InvestNow News – 13th Dec 19 – Pie Funds – CIO Report: Strong Global Performance

5th Dec 2019

Strong Global performance
Global funds performed strongly in November. Markets were buoyant as investors became more confident about a resolution to the trade war and less concerned about a US recession. We are also seeing signs global growth may be on the rise from depressed levels which has given us the confidence to become more fully invested. We have also seen rotation into cyclical or value stocks in recent months causing outperformance vs defensive or growth stocks.

We have seen increased takeover activity in our portfolio, especially in our smaller companies whose share-price had not benefited from the rising stock market this year. Two stocks, one in our Australasian portfolios and another in our UK / European funds, have received takeover bids and we believe this is not likely to be the last of it. EML, our largest position, also acquired a European business for $423m AUD and conducted a capital raising at $3.55 which we subscribed to, increasing our position.

Equity market conditions remain relatively benign as measured by the volatility index in the US which in late November was at lowest levels for the year at 11.5. It would not be unusual to see more volatility either in December or early in the new year, as it’s been a fantastic year to be in equity markets both Globally and in Australasia. However, stock markets don’t go up in a straight line and volatility provides us the opportunity to deploy cash at attractive valuations.