The year 2019 has been a challenging year from a macro point of view with uncertainties persisting throughout, especially from a political point of view, including ongoing trade war rhetoric between the US and China, the never ending Brexit saga and the Hong Kong protests.
A backdrop such as this has understandably made for a difficult and sometimes nerve racking environment for investors, leading some to adopt a “wait-and-see” stance. However, looking back at the year, it becomes evident that the year has continued its upward trajectory, especially in the equity space which has been playing out since 2009.
It would be remiss to overlook the fact that central banks have remained supportive during the year, with the FED once again cutting interest rates, but with major global equity markets returning ~17% during the first 11 months of the year, long-term investors have a lot to be positive about.
With an equity bias within our product offering, 2019 has been an equally positive year for Eric Sturdza Investments, with all funds within the E.I. Sturdza Funds plc delivering positive absolute returns on a YTD basis through to the end of November ranging from 7.65% (Strategic Bond Opportunities Fund) to 26.74% (Strategic Europe Quality Fund). More pleasingly perhaps is the fact that the majority of our funds have also added value over and above their respective indices, reflecting the directional and active management approach taken by the portfolio management teams.
Outlook for 2020 by Marc Craquelin
Retrospective assessments always have the benefit of hindsight and can only tell us what has already happened. To try and provide some guidance on what we may face in 2020, we spoke with Marc Craquelin, who is a member of the asset allocation team for the Sturdza Family Fund and former CIO of La Financière De L’Echiquier (LFDE) and have summarised some of the key points from his outlook*:
- Marc Craquelin believes that unloved stocks, which have more recently started to catch up, may continue into the new year – this could be particularly relevant in terms of European markets which have started to make up ground.
- Small and mid caps, which Marc perceives as being unloved over the last two years are starting to offer some good opportunities.
- Marc believes that cyclical stocks have been heavily marked down as a result of the macro environment, particularly those impacted by the US – China trade war and as such believes they may benefit from a re-weighting in investors portfolios. He does caution however that getting the entry point correct is essential in this regard.
In summary, Marc expects that 2020 is likely to prove better for the global economy than 2019; but equities are unlikely to enjoy the same level of returns.
For Eric Sturdza Investments, we remain positive regarding our fund range and the ability of the investment teams we work with to add value to our investors’ portfolios. We will continue to look for opportunities to selectively expand our fund range, but only as and when we find those strategic partners that we truly believe to be class leading and who have the ability to deliver value for our investors over the longer term.
Fund News 2019
New Fund Launches
At the end of 2018, Eric Sturdza Investments brought two new products to the market, representing a rationalisation of our Fund range, particularly within the fixed income space and adapting our offering to better reflect our client’s needs. This included the launch of the Sturdza Family Fund and Strategic Bond Opportunities Fund.
The Sturdza Family Fund provides our investors with a solution within the multi asset space, a necessity in our view given increased volatility and offering dynamic exposure to global markets. The Fund seeks to deliver long term capital appreciation, based on active and flexible management of a mixed asset investment portfolio, predominantly comprised of equities and fixed income investments. As such, the Fund may adopt a more defensive or aggressive strategy in terms of overall allocation when the Investment Adviser considers it to be in the best interest of the Fund and our investors to do so.
As indicated above, the Strategic Bond Opportunities Fund was launched in December 2018. The Fund invests in bonds across all sectors as well as sovereigns, with either fixed or floating coupon rates, and a minimum rating equivalent to either Standard & Poor’s BB credit rating or an equivalent minimum of Moody’s Ba2 credit rating, with the aim of achieving a total return through a combination of capital growth and income by investing in a globally diversified portfolio of fixed income securities.
Both funds have offered strong returns since inception to investors, with performance data being available to interested parties following their 1st anniversary.
Eric Sturdza Investments Nominated for ‘Best Fund Group’ in ‘Equity – Europe’ sector
We were delighted to be nominated for the ‘Best Fund Group 2019’ in the ‘Equity – Europe’ asset class twice during the year by Citywire in their France and Spain Awards.
The group awards are based on Citywire’s group ratings methodology. Citywire look at the top performing fund groups within each of the sectors, considering performance of up to seven years for the group awards.
For the awards Citywire then nominate the top performing groups over the last seven years that have at least one of their funds within that sector registered for sale in the relevant region. The winner is the group with the best risk adjusted performance.
We believe that the above nomination recognises the strong risk adjusted performance that our funds have offered to investors in this space.
Eric Sturdza Investments’ ESG / SRI Aspirations
During 2019, Eric Sturdza Investments established an ESG committee, which was tasked with developing a formalised approach with regards to ESG considerations and sustainable investing. The committee is currently in the process of finalising their high level aspirations in this regard and the associated policy.
