Benckiser Group, Nomura Research and JDE Peets the bottom performers.

Market Outlook

Optimism for the global growth outlook has continued but cooled down over the past couple of months. This was reflected by the persistent decline in bond yields and further outperformance of defensive stocks over cyclicals.

We expect to see a robust economic recovery in the short term as economies continue to reopen. Longer-term, we are closely watching inflation risk and are mindful of comparatives becoming much tougher as we enter 2022. Valuations in certain parts of the market remain expensive.

As always, we invite investors and prospective investors, to get in touch should you wish to discuss the positions held in the portfolio. Please do not hesitate to contact us for further information.

Adam TurbervilleAdam Turberville
Director
+44 1481 742380
a.turberville@ericsturdza.com

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 17/08/2021 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.