Portfolio Manager comment Coeli Global Select May 2019
Three and a half percent better than our benchmark index – that was the result for the fund during May.
The index fell 5.5 percent, but our portfolio of “ the world’s finest companies” held up well during the global turbulence of trade wars, which feels particularly pleasing. There are several factors behind this, including a solid month for German real estate, Swedish AAK climbing decently, and the bid on our new US holding, TSS, a stock we had bought into during the spring with precisely such a bid in mind. The deal will be made with shares, so the acquisition premium wasn’t as large as we had hoped, but the stock price rose by some 20 percent regardless during the month. In total this added around 0.8 percent to our fund’s performance. On the negative side, it was a tough month for our cyclical holdings, Chemours, Siltronic and United Rentals, but these are so small in size that their negative effect on the fund was minimal.
Key market events and trends affecting performance
Mediocre. That’s how we see the global economic situation ahead: a reasonably long period with a pretty dull growth environment, where cyclical growth has disappeared but the long-term trends remain intact. On the positive side, a global rate cut cycle has begun, which will create new demand for cyclical goods, but in general there won’t be a 2018-style party again for a long while. Our fund is positioned for this, hence the good development we saw during the month of May, and more is expected for the remainder of the year when our holdings will continue to grow. We are especially excited by our bank investments in India, now after Modi has won a second term.
During the month, we made a change to the European portion of the fund, selling Portuguese bank BCP, a stock that had unfortunately been more dead than alive over the past six months. Although the bank continues to grow well, it is clear that no one wants to own this kind of asset in the zero interest rate environment we now see lingering for the foreseeable future. Your money needs to be working in growth companies whose shares rise, and so we have instead invested in the Netherlands’ IMCD, a chemicals distributor that has seen growth of some 25 percent in the past quarter. Our analysis, including an interview with a former employee, suggests that this company is of the finest quality and has many years of high growth ahead of it.
The fund’s positioning
The positioning of the fund is in principle unchanged from the previous month. Our portfolio is well placed in the market and we look forward to reporting season starting in July, when our companies should again show their strong profit tendencies. The companies which we own are far from mediocre.
Coeli Global Select R-EUR
|Performance in Share Class Currency||1 Mth||YTD||3 yrs||Since incep|
|Coeli Global Select – R EUR||-1.94%||15.30%||32.84%||51.35%|
DISCLAIMER. The information provided here does not constitute professional financial advice. Past performance is not a guarantee of future returns. The price of the investment may go up or down and an investor may not get back the amount originally invested. The key investor information document (KIID) and prospectus are available at www.coeli.se.