Global Equities

BMO Responsible Global Equity Fund - June Update

Jamie Jenkins offers insights into the performance of BMO’s Responsible Global Equity Fund in June
July 2019

Jamie Jenkins

Managing Director and Co-Head of Global Equities

LEARN MORE ABOUT THE AUTHOR
Subscribe to our Insights

Risk Disclaimer 

Past performance should not be seen as an indication of future performance. Changes in rates of exchange may also reduce the value of your investment. The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

Screening out sectors or companies may result in less diversification and hence more volatility in investment values.

At a glance
  • Increased expectations around a July US rate cut helped global equities gain ground
  • Stock selection drives outperformance with Aptiv and Mettler-Toledo notable contributors
  • Defensive names lag in risk-on environment
  • Adding to Microsoft and locking-in gains in Mettler-Toledo
Fed signals boost sentiment – stock selection helps relative performance

Both sector allocation and stock selection proved positive. In the former an emphasis on Information Technology and a relative avoidance of Consumer Staples added value. Stock selection however, was the key driver. Auto parts specialist Aptiv rallied as China-related fears eased and Mettler-Toledo (laboratory and industrial equipment specialist) gained on the release of strong first quarter results. In terms of detractors, Shimano’s share price felt the impact of delays to its cost-cutting initiatives and its defensively orientated businesses lagged more broadly.

Risk Disclaimer 

Past performance should not be seen as an indication of future performance. Changes in rates of exchange may also reduce the value of your investment. The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

Screening out sectors or companies may result in less diversification and hence more volatility in investment values.

Adding to Microsoft, Humana

We added to our holding in Microsoft from the proceeds raised by our trimming of Amdocs as its share price continues to recover (and concerns remain over slow progress around ESG related matters). Elsewhere, we added to US healthcare firm Humana to take advantage of weakness in its share price. Conversely, we moved to lock-in gains in Mettler-Toledo after strong performance and following a price target review that suggested less scope for further immediate near-term gains.

Broader positioning remains unchanged, with an ongoing bias towards higher quality, sustainable growth companies that can prosper in any near-term economic and policy-driven volatility. We continue to add to positions where we see strong underlying quality and where the market allows us to top up holdings at more attractive levels. And where appropriate, we have been building positions that offer more defensive revenue streams given the slowdown in economic growth expectations and trimming holdings that have performed strongly and offer reduced upside potential.

Sector-wise, Information Technology, Industrials and Healthcare are our main overweights, whilst Financials is a modest overweight. The portfolio is underweight Communication Services, Energy and Consumer Staples. At the regional level, Emerging Markets, Japan and the UK are our biggest overweights, with the U.S. our largest underweight.
 

Trade tensions ease

June saw markets reverse May’s losses as investors interpreted a combination of weaker economic data and the accompanying change in Federal Reserve commentary around monetary policy as supportive of higher equity valuations. US-led trade uncertainty took a back seat, with the apparent Mexican resolution being taken well whilst the ongoing China tensions appear to have eased a little. Overall, with markets back within a whisker of all-time highs, valuations have now returned to levels that appear to be quite full given the current conditions. As we enter the interim results season, we will be looking for confirmation of a second half improvement in company outlooks, thus we continue to remain vigilant but stay constructive overall.

Use our handy glossary to look up any technical jargon you are unfamiliar with.

Related capability

Global Equity

Discrete performance vs. benchmark -12 month rolling (EUR, net of fees)
Percentage growth % Jun-18/ Jun-19 Jun-17/ Jun-18 Jun-16/ Jun-17 Jun-15/ Jun-16 May-14/ May-15

Responsible Global Equity Fund

11.93

11.50

16.77

-4.71

32.46

MSCI World

9.02

8.52

15.13

-2.49

24.64

Source: BMO Global Asset Management Limited as at 30-June-19. Share class I. Benchmark: MSCI World. The discrete annual performance table refers to 12-month periods, ending at the date shown. Figures subject to rounding.

The Fund is a sub fund of BMO Investments (Lux) I Fund, an investment company of variable capital (ICVC), registered in Luxembourg under No. B 25 570 and authorised by the Commission de Surveillance du Secteur Financier (CSSF). The Prospectus, Key Investor Information Document, Articles of Association, Annual and Interim Reports in German, as well as further information, can be obtained free of charge from our Swiss Representative: Carnegie Fund Services S.A., 11, rue du Général Dufour, CH-1204 Geneva, Switzerland, Web: www.carnegie-fund-services.ch. The paying agent is Banque Cantonale de Genève, 17, quai de l’Ile, CH-1204 Geneva. The current prices can be found at: www.fundinfo.com.

Related capability

Global Equity

Subscribe to our Insights

Related articles

No posts matching your criteria