Global cycle accelerating and tightening clearly ahead


Fund Commentary
21 Dec 2016


The outcome of the US elections was the biggest piece of news of the month. Contrary to what market participants might have anticipated, it triggered a stock market rally coupled with significant rotations between asset classes and sectors. After the facts, it appears that many investors were patiently holding off investing prior to the elections results.

In that context, and in spite of the absence of the best performing sectors in the portfolio, namely financials and basic resources, the Fund posted a +0.08% return during the month. This compares to +0.52% for the Fund’s benchmark. Year to date performance stands at +6.81% versus -4.81% for the Fund’s benchmark, translating into an 11.62% outperformance since the 1st January.

Jacquet Metal Services was the most significant contributor, followed, this month, by Trigano and Komax. At the other end of the spectrum, Norma, Rieter and Serge Ferrari were the three main detractors. During the month, the Investment Adviser added one new position to the Fund: Mauna Kea (France).

With the Italian referendum behind us now, financial markets have demonstrated this year, on several occasions, their ability to cope with unexpected and disruptive events. Global activity had been accelerating for months and economic conditions across the world seems to be in fact fairly positive, leaving the Investment Adviser comfortable with the global macroeconomic picture. In the Eurozone, the recovery remains on track and exporting companies should benefit from the Euro weakness for the months to come.

2017 should mark the end of an era with unconventional monetary policies across the globe, no inflation and a zero or negative interest rates environment. As a consequence, riskier asset classes should be favored and equity markets mechanically benefit from that change of paradigm, notably the European equity space that suffered its longest net outflow streak since 2012.


The views and statements contained herein are those of Pascal Investment Advisers SA in their capacity as Investment Adviser to the Fund as of 14/12/16 and are based on internal research and modelling.