Portfolio Manager comment Coeli Global Select January 2020
What a start to the year! Despite a somewhat tumultuous month – more on that below – the fund was up 1.84 percent during January, which was 1.6 percent better than our benchmark.
The biggest contributors to the results during the month were the stable US holdings of Microsoft, Global Payment, Visa, Mastercard, and Adobe. Thanks to sustainable business models and a high proportion of recurring revenues, these companies perform well during turbulent times. Both Visa and Microsoft released solid reports and their earnings per share rose 12 percent and 39 percent respectively on an annual basis. We find it striking that two of the world’s largest companies can demonstrate impressive growth rates year after year. The fund’s holdings that exhibited a weaker development in January were those in emerging markets and with cyclical exposure. The three worst performers were Carel, HDFC Bank, and TSMC. We note with interest that even though both HDFC Bank and TSMC surpassed market expectations for profit growth, the market chose to sell down these companies in the volatile stock market.
Key market events and trends affecting performance
January was particularly eventful. The month began with the US killing Qasem Soleimani, a leading figure in Iran’s Islamic Revolutionary Guard Corps, in a drone attack, and the world feared a new war between these two countries. Everyone was nervous and the oil price peaked, trading at more than US$ 68 per barrel at its highest. When the US and China announced progress in their trade agreement negotiations, the market turned positive again. It is traditional for the world’s leading politicians and financiers to meet during January for the World Economic Forum in Davos, Switzerland. Our own, home-grown environmental activist Greta Thunberg was there, presenting her views on climate change. Her speech was not exactly appreciated by Steven Mnuchin, the US Secretary of the Treasury, who thinks she should study economics at university for a few years before giving such speeches. Unfortunately, the US has a negative attitude towards various environmental agreements as they don’t want their economic growth impeded by regulations. Shortly after this meeting, the outbreak and spread of the corona virus cast a pall over all subsequent events. It is already clear that China’s economic growth will be curtailed by the virus. Some commentators believe that the country’s annual GDP growth could be as low as 5 percent, denoting a steep decline. The economic effects of the corona virus are likely to spill over to other parts of the world.
As you might have read on our blog, we have invested in a new company, Fiserv. It operates in the banking and payments industries and has recently acquired the second-largest payment company in the US, First Data. Fiserv is the largest company servicing the banking industry in the US, offering banks the opportunity to outsource a range of services, products and systems. Read more about Fiserv (in Swedish) here. We have not sold any holdings during the month.
The fund’s positioning
We still have a large proportion of Champions in the fund – more than 90 percent – because we believe this is where we can uncover the greatest value. We see too limited a valuation difference between growth stocks and cyclical shares right now to justify increasing the fund’s cyclical exposure.
Coeli Global Select I-EUR
|Performance in Share Class Currency||1 Mth||YTD||3 yrs*||Since incep*|
|Coeli Global Select – I EUR||1.84%||1.84%||40,83%||82,53%|
* the historic performance before 2018-06-30 is an estimated performance based on the R EUR share class adjusted for
the different Investment Management fee. It shall be noted that the adjusted historical performance can differ from the real
outcome and therefore shall only be seen as an indicator.
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.