Enduring Volatility

The Strategic Europe Quality Fund returned 0.07% in July, outperforming its index by 1.44%. The majority of alpha was generated by stock selection, particularly the information technology, health care and energy sectors. The Fund’s relative overweighting to the consumer staples sector also generated significant alpha.

Monthly Fund Commentary
21 Aug 2020

The Strategic Europe Quality Fund returned 0.07% in July, outperforming its index by 1.44%. The majority of alpha was generated by stock selection, particularly the information technology, health care and energy sectors. The Fund’s relative overweighting to the consumer staples sector also generated significant alpha.

There were no noteworthy detractors to alpha over the month. Utilities, materials and information technology were the best performing sectors over the period; while the worst performing sectors were energy, communication services and financials.
The largest contributors to alpha during July were: SBM Offshore, an oil and gas servicing business; and chemicals and biotechnology firm Lonza; there were no noteworthy detractors to alpha over the period for the European Fund.

The Strategic Global Quality Fund returned 4.55% in July. Stock selection was the main detractor, mostly seen within the consumer staples and information technology sectors, although currency effect helped to offset this for consumer staples.

The best performing sectors for the benchmark over the month were materials, consumer discretionary and utilities; while energy, financials and real estate were the worst performing sectors.

For the Global Fund, personal care and cosmetics company Shiseido was the only notable detractor.

Market Outlook

Our Team remains cautious given the current economic and political risks, as well as the likelihood of increased volatility. As a result, we will maintain our defensive view, looking to invest mainly in high quality companies that will better endure any market volatility to come.

 

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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 14/08/2020 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.