In May, the fund duplicated its record success rate (100% of our companies) for positive surprises from earnings season.
The fund’s holdings have barriers to entry which are sufficiently robust to provide them with maximum security against the numerous shocks currently rattling the world. While our companies are taking a proactive approach to cost inflation (staff, logistics, energy, finished goods, semi-finished goods, etc.), the majority of businesses will begin to feel the pinch from the gradual withdrawal of expansionary economic policies.
Energy (+26.79% YTD, compared with +18.26% at the end of April) and commodities (+14.78% YTD) – those poster children for irresponsible finance – were hands down the leading sectors of the Stoxx Europe 600 NR.
Since the end of April, the insurance and health care sectors have also weakened. The last sector still standing is telecoms, the third best performer YTD.
The fund’s top five negative contributors in May announced no bad news, financial or otherwise.
By contrast, the fund’s top five positive contributors announced good news through earnings publications and investor day disclosures: VALEO, BMW, AT&S, MERCEDES and INFINEON.
By market capitalization, the fund is 77% invested in companies with market caps of more than €5 billion. By country, the fund is invested mainly in France, followed by Germany and Italy.
Last month’s comparison of our companies’ earnings with their stock market performance is not only still relevant, the gap is even widening. (See our monthly report for April 2022, available on the Amplegest website.) Unsurprisingly, the fund’s valuation is gradually declining, pushing some of our stocks into value territory.
The fund’s performance so far this year is attributable to 1) the low correlation between earnings and stock prices, and 2) the fund’s absence from the energy and commodities sectors. These excesses will eventually correct.