Portfolio Manager comment Coeli Global Select July 2021

While many of you have hopefully enjoyed a relaxing summer break, this was an intensive month on the stock exchanges with a number of companies reporting earnings. Our portfolio, of the World’s Finest Companies, delivered strong results,. The return in July for Coeli Global Select was 3.68 percent (share class R EUR), beating the benchmark by 3.08 percentage points. Almost all of the reports went in our favour. The two best performers during the month were the US healthcare facilities operator HCA Healthcare and Miami-based air conditioning company Carrier Global. The companies reported far beyond expectations, and despite both shares being up by some 50 percent this year, we still anticipate a good deal more share price potential left in them. If you’d like to know more about HCA and Carrier, you can read more here (in Swedish).

The worst performer during July was payments company Paypal, whose report fell a little short of expectations, on the whole owing to Ebay’s reduced use of the platform. This was expected, but the pace of the decrease was a little speedier than the market had anticipated. The next poor performer over the month was Renault; although, after its stellar report on the last day of July, we expect to see a much-improved performance in the months ahead.

Key market events and trends

During reporting season, information pours in on how the world’s economies and industries are faring and a fair share of trends can be discerned when picking through the reports. Firstly, the coronavirus effect is easing off, global consumers are cutting back on time spent playing computer games and shopping less online, and they are going out more, eating at restaurants and visiting shops. All very healthy and expected, but some stocks, such as Logitech and Spotify, have felt the pressure from these changes in consumer behaviour. Note, however, that we hold neither of these names. Secondly, the lack of semiconductors has impacted global vehicle production during the last quarter. Car production lines won’t be back at full speed until later this year or even the beginning of 2022. The vehicle industry is one of the largest in the world, and it picking up the pace in the months to come will help sustain the European economy during the second half of 2021. Thirdly, higher prices and higher wages are another of the trends we see. Many companies have seen a marked increase in manufacturing costs owing to soaring commodity prices. Car manufacturers, for example, have subsequently raised sales prices towards consumers by around 6-8 percent. We also see many examples, largely from the USA, that it is increasingly difficult to find labour and many companies are lifting employees’ salaries. So, inflationary pressure is quite intense in the global economy right now.

Portfolio changes – with brief comments

We made no changes to our global fund during July.

The fund’s positioning – our market expectations

July was a splendid month of reports for the global fund, and the tone of quarterly calls by companies was particularly optimistic for the future. Interest rates remain low, and the global consumer is happy to consume, but, most important of all, the companies we have chosen to invest in are of the utmost quality, and they continue to grow.