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- EM consumer and online life have been our best performing themes in Q3
- We took profit in several online life and video games positions after a strong rally
- The US tech sell-off in September had a negative impact on our equity holdings
In Q3 most of our equity holdings have performed well. Although most of our single stocks reported better-than-expected numbers, “EM Consumer” was especially strong on the back of solid results in August and overtook “Online Life” as the best performing basket. “Video Games” stocks were held by cultural misconduct allegations at Ubisoft, however the situation has been improving with swift and decisive action by the company management. The performance was further boosted by positive reception of Ubisoft’s games reveal events, and we used the opportunity to double our position in the stock. Another opportunity came after management announced two games delays during the latest earnings update. Despite the delays, operating income guidance for this fiscal year stayed within the original range, implying a very strong underlying performance. Furthermore, operating profit for fiscal H1 came 2.6 times ahead of expectations.
Last quarter we split our “Value” holdings into “Resilient” and “Recovery” to more accurately reflect the underlying drivers and to better align these stocks with the thematic structure of our satellite holdings. The “Resilient” basket, which now holds only Unilever, has kept its slow and steady upward pace reinforced by solid Q2 and Q3 updates. Our “Recovery” basket has lagged all other themes due to poor performance of Total (which has since been sold from our portfolios) on the back of deteriorating oil outlook and VW despite a positive news flow around divestments and improving car sales.
We took profits in Mastercard (+52%, sold entirely), Alphabet (+43%, sold entirely), Amazon (+58%, sold half), and Electronic Arts (+40%, sold half) and reallocated into the MSCI World ETF. In addition, we cut losses at Total (-6%) completely and reallocated to a Materials ETF as we see a better outlook for the sector compared to oil.
Past performance is not a reliable indicator of future returns. Forecasts are not a reliable indicator of future returns. If the information is not listed in your base currency, then the result may increase or decrease due to currency fluctuations.
If not otherwise indicated, all graphs are sourced from Dolfin research, October 2020.
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