The Strategic Europe Value Fund* returned 0.58% over the month, slightly outperforming its benchmark (+0.53%). Stock selection was strong during September, particularly in the Information Technology and Consumer Staples sectors.
Energy, Materials and Financials were among the best performing sectors during the month, with the Fund’s underweight however dragging on performance. In September, the best performing sectors for the benchmark were Energy and Materials, while the worst performing sectors were Real Estate, Information Technology and Consumer Staples.
At the stock level, the top performing stocks during the period were SBM Offshore and Reckitt Benckiser Group. SBM shares rallied at the beginning of the month on news that the Company had settled its remaining suit with Brazilian federal prosecutors, clearing the way for SBM to resume business in one of its key markets. There were no significant detractors to performance over the month, with no portfolio changes to be reported.
The Strategic Global Quality Fund returned 1.21% in September, outperforming its benchmark by 0.65 percentage points. Both, stock selection and sector allocation were positive. Consumer Staples and Information Technology contributed most to alpha, while Industrials depicted the largest drag on performance. The best performing sectors for the benchmark over the period were Energy, Health Care and Industrials, whilst the worst performing sectors were Real Estate and Financials.
Reckitt Benckiser Group and Shiseido were the Fund’s top performing stocks during the month. There were no significant detractors over the month, with the Fund initiating positions in Equifax and Shiseido.
The investment team maintain their cautious view; concerned about risk assets given the overall tightening of global monetary stimulus, the strengthening of the US dollar and the impact of normalising interest rates on Emerging Markets. According to the Investment Adviser, the economic system is highly leveraged and subject to shocks which are starting to appear. In an environment of heightened economic and political risk the investment team retain their preference for defensive portfolio positioning.
*EUR I Class.
The views and statements contained herein are those of Lofoten Asset Management in their capacity as Investment Adviser to the funds as of 12/10/18 and are based on internal research and modelling.