The year 2024 has begun on a positive note. The economic outlook is generally upbeat for equities, with disinflation set to continue, interest rates expected to fall in 2024 and economic indicators (e.g. unemployment and PMI) trending favourably. But above all it is the first wave of annual results which has pushed indexes to new highs. In the eurozone, heavyweights SAP, ASML and LVMH created positive surprises. The fund holds two of these three companies in its portfolio. As of 31 January the fund had advanced 3.1%, compared with 2.2% for its benchmark index.
Shares of companies with strong pricing power generally outperformed in the context described above. ASML’s annual results boosted the entire semiconductor sector. The largest manufacturers of chips and memory have resumed investments, further enhancing the visibility of leaders such as ASML and BE Semiconductor. In the same sector, shares with exposure to software benefitted from SAP’s earnings announcement. Fund positions in Dassault Systèmes, Atoss Software and CapGemini all performed well.
Luxury goods shares have finally recovered, after underperforming for six months. LVMH published solid earnings, and the message from Bernard Arnaud was enthusiastic and convincing. Brunello Cuccinelli continues to provide positive surprises. Our exposure to the sector remains stable, with LVMH, Moncler and Cuccinelli.
Among the negative performers, Campari (wines and spirits) was a disappointment. The group announced a capital increase that was larger than expected. This capital increase will be used to finance the acquisition of cognac house Courvoisier. Infineon shares declined after announcing disappointing comparables.
In January we closed our position in CapGemini. New positions in Scout24 and BE Semiconductor were opened, bringing the total to 31. Scout24 is Germany’s undisputed leader in online real estate ads, with twice the listings, traffic and penetration rate to property agents as the sector’s number two player. This allows the company to set prices, with a subscription model that provides it with strongly recurring business. BE Semiconductor manufactures semiconductor assembly equipment. It is positioned in a market whose high barriers to entry guarantee high margins. These are protected by the rapid development (expected to continue until 2030) of the hybrid bonding market, for which the group enjoys a comfortable technological advance.