It was a mixed month for equities, with tech stocks lifting US market performance, while in Europe volatility was much more evident. European equities retreated on weaker sentiment following renewed concerns over a second wave of Coronavirus as new lockdown restrictions were set in specific countries. Q2 earnings season was no worse than feared, though there are plenty of questions around visibility into Q3. Elsewhere, there was more gloomy economic data across Europe. On the political front, EU leaders agreed a €750 billion post pandemic recovery fund, which should have a positive impact on the European macro outlook in the coming years.
Turning to equity markets, cyclicals and value stocks were hit hardest in the month. By sector, Utilities, Materials, Industrials and Tech outperformed. Telecoms, Energy, Healthcare and Financials were out of favour. The energy sector sold off as reduced global demand has seen the price of oil fall, further exacerbating a particularly volatile year for oil stocks.
The fund reported a strong positive return of 3.2% in July, which reflected considerable outperformance against its benchmark. Stock selection was positive, driven by gains within our Industrials, Consumer Goods, Consumer Services and Energy. Sector allocation was also positive, led by a beneficial contribution from our underweight in Healthcare and Financials. At the company level, Schibsted, Shop Apotheke, Nacon, Vestas Wind Systems, Campari Group and Teleperformance were key positive contributors. There were no noteworthy detractors in the period.
There was no significant trading activity in the period.