April was a neutral month for equities and positive for bonds. European equity markets have had a performance of + 0.8% in April. These have generally reacted to the new details of the asset purchase program proposed by the ECB and announced by its Chairman during the month. Although the ECB announced stronger than expected measures, it is not yet clear what amount they will commit exactly. Anyway, macroeconomic data have improved since the lows of February. The Euro strengthened during the month versus to the US dollar. The earnings season of European companies turn is quite mixed. At the same time, US stock markets were flat during the month, mainly because of recent comments from Janet Yellen were quite cautious. However, the situation was in line with the consensus and the next rate hike remains planned for the second half of the year despite macro statistics below expectations and growth forecasts revised downward. The US bond market has meanwhile had a very positive month despite default rates that substantially increase especially in the mining and energy sectors. Finally, the Bank of Japan surprised the market by keeping rates unchanged despite expectations for more accommodative measures. The Yen appreciated sharply while the TOPIX ended in negative territory. Overall earnings season is quite disappointing and global central banks are not ready to assume their policies. These elements combined have generated a lot of volatility. The Global Strategy Fund has suffered over the month due to its allocation to USD which is nearly 30%. We decided to hold this allocation whose performance in April seems exaggerated. Equity exposure was unchanged during the month but should be reduced in May while defensive investment in European investment grade and high yield have been made to offset the volatility and contributed positively to performance.
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