Maintaining a defensive strategy

The Strategic Europe Quality Fund returned 8.10% in November in absolute terms, however, underperformed its benchmark. The largest detractor from alpha was allocation effect, mainly due to the Fund’s relative underweight to Financials and overweight to the Consumer Staples sector.

Monthly Fund Commentary
18 Dec 2020

The Strategic Europe Quality Fund returned 8.10% in November in absolute terms, however, underperformed its benchmark. The largest detractor from alpha was allocation effect, mainly due to the Fund’s relative underweight to Financials and overweight to the Consumer Staples sector.

During the month we added to the portfolio’s Financials exposure. The best performing sectors for the benchmark over the period were Energy and Financials; while the Consumer Staples and Health Care sectors were the worst performers, although still positive for the month.

For the European strategy, Mowi and Nestle were the largest contributors to alpha and SBM Offshore and Wolters Kluwer were the main detractors.

The Strategic Global Quality Fund returned 9.58% in November, underperforming on a relative basis. The largest detractor from alpha was again allocation effect, mainly due to the Fund’s relative overweight to the Consumer Staples sector. Stock selection for the Industrials sector was also a noteworthy detractor.

The best performing sectors for the benchmark over the month were Energy and Financials; while Utilities, Consumer Staples and Health Care were the worst-performing sectors – again positive for the month.

The only noteworthy stock specific move for the Global Fund was Fujitec which detracted from return.

Market Outlook

During the month we tilted the European portfolio towards more cyclical and value names in light of recent political developments and on the basis of a vaccine and further stimulus. However, the Fund does still have a defensive bias and there have been no significant changes to the global strategy.

If you have any questions about the Funds or would like further detail on our views, please do not hesitate to contact us.

Adam TurbervilleAdam Turberville
Head of Marketing & Client Relations
+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 15/12/2020 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.