BY MIKE WILLANS, HEAD OF EQUITIES
Global equities were broadly flat in local currency terms in May, as Italian-induced volatility and President Trump’s trade war rhetoric saw investors prefer ‘safe haven’ assets such as government bonds. This was despite a supportive macroeconomic backdrop, as the US continued to churn out strong data, consumer confidence and retail sales rebounded in the UK and Europe remained in growth mode.
This resulted in a number of consumer stocks continuing to perform strongly, with the Fund in particular benefiting from exposure to names such as Under Armour and Treehouse Foods. Financials also performed well, with the US Federal Reserve looking to continue its rate-hiking path. Elsewhere our holdings in Asia – especially Chinese-listed A-Living – also contributed to performance, although our long-held underweight to the technology sector was a drag.
We believe the market’s favoured technology stocks are, in the large part, overvalued and we continue to prefer the more value sectors, where we feel there are more exciting stock-specific opportunities. However, we did reduce our technology underweight slightly, as well as adding Kellogg to the portfolio. This world famous brand is at a valuation trough and is currently generating a healthy free cash flow (FCF) yield of 8%.
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.
CLI01232 Expiry on 15 September 2018