Insights

  • MONTHLY FUND COMMENTARY

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). 

  • MONTHLY FUND COMMENTARY

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). 

  • MONTHLY FUND COMMENTARY

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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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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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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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.

  • MONTHLY FUND COMMENTARY

During November, the Fund declined by -3.42% on an absolute basis. Year to date however the Fund has posted a positive absolute return of +19.20%, outperforming its benchmark by +9.42%. The Q3 earnings season coupled with uncertainty surrounding the US fiscal reform created some volatility in European financial markets; even companies producing results which were in line with expectations were often met with profit taking. The Fund’s benchmark was down -2.02% during the month.

Lilian Co, portfolio manager of EI Sturdza’s Strategic China Panda Fund, sat down with InvestmentEurope to discuss her expectations for growth in China’s economy in 2018. Lilian offers her insights on the strong rally in Chinese equities YTD and the opportunity for sustained growth, advising investors to focus on the quality of China’s GDP growth, not quantity.

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The Federal Open Market Committee (FOMC) minutes and statement, alongside a couple of noteworthy economic data releases were this month’s focus: The consumer price index (CPI) increased in September, mostly following higher energy prices. Core CPI rose less than anticipated, with its year-on-year rate remaining stable around +1.7%. On the industrial side, production saw a rebound in September. As expected, the output levels are however still below trend due to continued hurricane-related disruptions, boding well for the Investment Adviser and an above trend rebound in Q4. 

 

  • MONTHLY FUND COMMENTARY

In October, NYMEX WTI CRUDE was up 5.2% to finish the month at $54.38. The US 10y treasury yield increased by 1.96%, finishing at 2.3793%. Throughout the month, concerns about the failure to finalise Trump’s Tax plan and the fact that any change may be delayed to 2019 became apparent. The German 10y treasury yield decreased by 21.70% to finish the month 0.363%, while the Swiss 10y treasury yield decreased by 264.81%, closing the month at -0.079%. 

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After the very good performance posted in September, the European stock market overall continued its surge in October. The main catalyst was the ECB meeting held on October 26th, which paved the way to a short term acceleration, allowing the MSCI Europe Index to move close to its yearly highs posted in May.

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Prime Minister Abe’s snap election held in October paid off for the ruling LDP and the Komei party, which were able to maintain their seats. Both parties continue to dominate 2/3 of the House of Representatives, with PM Abe and the coalition government being able to strengthen their current position for at least another four years. The newly formed party under Ms. Koike gained 49 seats out of a total of 465 seats.

  • MONTHLY FUND COMMENTARY

October was another up month: Chinese equities simply went from strength to strength. The MSCI China Index and the CSI 300 index jumped 4% and 4.4% respectively. Better than expected Q3 results released by banks, the development of insurance stocks and the unexpected announcement regarding the cut of the Reserve Requirement Rate (RRR) triggered a strong run in financials and hence pushed the index upwards. Conversely, sectors that rallied the previous month gave back some of the performance.

  • MONTHLY FUND COMMENTARY

During October the Fund reported a gain of +1.30% on an absolute basis. Year to date the Fund has posted a positive return of +23.43% on an absolute basis; an outperformance of +11.38% versus its benchmark. The month October provided some clarity for market participants regarding the future direction and timing of monetary policies. The Fed confirmed its normalisation plans, while the ECB unveiled details about its tapering actions. Both appeared in line with expectations and without major disruptions. As a result, the Fund’s benchmark gained 1.91% over the month.

  • MONTHLY FUND COMMENTARY

In October, US macroeconomic data was strong: the ISM manufacturing index rose to 61, durable goods orders increased by +2.2%, retail sales rose to +1.9%, and the University of Michigan sentiment index climbed from 95.1 to 100.7. Unemployment data was probably affected by the hurricanes, with a surprising -33,000 job losses. Nevertheless, the unemployment rate still decreased from 4.4% in August to 4.2% in September.

  • MONTHLY FUND COMMENTARY

In October, the Japanese stock market rallied following favourable economic indicators, a depreciation of the yen against the US dollar, expectations regarding economic policies following the Lower House election and increasing corporate profit growth. The Nikkei 225 closed the month at 22,011.6, up 8.1% MoM, while the TOPIX ended the month at 1,766.0, up 5.5% MoM.

Bertrand Faure, portfolio manager of EI Sturdza’s Strategic European Smaller Companies fund, features in Citywire Selector, discussing current opportunities in Europe’s small-cap markets and how he identifies ‘gems off the beaten track’. Bertrand highlights the importance of meeting companies face-to-face before investing, particularly in Europe’s small-cap sector, where many have reduced the frequency of financial reporting.

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Georges Gutmans, executive chairman of EI Sturdza Investment Funds, discusses the rich history behind this young and dynamic asset management business and why its investment philosophy is so unique.

In her latest webinar to investors, portfolio manager Lilian Co, discusses China’s journey towards sustained economic growth and the opportunities within the countries increasingly dynamic ‘new economy’. Despite economic growth pains induced by overleveraging of China’s financial system in recent years, Lilian believes China is now on the road to real recovery following strong domestic stock performance in 2017. 

  • MONTHLY FUND COMMENTARY

In September, NYMEX WTI CRUDE was up 9.4% to finish the month at $51.67. The US 10y treasury yield increased 10.23%, finishing at 2.33% as positive news regarding Trump’s Tax plan began to make headlines and success seemed closer.

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