Growth optimism

The Strategic Europe Quality Fund returned +1.31% in June. Sector allocation was the main contributor to return, it was particularly strong for the Health Care sector. Stock selection in the Materials sector also contributed to alpha. Stock selection in the Energy sector was the biggest drag on performance.

Commentaire Mensuel
13 Juil 2021

The Strategic Europe Quality Fund returned +1.31% in June. Sector allocation was the main contributor to return, it was particularly strong for the Health Care sector. Stock selection in the Materials sector also contributed to alpha. Stock selection in the Energy sector was the biggest drag on performance.

The best performing sectors for the benchmark over the period were Health Care, Information Technology and Energy, while Financials and Utilities were the bottom performing sectors.

The best-performing stocks for the European strategy were Wolters Kluwer, International Flavors and Fragrances, Siemens Healthineers and SIG Combibloc. The largest detractors were National Express and SBM Offshore.

The Strategic Global Quality Fund returned +0.58% in June. Stock selection was the main contributor to return over the month, particularly the Industrials and Materials sectors. Allocation to the Financials sector also contributed to outperformance due to the Fund’s relative underweight compared to the benchmark, currency effect on Financials also added to alpha.

The largest detractors to performance over the period were the Currency effect on 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 the Information Technology, Energy and Health Care sectors, while Materials, Financials and Utilities were the bottom performing sectors.

The best-performing stocks for the Global strategy were International Flavors and Fragrances, Otis Worldwide and Wolters Kluwer, with Fidelity National, JDE Peet’s and Nordic Entertainment underperforming.

Market Outlook

Optimism for the global growth outlook has continued but cooled somewhat recently. This was reflected by bond yields reversing part of their strong upward trends, equity markets finding some resistance and the end of the recent outperformance of cyclicals over defensives.

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 are 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 06/07/2021 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.