The UCITS' investment objective is to seek performance through exposure to equity markets, primarily in the Eurozone, by selecting, on a discretionary basis, securities from an investment scope comparable to the MSCI EMU index.
January has confirmed that the macroeconomic recovery, already identified several months ago in Europe, is ongoing with SMIs on an uptrend. But political risk has had some impact with the effective start of President Donald Trump's career in the White House and the announcement of his first measures. For her part, UK PM Theresa May has presented her roadmap for Brexit, though triggering it will require Parliament's approval, according to Supreme Court's recent ruling. Given this environment, interest rates have been tightening in the euro zone with a widening OAT/Bund spread reflecting what looks more like a hike in the risk premium, than anticipation of a cyclical recovery. While the first corporate earnings reports of the season (SAP, LVMH, JC Decaux, STM) have generally been positive with the notable exception of Unilever among market leaders we have above all witnessed the return of large-scale M&A deals. These include Essilor and Luxottica merging to create the new world leader in optics, and Safran buying Zodiac Aerospace through a friendly takeover. US pharma giant, Johnson & Johnson acquired the Swiss lab Actelion for over $30 billion, bringing an eventful saga to an end. In Italy, Intesa has confirmed the possibility of a merger with Generali. This month we bought ProSiebien (TV/cable operator), which has benefited from the German market's ongoing momentum, spurred along by numerous acquisitions of internet players, enabling it to show an enviable sales growth chart topping 10%. We also bought Iliad: the stock has fallen 20% since its high, despite a commercial victory in both fixed and mobile telecoms that has lost none of its momentum. Its growth prospects on the Italian market have not been priced-in by the consensus and the resumption of M&A in France after the elections could quickly revive interest in this stock.
(1) The rating grades the funds on a scale from 1 to 7. This rating system is based on the average fluctuations of the net asset value over the past five years. It corresponds to the variation range of the portfolio upwards and downwards. If the net asset value is less than 5 years old, the rating is determined by other regulatory calculation methods. Historical data such as those used to calculate the rating may not be a reliable indication of the future risk profile. The current category is neither a guarantee nor an objective. Category 1 does not signify a risk-free investment.