September 2020 Quarterly Report - Strategic Selection Fund - European Value

191020 Market Commentary

September 2020 Quarterly Report - Strategic Selection Fund - European Value

Executive Summary

  • Performance overview
    • MSCI Europe up 0.1% during Q3 2020
    • Strategy up 2.5% (Share class A EUR), outperforming the market by 2.4%  and MSCI Europe Value by 6.2%
    • Performance is driven by stock picking: increased focus on quality has started to yield results
  • Investment cases
    • 3 new names joined the portfolio, 4 names were sold
  • Market environment & outlook
    • European market took a wait-and-see approach during Q3
    • European equities are under-owned and cheap relative to the US
    • The underperformance of value has reached unsustainable levels
    • We remain true to our investment principles we have applied over the last 2 decades at the same time putting extra focus on the quality of the business and sustainability of cash flows
    • Median margin of safety of portfolio 40%
    • 8% Cash left to seize new investment opportunities