The year 2023 was similar to recent years in terms of intensity and unexpected changes. Global stock markets again adhered to macroeconomic data, guidance from central banks and tense geopolitical conditions. Thanks to an unexpectedly robust economy and a welcome dose of disinflation, eurozone shares finished the year near record highs. EPS have not been revised down, despite more stringent financial conditions in 2023, and valuation levels are still below long-term averages.
In terms of investment approaches, growth shares outperformed value shares for the first time since 2020. Given the economic context described above, cyclicals handily outperformed defensive stocks. Finally, large caps once again outperformed small caps. The Amplegest Pricing Power fund ended the year up +17.9%, compared with +18.3% for the benchmark index.
The ability to control prices was a major factor in the disinflationary environment of 2023. The vast majority of the fund’s companies were able to use this to their advantage to boost both margins and growth. In 2023, EPS grew by 15%, compared with 4% for the benchmark index. Some of the best performances came from technology shares, which make up a significant part of the portfolio (ASML, Infineon, Amadeus and Dassault Systèmes). The top contributor to the fund in 2023 was Ferrari, which we have had in the fund since 2016.
By contrast, our absence from certain sectors (banks, construction) hurt performance. Despite the unquestionable pricing power of spirits, the sector was hit hard by significant inventory reductions at U.S. distributors. Consequently, we have reduced our positions in these companies. The luxury sector (LVMH, Moncler) underwent two very different phases in 2023. While the first half was boosted by a resumption in Chinese consumer spending, the second half saw a return to normal levels in OECD countries.
In 2023 we opened 12 new positions and closed 10, bringing the portfolio’s total positions to 30. The most significant new investments were in Safran, Merck and UCB. Positions which were closed included Pernod Ricard, BMW and Adyen. The fund enters 2024 with a more balanced profile than its long-term average: EPS growth of around 11%, moderate debt and valuation at around 24x 2024 P/E.