Top Picks – Funds Selection – July 2023

We are showing here a selection of funds that might be of interest to you, either due to their recent outstanding performance, the attractive return potential or diversification benfit they may offer in the given market conditions.

In June, optimism fuelled investor risk appetite for equities and corporate bonds. Risky assets were supported by signs of slowing inflation, a Fed’s policy pause, and strong micro results. Global Equities extended their year-to-date gains in June, with developed markets outperforming the emerging world. Corporate bonds also benefitted from this better-than-expected backdrop.

Equity Funds

In June, Artemis Funds (Lux) US Smaller Companies outperformed the Russell 3000 Index by +72 bps*, helped by the stock selection in the early cycle recovery names, and by the infrastructure sector. Building products positions, i.e Eagle Materials, Builders FirstSource, and TopBuild, performed well. SAIA and TFI were also among the best performing stocks in the portfolio.

Threadneedle Global Technology benefitted from its solid stock picking in the US mid-caps tech names and managed to outperform its benchmark by +85 bps. It was achieved despite being underweight in Apple, Microsoft and Nvidia, three of the so called “Magnificent Seven” (Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Tesla and Nvidia) that experienced an average +58% in the first half compared to just +5% for the remaining 493 stocks in the S&P 500 index.

Thematics Safety also outperformed the market (+87 bps) helped by stock selection in the Work subsegment (API Group, Clean Harbors, MSA Safety, Wabtec).  On the other hand, companies from the Connect subsegment underperformed (notably Okta).

Within Emerging Markets, our fund selection continues to exhibit good positive results this month, particularly the Artemis SmartGARP Global Emerging Markets (+180 bps) and the Vontobel mtx Sustainable Asian Leaders (+141 bps), two of our main convictions for GEM and Asia ex Japan regions.

Fixed Income Funds

Within Fixed Income, our fund selection in EM Debt proved to be very successful in June. Our main convictions in the asset class displayed again very solid outperformance across the board: Vontobel EM Debt (+130 bps), Barings EM Local Debt (+77 bps) and BNY Mellon EM Corporate Debt (+29 bps).

Fund selection in both investment grade and high yield space was also positive in June, notably with Robeco Corporate Hybrid Bonds (+71 bps) and Barings Global High Yield Bond (+30bps).

AXA WAVe Cat Bonds (+68 bps) proved to be again a very good diversifier and satellite for a balanced portfolio.

*Performance figures in bracket are monthly alpha compared to respective funds’ benchmark, not absolute performance.

All the mentioned funds are exclusively extracted from our OpenList service, a fund selection list for use by Wealth Managers in Switzerland.

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