Trump rally enables financial markets to end the year in marginally positive territory for 2016


Fund Commentary
19 Jan 2017


The Trump effect, characterized by a reallocation towards riskier asset classes, continued in December. As a consequence, financial markets continued and even extended their rally during the month, finishing the year with a strong rebound across the globe.

The Fund’s benchmark recorded a +5.75% return during the month, by far the strongest monthly performance of 2016. This enabled the Fund’s benchmark to close, albeit marginally, in positive territory.

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 +6.28% return during the month, a +0.53% outperformance vs the index. During the quarter, the Fund’s performance stands at +6.10% and compares to +5.76% for the Fund’s benchmark.

Calendar year 2016 performance stands at +13.53% for the Fund versus +0.67% for the Fund’s benchmark, translating into a 12.86% outperformance since 1st January 2016. The Fund has outperformed its benchmark for 10 months out of 12 during the year and more importantly, it has outperformed its benchmark every single quarter in 2016.

GfK was the most significant contributor, followed this month by Spie and MGI Coutier. At the other end of the spectrum, Andritz, Vexim and Mauna Kea were the three main detractors. Those three positions were actually the only positions out of the 33 investments in the Fund to report negative performance in December. Those three positions combined had a minor 0.09% negative impact on the monthly performance.

On 8th December, KKR announced its intention to launch a takeover offer for GfK to delist the company. The €43.50 price represents a 30% premium over the stock price at the time of the announcement. The Board of GfK recommends the offer that started on 21st December and should end on 10th February should be accepted. The Investment Adviser shall tender the shares to the offer in the near future. GfK had been a position in the Fund since inception in May 2015.

Looking ahead, 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 favoured and equity markets mechanically benefit from that paradigm shift, notably the European equity space that suffered its longest net outflow streak since 2012. The investment Adviser shall continue to deploy the Fund’s assets with discipline and selectivity.


The views and statements contained herein are those of Pascal Investment Advisers SA in their capacity as Investment Adviser to the Fund as of 10/01/17 and are based on internal research and modelling.