Picking quality investments during volatility

The Strategic Europe Quality Fund returned -1.82% in September. The largest detractor to return was the Information Technology sector, primarily due to Nokia. The Fund’s relative underweight to the Financials sector contributed significantly to alpha.

Monthly Fund Commentary
26 Oct 2020

The Strategic Europe Quality Fund returned -1.82% in September. The largest detractor to return was the Information Technology sector, primarily due to Nokia. The Fund’s relative underweight to the Financials sector contributed significantly to alpha.

The best performing sectors for the benchmark over the period were Consumer Discretionary, Consumer Staples and Health Care; while the bottom performing sectors were Energy, Financials and Real Estate. The only noteworthy single stock move over the month was Nokia, but we will continue to hold the position as the investment case remains on track.

The Strategic Global Quality Fund returned -1.47% in September outperforming its index by 1.98%. Both stock selection and sector allocation contributed to alpha. The Fund’s relative overweight to the Consumer Staples sector generated significant alpha. Stock selection for the Information Technology sector was also a noteworthy contributor in September.

The best performing sectors for the benchmark over the month were Utilities, Industrials and Materials; while Energy, Financials and Communication Services were the bottom performing sectors. Nomura Research Institute was the largest contributor to alpha for the Global Fund; there were no noteworthy detractors to alpha over the period.

Market Outlook

We remain cautious and therefore will maintain our defensive view, with a general preference to invest in high quality companies that we believe will better placed to endure any future market volatility.

 

The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 20/10/2020 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.