March Asset Management, the investment management arm of Spain’s Banca March, sees monetary policy and ongoing market uncertainty in the face of global political changes as the major influences on its four key portfolios over the last quarter of the year.
Concerns have re-emerged regarding the European banking sector, even though overall markets data has been positive. The uptrend of global stock markets has slowed, and volatility has rebounded since September.
The March International Torrenova Lux A EUR fund returned minus 0.45% in September and minus 0.32% year-to-date with equity exposure kept slightly below the neutral level at 19.5%.
“The risks on the horizon over the coming months lead us to favour a cautious stance,” noted March CIO Carlos Andres.
“In Europe, these include the outcome of the referendum in Italy in December and the tone of the Brexit negotiations, whilst on the other side of the Atlantic, the outcome of the presidential elections, the potential rate hike and the upcoming corporate results season underlie our cautious portfolio positioning,” he added.
The manager increased exposure to Vodafone and Disney, which is trading at lows and offers “very attractive valuations”, while tactically cutting the Intesa holding following the stock’s strong rebound from previous lows. A new holding is E.on, now trading at “very attractive valuations”, with strong potential for improvement in margins following the spin-off of its power generation business.
In fixed income, the Torrenova fund continues to buy periphery bonds and floating-rate corporate bonds, including selective purchases of Italian financial sector issuers after Italy’s sovereign credit spread widened. The portfolio duration remains at 1.1 years with a yield of 0.46%.
The March International March Vini Catena A EUR fund is up 0.69% YTD versus a gain of 2.28% for the reference index. The most heavily weighted sectors in the portfolio are distilled spirits, wines, industrial machinery and distribution.
The March International Family Businesses Fund is performing well so far this year, up 3.48% versus a gain of 2.28% for the reference MSCI World LC index. The portfolio’s biggest sector weightings are industrials, consumer discretionary and consumer staples.
March AM’s Valores Iberian Equity A EUR fund, for its part, has returned +1.61%, compared with +0.72% for the Ibex 35 and YTD, the fund is up +0.91% versus a loss of -8.01% for the index.