|Fund base currency||USD|
|Share Class reference currency||CHF|
|Benchmark||HFRX EQUITY HEDGE CHF|
|Total Assets (all classes) in mn||CHF 1010.50||28.02.2021|
|Number of positions||–||–|
LO Funds–Europe High Conviction outperformed the market by +87 bps net of fees (EUR P share class) in April. The Fund was up +2.94% (P class) while its benchmark, MSCI Europe, rose +2.07%. YTD, the Fund has underperformed the benchmark by -74 bps net of fees (P class), giving a total return of +9.85% (P class) compared to the wider market, which has returned +10.59%. N class shares outperformed the market by +94 bps in April, giving an underperformance of -43 bps YTD for a return of +10.16%.
The Fund outperformed the benchmark last month driven by positive alpha as well as some favourable sector rotation. 60% of the portfolio had a positive contribution to the outperformance, with Adevinta the only one to add >+30bps and no meaningful detractors.
April also saw some reversion of the sector trends experienced earlier in the year, benefiting the fund. Whilst the likes of autos (-5%) and energy (-3%) underperformed, consumer segments such as retail (+7%), and products and services (+6%) led. We estimate that the sectors to which we have zero exposure (Financials, Energy and Basic Resources) added +36 bps (gross) to our relative performance in April. YTD, these sectors have detracted -128 bps (gross) from our performance.
STOCK PERFORMANCE: TOP CONTRIBUTORS AND DETRACTORS
The top three positive contributors to the Fund’s performance in April were Adevinta, Worldline and Heineken.
Adevinta: the online classifieds firm saw its shares reverse some of the underperformance seen at the start of 2021. The UK CMA review for the deal to buy the eBay classifieds business is ongoing; this business reported decent quarterly numbers at the end of April.
Worldline: the French payments firm quarterly figures were solid. In addition, reports indicated the company was seeking to divest its payment terminals unit.
Heineken: first quarter results were well received. Group beer volumes were flat with the Heineken brand growing +12%, as the on-trade channel showed signs of recovery in some regions emerging from the pandemic.
The three positions that detracted the most from the Fund’s performance last month were Iliad, Schindler and Whitbread.
Iliad: nothing noteworthy at the French telecom firm in April. Despite a couple of broker upgrades, the shares underperformed.
Schindler: first quarter earnings were above consensus expectations. Nevertheless, the cautious tone of management hampered the stock. The elevator industry retains its attractive characteristics and Schindler’s strong position supports good growth potential.
Whitbread: the UK’s largest budget hotelier reported a slightly smaller loss than expected, as RevPAR sensitivity improved on management’s continued success at controlling costs. However, the shares still underperformed as the outlook remained muted. The company continues to take significant share in an industry crippled by the pandemic.
With more than 8 years of track record, the 1798 Fundamental Strategies Fund is a multistrategy fund that combines the best expertize of 1798, the LOIM hedge fund platform. The capital allocation committee is composed of seasoned investors who’s role is to select teams of talented and differentiated hedge fund managers and allocate capital to them to capture the best opportunity set. The Fund targets net returns of 8% with volatility around 8% in every economic cycles, independently of whether it is a bull or bear market. Also, the Fund aims at offering diversification to a global portfolio. As a result, It is intended that the Fund should have low directionality and thus low correlation to traditional asset classes. At the underlying strategies level, risk is monitored real time by the 1798 risk team who has full transparency on all positions, controls risk limits through proprietary tools and can enforce risk reduction if necessary.