BY KIM LEE, SENIOR FUND MANAGER
July was another very strong month for Asian equites, with China and India leading the pack in performance terms. Markets such as Australia and Korea were weaker, but still positive in absolute terms. Strong economic data from China was the foundation for this outperformance, with Gross Domestic Product (GDP) growth of 6.9% surprising on the upside, whilst industrial production and fixed asset investment were robust across all sectors.
We took advantage of this by adding a number of Chinese industrial stocks that were trading at excessively cheap valuations, as we expect macro indicators to remain supportive in the world’s second largest economy. Outside of industrial, the portfolio’s exposure to commodities was also increased via both Chinese and Australian-listed companies. Commodity prices have continued to rise globally and should remain underpinned by strong demand from China.
This was funded by a reduction in our Australian consumer exposure, a sector that has performed exceptionally well. As a result, we reduced our holdings in companies that are now trading on premium multiples, although we did add JB Hi-Fi to the portfolio. The company, which is one of Australia’s largest home entertainment retailers, has struggled of late but we believe it has been oversold and is now an attractive opportunity. We also increased our weighting to Australian banks as regulatory concerns have now eased.
Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Currency fluctuations can also affect performance. Due to the underlying assets held, the price of the Fund is classed as having above average to high volatility.
The information contained in this document is provided for use by institutional investors, professional investors and professional advisers and is not for onward distribution to, or to be relied upon by, private investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com.
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI00872 Expiry on 15 November 2017