NHS Sicav – MC Bolero Global allocation – factsheet October 2015

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  Due to a conservative positioning at the start of the month, with a net equity exposure of 38.55%, the fund has captured only part of the rally and so lagged its benchmark by a wide margin (+2.25% vs+3.95%). In the face of economic data pointing to a general economic slowdown, we were indeed sceptical about a sustainable rebound in equities. Easing momentum in China was having a clear impact on world trade, with analysts starting to revise down their earnings expectations.  But the sooner-than-expected easing signals from the ECB and the Bank of China were hard to ignore and we gradually bought back our short futures on the S&P and the Stoxx 660, raising the net equity exposure to 63% by the end of the month. Our hedge strategy detracted around 3% of relative performance, reducing the outperformance of the fund since the start of the year to 44 bps. No change was made to the overall asset allocation. US equities are kept (slightly) Underweight as we see higher upside potential in the Euro zone and Japan where policy makers in contrast to the US continue to pump liquidity into their economies. We expect the risk-on mode to extend until year-end, underpinned by additional ECB QE, relatively resilient corporate earnings and a wave of M&A.  A US rate hike in December could put a temporary end to the uncertainty that has weighed on investor sentiment for so many months. The outlook for 2016 however remains uncertain. The spill-over from the Chinese slowdown to developed markets has been limited so far, confined mostly to manufacturing. Services and consumer spending continue to support global growth. It remains to be seen whether domestic consumption in the US, Europe and Japan can go on performing in the face of slower momentum elsewhere. While lower bond yields should provide a major support to risky assets, the outlook for global corporate earnings remains uncertain. Expectation of Fed tightening may still act as a trigger for further EM weakness and a renewed increase in global risk aversion

Bolero_factsheet Oct15 EUR – FR

Bolero_factsheet Oct15 USD – EN

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