BY WILLEM VINKE
The Fund’s benchmark returned -0.37% in January. NYMEX WTI CRUDE was down 1.69% on the month as investors took profits and invested in other asset classes as Trump set out ambitious plans before his inauguration.
The US 10year treasury yield increased 1bp to finish the month at 2.45 and the Swiss 10year treasury yield also increased by 13bps to finish the month at -0.06%. The UK 10year gilt yield increased by 18bps to finish the month at 1.42% as Prime Minister May took a positive stance towards her position for negotiating Brexit. Gold increased by 5.5% to finish at $1,211, with silver increasing by 10.22% to finish the month at $17.56. The Euro strengthened over the month against the US$ up 2.67% at 1.08 and strengthened against sterling, up 0.57% to 0.86, because of concerns surrounding what a “Hard” Brexit would mean for the UK and what would likely have to be compromised in the deal.
The Fund outperformed its benchmark by 0.25%* in January. Materials, Financials and Industrials were the best performing sectors in the benchmark whilst the worst performing were: Energy, Real Estate & Utilities. The Fund’s top performing stocks were: ASR Nederland, Wirecard and CTS Eventim and the worst were: SES, Sage and Shire.
During the month the Fund exited positions in: Autotrader and Société Genéral and bought Bankia, ING, Sage and Stroeer.
The position in Societe Generale was part of a trade to increase the market exposure of the portfolio, it was very much a market proxy and one of the higher risk companies added to the portfolio. It was sold at a profit to reduce the banking risk, shifting the portfolio towards those financials which are more pure retail and which have higher interest rate sensitivity. Bankia and ING both sit on this side of the trade. Stroeer is a German media company that offers individualised and fully integrated premium communication solutions using digital, billboard, transport and outdoor advertising. They are gaining market share in their more traditional billboard and outdoor divisions, and are now looking to replicate these achievements online. They are looking to control the overall marketing flow and the Investment Adviser believes the shares are undervalued given what the company will ultimately look like.
* EUR I Class.
The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the Fund as of 03/02/17 and are based on internal research and modelling.