Insights

  • MONTHLY FUND COMMENTARY

During June, the Fund reported a loss of -1.09% on an absolute basis, with the Fund’s benchmark ending the month down 0.63%. Takeaway.com was the largest monthly contributor to the Fund’s performance, followed by Spie and Elis. Takeaway.com acquired the operations of Delivery Hero in Switzerland during the period, combining the 2nd and 3rd largest players in the country and making the Company a close challenger of the country’s leader, Eat.ch.

  • MONTHLY FUND COMMENTARY

The Japanese market gained in the first half of June on the back of strong economic data in the US and a depreciating yen. Later in the month, the risk-off sentiment prevailed as concerns about US-China trade frictions rose, triggering a decline of the Japanese market (similar to other markets).

As concerns over an impending trade war between the US and China hots up, one fund manager is upping allocations to Chinese banks and financials.

Current negative sentiment is driving the market down, generating opportunities to buy on weakness, something that attracts Lilian Co, portfolio manager of the EI Sturdza Strategic China Panda Fund with nearly $200m of assets under management. This year she has increased the weighting of financials, including Chinese banks and property companies, to account for over a quarter of the entire portfolio’s allocations. 

President Trump's "Uncooperative Games"

The trade war between the United States and most of its trading partners, China in particular, is reminiscent of John Forbes Nash's "uncooperative games". A mathematician whose career was impacted by schizophrenia, Nash worked on “Game Theory and Outcome”, particularly in relation to the implications resulting from individual optimization of choice. 

By Marc Craquelin
​Non Executive Director of EI Sturdza Funds plc

  • MONTHLY FUND COMMENTARY

The EI Sturdza Strategic Euro Bond Fund launched in 2009, just after the collapse of Lehman Brothers. At the time, cash was a risky investment due to counterparty exposure risk. As a result, the Fund’s profile was constructed to be very cautious: with a duration below 2, investing in Investment Grade issues, with no more than 25% of NAV invested in BBB (i.e. low duration risk / low credit risk). In addition, the Fund was not permitted to invest in subordinated debt.

  • MONTHLY FUND COMMENTARY

In May, the Fund gained 0.57%, led by companies that reported better than expected earnings results and forecasts, whilst the overall market declined slightly during the month, with the Fund’s benchmark losing 1.67%.

  • MONTHLY FUND COMMENTARY

By the end of May most - if not all - of the companies in the S&P 500 had published their 1st quarter earnings, with more than ¾ able to meet or beat bottom line consensus expectations. Technology, healthcare, and industrials were the sectors with the most upside surprises.

  • MONTHLY FUND COMMENTARY

​The month of May showed a pronounced dispersion of returns, with US equities demonstrating strength (S&P 500 PR: +2.16%), supported by growth and quality companies (MSCI USA Growth: +4.18% and MSCI USA Quality: +3.52% respectively), with the tech sector best in class again (S&P 500 InfoTech: 7.13% ).

  • MONTHLY FUND COMMENTARY

​In May, the Europe Value Fund* returned +1.37%, outperforming its benchmark by 1.26 percentage points, partially attributable to the Fund’s underweight to Financials. The largest detractor was Consumer Discretionary (largely due to Pandora), whereas Information Technology performed well throughout the month.

  • MONTHLY FUND COMMENTARY

During May the Fund reported a loss of -1.91% in absolute terms. Despite the uncertainty in Europe, in part created by the political situation in Italy and the resurgence of protectionism, European financial markets managed to navigate the risks with the Fund’s benchmark gaining 0.13% in May. 

  • MONTHLY FUND COMMENTARY

In May, investor sentiment regarding China stocks kept improving as the market digested macro events like interest rate hikes and noises surrounding the trade dispute between China and the US.

  • MONTHLY FUND COMMENTARY

Despite the trade war between the US and China still being a matter of concern, all eyes were on Italy and Emerging Markets in May. In the US, the FOMC confirmed that a rate hike in June will be likely, with inflation being close to the Fed’s target of 2%. This target has been described as “symmetrical”, meaning that the US central bank will in future tolerate small fluctuations of the inflation rate slightly above or below 2%. 

  • MONTHLY FUND COMMENTARY

During the first half of May, the Japanese market gained as optimistic views prevailed on the back of solid company results and a depreciation of the yen following a rise in both, the crude oil price and the US long-term yield. 

An unprecedented wave of political and economic uncertainty in Europe over the past few years has created significant opportunities for investment teams to uncover real value in Europe’s small and mid-cap equity markets.  Bertrand Faure, Portfolio Manager of the EI Sturdza Strategic European Smaller Companies Fund (the “Fund”) has successfully navigated these markets, identifying undervalued companies with high upside potential.

​In April, the trade war between the US and China was still a matter of concern. In addition, a wave of new US sanctions against Russia led to a rally in the commodity markets, with Aluminum leading the trend with a surge of 14% on the back of sanctions against the Russian producer Rusal.

During April the Fund reported a gain of +0.68% on an absolute basis. After a negative first quarter, European financial markets took a breather in April, with solid economic growth outpacing geopolitical risks and the uncertain environment for monetary policies globally. As a result, the Fund’s benchmark was up 4.49% during the month.

In April, NYMEX WTI CRUDE rose 5.59% to finish at $68.57. At the same time, the US 10y treasury yield increased by 7.82%, closing the month at 2.9531.

In April, the performance of the Japanese domestic market was mixed following geopolitical turmoil and in anticipation of the forthcoming earnings season.

As the Fed continues to reduce the scale of accomodation, calls for an economic slowdown have increased, despite the market’s fundamental backdrop. 

April was a positive month for equity markets, leading to a partial reduction in the gap between the market’s peak in January and its low registered in March. Throughout the month, the MSCI World Index and the S&P500 underperformed in relative terms (returning +0.95% and +0.27% versus +4.72% for the Nikkei Index and +4.02% for the MSCI Europe Index respectively).

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