Value rotation continues

The Strategic Europe Quality Fund returned +1.60% in February. The main detractor to alpha was the Fund’s relative overweight to the Consumer Staples sector, however, this was mostly offset by strong stock selection for the sector. The Fund’s overweight to the Energy sector and underweight to the Utilities sector also delivered strong returns.

MONATLICHER FONDSKOMMENTAR
23 Mrz 2021

The Strategic Europe Quality Fund returned +1.60% in February. The main detractor to alpha was the Fund’s relative overweight to the Consumer Staples sector, however, this was mostly offset by strong stock selection for the sector. The Fund’s overweight to the Energy sector and underweight to the Utilities sector also delivered strong returns.

The top-performing sectors for the benchmark over the period were Financials and Energy; while Utilities, Consumer Staples and Health Care were the bottom-performing sectors. For the European strategy, National Express Group and Carlsberg were the best-performing stocks, and SIG Combibloc was the largest detractor.

The Strategic Global Quality Fund returned +0.59% in February. Stock selection was positive for the month, sector allocation was the detractor to alpha, driven primarily by the Fund’s relative overweight to the Consumer Staples sector. The Fund’s underweight to the Financials sector also detracted from return. On a positive note, stock selection for the Information Technology and Health Care sectors delivered positive returns.

The top-performing sectors for the benchmark over the month, same as the European benchmark, were the Energy and Financials sectors; while Utilities, Health Care and Consumer Staples were the bottom-performing sectors. The best performing stock for the Global strategy was International Flavors & Fragrances, a new addition to the portfolio, and SIG Combibloc was the main detractor to return.

Market Outlook

We are encouraged by the rollout of vaccine programmes globally and expect to see strong recoveries as economies reopen. We expect the value rotation trade to continue as expectations of inflation increase. We repositioned some of the European portfolio towards Financial and Energy companies in November last year which has worked well. The portfolios also hold many companies which should benefit from economies opening up.

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

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The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 12/03/2021 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.