Yoann Ignatiew (left) and Charles-Edouard Bilbault (right), co-fund managers of R-co Valor
At the beginning of the year, the fund had a conservative position with a historically low net equity exposure of around 70%. We have gradually increased it to almost 87% today.
Update on sectoral contributions over the past month
The one-month rolling period is interesting to consider as it corresponds to the acceleration of the epidemic at the international level.
Most affected sectors:
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Leading the way, financials which represent the third of the portfolio and clearly underperform other sectors (S&P Financials at -36.85% versus S&P 500 at -29.41%). Four of the five lines in the portfolio are US stocks.
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Commodities (including oil), the sector is facing concerns about global demand
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Lastly, industrial cyclicals, as they are confronted with concerns of disruption at a global level
Most resilient sectors:
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The healthcare sector: pharmaceutical companies are not spared but are falling less than the market (over one month, the S&P 500 Healthcare posted -20.59% versus -29.41% for the S&P 500). Gilead, a US biotech company, is one of the only stocks, across all sectors, to post a positive performance. This can be explained by the tests carried out on the "remesivir" drug that could possibly treat COVID-19 patients
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Mining, with negative but relatively strong performances from Newmont Mining Corporation and Pretium Resources Inc
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Perhaps more surprisingly, Chinese stocks with usually relatively high betas, such as Ping An Insurance, but also technology stocks, such as Vipshop with very good results and Trip.com with an adjustment earlier in the year.
Futures on S&P 500 contributed significantly to the performance of the fund.
We recently strengthened Ping An Insurance, which is now the portfolio's top line. This move is justified by the desire to integrate a "quality" and "growth" bias to the portfolio.
Since the beginning of the year the picture remains the same. The fund has been impacted by its exposure to financials, commodities and oil. The Chinese technology sector has held up better than its US counterpart, with more sustainable valuation levels.
Generally speaking, market levels are now attractive but offer less visibility.
