NHS Sicav – MC Bolero Global allocation – factsheet April 2016

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 The fund registered a small gain during the month (+0.16%) penalized by an Underweight in commodity stocks and in bonds, and a partial hedge of the Euro exposure against the dollar. Some individual stocks also underperformed during the month (Apple, Carnival, Nike, AB Inbev). In terms of activity, we cut Japan equities to zero as the outlook is deteriorating. Despite the Bank of Japan’s efforts to stimulate the economy, with negative interest rates and massive asset-buying, this has yet to translate into growth. A stronger yen has triggering a wave of earnings downgrades. We reduced the Underweight in US equities (now close to Neutral). A sustained albeit modest growth should allow the Fed to remain patient until September at least, which should limit the downside risk for equities. We increased the industrial exposure of the portfolio with the purchase of a US sector ETF and Holcim-Lafarge (broad exposure to Emerging markets and revival in infrastructure spending). Growth stocks (Estée Lauder, Home Depot) were also added to the portfolio. We reduced the Overweight in European equities as the impact of a weaker euro on corporate profits is starting to fade. We also would like to see more evidence that monetary policy is filtering through the real economy. Exposure to emerging markets was increased to 6.98% from 5.15%, mainly in Asia. We remain cautious about Brazil given the deep economic recession over there. In the fixed income part, we slightly reduced US Treasuries to re-build a position in US investment grade credit. We also reinforce the Emerging debt. On the very last day of the month, we initiated some hedges on the S&P500 and the Stoxx600 with the sales of future contracts bringing down the net equity exposure to 40.6% from 56.80% at the end of March. We think the near term outlook is at risk of a renewed increase in volatility triggered by the continued debate around the timing and pace of the Fed tightening, the UK referendum in June and likely headlines about the Greek saga. Although the likelihood of a contraction in global activity this year is smaller than in the first two months of the year, the global economic footing is fragile and unstable and it remains to be seen whether the recent improvement in economic data can be sustained. Doubts remain about the effectiveness of the global monetary policy arsenal. Although a softer dollar has helped stabilize the yuan, oil prices, EM capital flows, and US earnings, it hurts Japan and the euro area in their struggle against deflation. Barring a renewed deterioration in macro numbers, we believe that equities will perform better than bonds in the second half of the year as modest but persistent growth, low interest rates for long, and fair valuations should support risky assets. Return expectations should be moderate.


MC Bolero factsheet Apr 16 USD – EN

MC Bolero factsheet Apr 16 EUR – FR


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