BY MIKE WILLANS, HEAD OF INTERNATIONAL EQUITIES
The first few days of February were weak, as strong global growth, higher-than-expected US inflation data and more hawkish central bank sentiment combined to send government bond yields spiking higher. This caused a modest sell-off in both equities and bonds, although global equities largely recovered through the rest of the month, with the UK and Europe the exceptions. This was down to Brexit uncertainty, with significant issues surrounding the future Irish border prominent.
Asia and Japan were among the strongest performing markets, supported by robust Chinese growth and more dovish comments from Bank of Japan Governor Kuroda. In terms of portfolio activity we began to close the Fund’s significant underweight in the information technology sector, as we have not seen the underperformance from the sector that we had expected in this environment. The portfolio is now focusing on stock-specific opportunities.
In particular, our contrarian positions in retail stocks such as Under Armour and TJX Companies are beginning to bear fruit, whilst we also saw some strong performances from a number of defence names. Looking forward, we continue to believe that a steepening yield curve will be a catalyst for value-style stocks to outperform. Given our naturally contrarian bias, we believe that the Fund is well-positioned to benefit from such a shift.
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.
CLI01132 Expiry on 15 June 2018