BY MIKE WILLANS, HEAD OF INTERNATIONAL EQUITIES
Despite the underlying macro environment remaining supportive, global equities struggled in March as investors remained in ‘risk-off’ mode. This saw traditional ‘safe haven’ assets such as government bonds outperform, as treasury yields fells from their peak of nearly 3% at the end of February. However, we do not have any concern over global growth, with US data remaining strong, whilst European indicators have stabilised following a rapid acceleration in 2017.
We view the recent sell-off as a combination of concerns around inflation, interest rates and crucially valuations. Large growth parts of the market – such as technology – have been on an extended bull run and a correction has been due. However, value-style equities have continued to lag and this is where we still believe the most attractive opportunities lie. As a result, we have maintained the Fund’s contrarian bias, investing in out of favour parts of the market and in stocks that we believe have significantly more upside than the market expects.
In terms of portfolio activity, the Fund added a position in Reckitt Benckiser in March as we felt that margins had bottomed and that the stock was now trading at an attractive yield. We have also de-risked the portfolio somewhat in March, taking down some of our largest active bets slightly. With central bank monetary policy becoming less accommodative in 2018, we believe that stock and sector correlations will continue to fall, providing us with a number of attractive opportunities.
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.
The information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail 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 should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views 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.
CLI01168 Expiry on 15 July 2018