PORTFOLIO MANAGER’S UPDATE Q1 2016 For professional investors
ROBECO GLOBAL PREMIUM EQUITIES FUND
A game of two halves for stocks
Christopher Hart, Portfolio Manager
Choppy markets fall then rise to finish first quarter Consumer sectors and Industrials largest contributors Materials and Utilities along with UK and N America detract Global economic data expected to remain mixed in near term
Retrospect: Six-week rout is mirrored by six-week rise as central banks kick in The MSCI World reached its quarterly nadir on 11 February, almost midway through the quarter. The market’s performance before and after that date were a mirror image of each other, with the collapse in the first half being almost entirely erased by the second half’s precipitous rise. Global equity markets clawed back their losses as policymakers around the world signaled their readiness to bolster flagging growth. The reassertion of the central bank safety net spurred demand for riskier assets following a six-week rout that punished equities, commodities and emerging market currencies, amid concern that the slowdown in China would spread. Because of sluggish growth in the US (the Atlanta Fed’s GDPNow model is predicting annualized first-quarter growth of just 0.6%) and worldwide, the Federal Reserve is expected to raise rates just twice this year.
Joshua Jones, Portfolio Manager
Utilities and Telecoms were the best performing sectors as high dividend-paying stocks continue to attract attention in a world of low/negative rates. Health Care and Financials were the worst performing sectors. Investors are concerned about pharmaceutical pricing in a presidential election year, and bank profitability is expected to be hurt by continued low interest rates. The euro posted its strongest performance against the US dollar during the quarter in over five years. Much of the US dollar’s prior strength has been based on expected rate increases, from which the Fed is now backing away.
Performance: Europe, emerging markets shine as UK, North America detract The Global Premium Equities strategy performed in line with its benchmark, the MSCI World Index, during the first quarter. Security selection modestly contributed to performance. At the sector level, Industrials and Consumer Staples were the largest contributors to performance, while Materials and Utilities were the largest detractors. From a regional perspective, Europe and emerging markets made the largest contributions to performance, while the UK and North America detracted. Off-benchmark European industrial stocks made notable contributions to performance. Kion Group is the leading EU forklift truck manufacturer, whose shares rose after forecasting higher 2016 revenue and announcing an attractive dividend plan.
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