Insights

EI Sturdza, Seeking Excellence Across Global Markets
Seeking Excellence Across Global Markets

We form exclusive alliances with portfolio managers who are leaders in their sector and have solid, outstanding, demonstrable long-term track records. EI Sturdza provides its portfolio managers with an extensive infrastructure, supported by independent institutional-quality risk management and controls. Allowing the investment teams to focus purely on portfolio management.

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Eric Vanraes comments on recent market volatility

First and foremost, the current volatility is not exceptional; however investors have forgotten how markets really behave when they are not manipulated by central banks due to their quantitative easing policies.

Lilian Co sees further upside for Chinese equity markets
Lilian Co sees further upside for Chinese equity markets

Morningstar five star rated Strategic China Panda Fund returns 63% in 2017, and Lilian Co believes the market has room for a further rebate in the short to mid-term.

Five Star Rating for the ‘Strategic Global Quality Fund’
Five Star Rating for the ‘Strategic Global Quality Fund’

The Morningstar five star rating recognises the strong risk / return profile that the Strategic Global Quality Fund has delivered to investors since inception.

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December update

In December, NYMEX WTI CRUDE was up 5.26% to finish at $60.42. The US 10y treasury yield decreased 0.18% to finish the month at 2.4054, following the Fed’s decision to raise rates by 25bps, in a 7-2 vote. Additionally, the Fed confirmed it would step up the monthly pace of shrinking its balance sheet from $10bn to $20bn per month, beginning in January. During the month, the 2018 US economic growth forecast was revised up from initially +2.1% to 2.5%. 

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European equity market ends year in positive territory

December was generally a positive month for global stock markets (MSCI World P.R.: +1.26%; S&P500 P.R.: +0.98%; MSCI Emerging Markets P.R.: +3.36%), with the exception of the Euro-Area, where all the main regional markets registered negative returns. 

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Market rally backed by corporate earnings growth and low inflation

In December, Japanese stocks generally rose. Foreign investors who invested heavily during September and October however appeared relatively quiet throughout the month. Small cap stocks followed their 2017 trend and continued to rise. Throughout the year, the Topix (containing 2,000 companies out of a total of 3,600 listed companies in Japan) rose 20%, whereas the Jasdaq (containing 749 smaller companies) increased 43% during the same time period.

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The timing of the BoJ’s policy change expected in the short term

​In December, the Japanese stock market increased for the fourth consecutive month with the Nikkei 225 closing the month at 22,764.9 (up 0.2% MoM) and the TOPIX finishing at 1,817.6 (up 1.4% MoM). 

Insights from Lilian Co, portfolio manager of EI Sturdza Strategic China Panda Fund
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Corporates are reaping benefits from supply side reform

The index closed in 2017 with a hefty 54.1% gain, finally surpassing its previous peak in 2007. 2017 marked a year during which the index broke its 7-year trading range for the first time since the last bull market in 2009. During December 2017, sectors such as energy, properties and Macau gaming outperformed, while the technology sector clearly underperformed.

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US tax boost likely to provide tailwind and lift U.S. equities higher

Stocks finished the year positively, with the benchmark posting a 1.1% gain in December, while the Fund returned 0.1%. The largest contributor to the Fund’s performance in December was Envision Healthcare, which rebounded 8.2% amid rumors that the Company had attracted several bids from private equity firms. On the other hand, the biggest detractor during the period was Broadcom, losing 7.6% following a very strong run in 2017 (up 57.2% from January through to the end of November). 

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Central banks behaviour will be led by inflation, not growth

In December, US economic data were mixed, with a very strong housing sector and unemployment figures on the one hand, and lower consumer confidence (with the University of Michigan Consumer Sentiment Index decreasing from 98.5 to 95.9) on the other hand. Inflation is still stable as wage growth remains subdued (+2.5% YoY 2017), despite a very low unemployment rate (4.1%). The CPI increased by +0.4% MoM in November, with the core CPI (ex-food & energy) however only rising by +0.1%. As a result, the YoY core CPI still remains below 2% (+1.7%). 

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Outlook for 2018 remains positive

2017 was a good year for the Fund, both in terms of absolute and relative performance. The Fund was up +3.02% in December and +22.80% for the year on an absolute basis, outperforming its benchmark by +12.22% during 2017. Since inception, the Fund has returned +38.44% (+13.02% annualised) to its investors compared to +6.76% (+2.49% annualised) for the Fund’s benchmark index, translating into a 31.68% outperformance over 32 months (+10.53% on an annualised basis). 

Lilian Co, Portfolio Manager of EI Sturdza Strategic China Panda Fund provides her latest insights
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EI Sturdza’s Lilian Co on China’s New Economy

Lilian Co, portfolio manager for EI Sturdza’s Strategic China Panda Fund explains why China’s New Economy, a term she uses to describe the region’s growing technology, healthcare and education sectors, is likely to lead the region to sustained economic growth over the long term. 

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Goldilocks market environment in Japan

Overall, the Japanese market rose again in November, backed up by strong corporate earnings. Small-caps caught up with large caps, which had rallied during the previous months.

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US markets outperform European markets in November

The month of November showed a misalignment in performance of the main equity markets: the global and American indices posted positive performances (MSCI World (+1.99%) and S&P 500 (+2.81%) respectively), while the European markets declined (MSCI Europe (-2.24%) and EuroStoxx50 (-2.83%) respectively). 

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Economy's growth momentum accelerating in Japan

In November, the Japanese stock market recorded a 26-year high following improving economic fundamentals, a continuous upward revision of corporate profits and a strong US market. The Nikkei 225 closed the month at 22,725.0 (up 3.2% MoM), while the TOPIX closed at 1,792.1 (up 1.5% MoM). 

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November update

In November, NYMEX WTI CRUDE was up 5.55% to finish at $57.40. The US 10y treasury yield increased by 1.27% to close the month at 2.4097%, following progress regarding the US Tax plan and the chance of getting reforms approved. 

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Non-stop market rally

In November, the China stock market rally was unstoppable. The MSCI China Index and the CSI 300 Index soared 6.9% and 5.9% intra-month respectively, despite profit taking during the last week of the month. 

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Productivity growth acting as tailwind for economic growth in US

The latest economic data releases remain consistent with the ongoing moderate pace of growth and are likely to support the continuation of such in the near-term. Generally speaking, the tight labour market is still expected to act as a headwind for economic growth in the US, whilst faster productivity growth should act as a tailwind.

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US and German yields stay low despite good economic figures

In November, the US unemployment rate remained low at 4.1% and, more importantly, wages rose. In Europe, the Q3 growth rate reached +0.6% (QoQ), leading to an anticipated annual growth rate of 2.2% in 2017 and 2018. The Federal Reserve confirmed its optimistic view, which would lead to gradual increases in the Fed Funds rates with the next hike scheduled for 13 December. In the Eurozone, despite encouraging economic data, the ECB is still concerned about too low inflation figures.

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