As part of this process, the committee have been undertaking active dialogue with each of the Investment Advisers that we work with and have shared portfolio level analysis with them, provided by Sustainalytics, which considers ESG risk factors.
As we move forward through this process the expectation at this time is that each of our Investment Advisers will be provided with access to the Sustainalytics database, allowing them to actively monitor investments and short listed stocks on an ongoing basis. Further we are in the process of extending the access we have in place within the system to also provide product involvement data points.
As the above indicates, Eric Sturdza Investments is in consultations with its Investment Advisers and is working to establish a robust approach to the implementation of ESG consideration into the investment processes associated with our funds, with the aim of becoming a signatory of the UNPRI in 2020.
Our commitment to society and charitable giving
At Eric Sturdza Investments we are very mindful of the global and social issues that we face today and our obligation to take steps whenever possible to support initiatives that seek to address these.
To this end, Eric Sturdza Investments once again in 2019 elected to work with the Tumaini Fund and Guernsey Cheshire Homes as part of our charitable engagement programme, as well providing support to emergency appeals, such as UNICEF’s emergency survival kits appeal.
The Tumaini Fund
Eric Sturdza Investments first worked with the Tumaini Fund in 2018, providing support for the construction of two new clean water wells during the year, providing approximately 1,000 people with access to safe drinking water.
We elected to build on this initiative in 2019 and provided further funding for the construction of an additional three wells. The wells were built in the Karagwe District of the Kagera region, Tanzania and provides access to clean safe drinking water to 2,564 people; however as noted below this number can expand significantly during the dry season when surface water decreases.
Dr Susan Wilson in commenting on the impact of Eric Sturdza Investments in 2019 stated “In the Dry Season the number of people coming to these wells can double as the surface water dries up in their villages, so your wells will easily be supplying to 3-4000 people in the Dry Season.”
We are delighted to be able to provide support to the fantastic work of the Tumaini Fund. Further information regarding the charities efforts can be found on an earlier post here.
Guernsey Cheshire Home
In addition, Eric Sturdza Investments selected the Guernsey Cheshire Home to be a beneficiary of our charitable engagement program in 2019, a local and very deserving charity. The Guernsey Cheshire Home has one aim: to provide care and opportunity for people with physical disabilities in as close to a family atmosphere as possible. Equally important to the team, is the preservation of dignity and individual independence, providing residents with the absolute right to live a life of their own choosing within a family environment.
As we turn to the year ahead, Eric Sturdza Investments has committed to once again provide support to both the efforts of the Tumaini Fund and the Guernsey Cheshire Homes. In addition, we have also extended our charitable engagement programme to include the Eden Reforestation Projects (‘Eden’).
Eden is an international non-profit organisation committed to alleviating extreme poverty and restoring healthy forest systems. Through their “Employ to Plant” methodology, over 3,500 local villagers have been employed to plant an average of 4.5 million trees every month. Since Eden’s launch in 2005, over 285 million trees have been planted, and, as a result of consistent employment, Eden’s employees are now sending their children to school and able to afford food, clothing, and medical care. Learn more about the Eden Reforestation Projects at edenprojects.org
Charitable Engagement Programme
We are very proud of the initiatives that our charitable engagement programme will support in 2020 – listed below:
• Via the Tumaini Fund, Eric Sturdza Investments will provide approximately 300 secondary school starter kits, providing the books that children are required to obtain in order to be admitted for secondary education.
• The planting of over 50,000 trees via the Eden Reforestation Project
• Eric Sturdza Investments will continue to provide support to the invaluable works undertaken by the team at the Guernsey Cheshire Homes.
Season’s Greetings Festive Film
We would like to take this opportunity to thank all our clients and partners for their support throughout 2019 and invite you to enjoy our festive animation.
* The views and statements contained herein are those of Marc Craquelin as at the time of production.
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This document is issued by E.I. Sturdza Strategic Management Limited, the Investment Manager and Promoter of E.I. Sturdza Funds plc, an Irish domiciled fund. It is not intended for retail customers and is only made available for professional clients and eligible counterparties. Any opinions or estimates expressed herein are at the date of preparation, are subject to change without notice and cannot create any liability on the part of E.I. Sturdza Strategic Management Limited or E.I. Sturdza Funds plc. This document is for information purposes only and does not constitute an offer or recommendation to buy, sell or otherwise apply for shares in E.I. Sturdza Funds plc. The information contained in this article has been obtained from carefully selected public sources. Despite the exercise of due diligence to make sure that this information is correct at the time of publication, no guarantee whatsoever is given as to its accuracy, completeness or sincerity.