Global growth outlook biased towards defensive stocks

The Strategic Europe Quality Fund returned +2.93% in August, outperforming its index by 0.42%. Stock selection was the main contributor to return, it was particularly strong for the Energy, Financials and Communication Services sectors. The only noteworthy detractor to alpha over the period was the Fund's relative overweight to the Consumer Staples sector.

Monthly Fund Commentary
15 Sep 2021

The Strategic Europe Quality Fund returned +2.93% in August, outperforming its index by 0.42%. Stock selection was the main contributor to return, it was particularly strong for the Energy, Financials and Communication Services sectors. The only noteworthy detractor to alpha over the period was the Fund’s relative overweight to the Consumer Staples sector.

The best-performing sectors for the benchmark over the period were Information Technology, Utilities and Healthcare, while Consumer Discretionary was the only sector to record a negative performance.

The best-performing stocks for the European strategy were SBM Offshore, ASR Nederlands and Sampo, and the largest detractors were Smith & Nephew, National Express Group and Carlsberg.

The Strategic Global Quality Fund returned +1.40% in August. Stock selection in the Communication Services, Healthcare and Industrials sectors was strong. The only noteworthy detractor to alpha over the period was the Consumer Staples sector, with stock selection and allocation both dragging on performance.

The best performing sectors for the benchmark over the month were the Communication Services, Information Technology and Utilities sectors, while the Energy and Materials sectors were the bottom performers.

The best-performing stocks for the Global strategy were Nomura Research, Novo Nordisk and Facebook, while the largest detractors were Fidelity, Kering and Carlsberg.

Market Outlook

Optimism for the global growth outlook has continued, but cooled lately, following mixed economic data in the US and China. This was reflected by bond yields reversing part of their strong upward trend and further advances in major equity indices, led by more defensive stocks.

We expect to see a robust economic recovery in the short term as economies continue to reopen, but also more market volatility if the Fed goes ahead with tapering in November. Longer-term, we are closely watching inflation risk and are mindful of comparatives becoming much tougher as we enter 2022. Valuations in certain parts of the market remain expensive.

As always, we invite investors and prospective investors, to get in touch should you wish to discuss the positions held in the portfolio. Please do not hesitate to contact us for further information.

Adam TurbervilleAdam Turberville
Director
+44 1481 742380
a.turberville@ericsturdza.com

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 09/09/2021 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.