General information
| Asset Class | Alternatives | |
| Category | – | |
| Share Class reference currency | USD | |
| Benchmark | Bloomberg Commodity ex-Agri & Livestock Total Return Index | |
| Dividend Policy | Distribution | |
| Total Assets (all classes) in mn | USD 68.49 | 30.04.2021 |
| Assets (share class) in mn | USD 0.76 | 30.04.2021 |
| Number of positions | 12 | 31.10.2018 |
| TER | 1.79% | 31.01.2021 |
| TER Synthetic | 0.76% | 31.07.2013 |
PERFORMANCE COMMENT
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
CONTRIBUTORS
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.
DETRACTORS
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.
Highlights
LO Funds (CH) – Commodities Risk Premia ex-Agri is a rule-based portfolio. Its long-only commodity strategy has been in place since October 2012. It offers exposure to commodities in the energy and metal sectors. It seeks to deliver stronger risk-adjusted returns over an economic cycle than traditional indices such as the Bloomberg Commodity ex Agri & Livestock Index. The investment approach seeks to replicate, through a Total Return Swap, the LOIM Commodities Risk Parity ex-Agri index. This index equalises the risk contribution of two sectors (energy and metal) and of individual commodities within each of these. The cost of rolling forward future contracts is optimised taking into account the shape of forward curves in commodity markets. Risk management is performed by fund managers at a portfolio level, alongside independent teams who oversee investment, counterparty and operational risks.