Portfolio Manager's Update: BP Global Premium Equities Q3 2015

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PORTFOLIO MANAGER’S UPDATE Q3 2015 For professional investors

ROBECO GLOBAL PREMIUM EQUITIES FUND

Defensive flight hurts Q3 returns    

Christopher Hart, Portfolio Manager

Global equities drop on China fears Fund lags in expensive Consumer sectors Industrial holdings produce strong returns Underweight exposure to Utilities detracts

Retrospect: Global equities see worst quarter since US downgrade in 2011 Global equities as measured by the MSCI World Index declined 8.4% during the third quarter. This was the worst quarterly return since the third quarter of 2011. Back then, markets were hit by a US debt downgrade following political tussling over whether to increase the US debt ceiling. The debt ceiling is in play again now for different reasons, but isn’t the cause of the market’s recent maladies. China’s decision to devalue its currency was the proximate cause of the sell-off. The devaluation raises concerns about the ability of Chinese policymakers to prevent a hard landing in the world’s second-largest economy. Curiously, markets also traded lower following the US Federal Reserve’s decision not to raise rates last month. Over the past few years, markets have anxiously awaited the first Fed rate increase since 2006. Since former Chairman Ben Bernanke first mentioned ‘tapering’ in May 2013, the silver lining to disappointing economic news has been that it tipped the scales in favor of keeping rates unchanged and low. The Fed’s decision to pass on this well-telegraphed rate increase was seen as a lack of confidence in the global economy. Few asset classes posted a positive return during the third quarter. With the exception of Utilities, all economic sectors and geographic regions within the MSCI World Index delivered a negative return. The riskier segments of the equity markets had the worst performance, as emerging markets and commodities feel the most pain whenever concern about global growth deteriorates. Emerging market equity underperformance is mostly due to continued currency weakness as many EM currencies are trading below or near lows last seen in the 1990s.

Performance: Fund lags amid market flight into expensive defensive sectors The Robeco Global Premium Equities Fund underperformed its benchmark, the MSCI World Index, during the third quarter. Our strategy remains focused on identifying dislocations between underlying fundamentals and valuations on an individual company basis. Sector allocation, which is purely a side-effect of individual stock selection, was a notable driver of the underperformance, as expensive defensive sectors like Consumer Staples and Utilities, where the portfolio is underweight, outperformed the broader market during the sell-off. The overweight allocation to Materials also detracted from performance, but this was

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