Im Januar konnte der Pictet Security P EUR (WKN A0LC44, ISIN LU0270904781) den MSCI World outperformen, da physische sowie softwaretechnische Sicherheitsprodukte stark gefragt waren und positiv zur FondsPerformance beitrugen. Besonders gut entwickelten sich Aktien von Halbleiter-Produzenten sowie Cyber-Security. Das aus Yves Kramer, Alexandre Mouthon und Rachele Beata bestehende Pictet Security Management Team analysiert für alle Investoren der FondsStrategie SJB Nachhaltig die jüngsten Marktentwicklungen uim Detail und berichtet über die im Portfolio vorgenommenen Veränderungen. Zudem thematisiert der aktuelle Marktbericht die FondsPerformance und gibt einen Ausblick auf die Aktienmärkte des Security-Sektors.
Market review
January 2021 will be remembered as the month when populism shook the foundations of Wall Street. Amateur traders, whose ranks and investment resources have swollen with the emergence of commission-free trading platforms and as governments have enforced lockdowns and boosted welfare payments, launched a coordinated assault on hedge funds with short positions in struggling firms. By driving up the shares of heavily shorted companies, such as video games retailer GameStop – which rallied by much as 1600% on the month – day traders succeeded in inflicting heavy losses on some of the most revered money managers. The buying spree saw daily trading volumes hit their highest levels since the depths of the 2008 credit crisis. The volatility of share prices also spiked, with the VIX Index surging. The disruption caused by day traders unsettled a market already concerned by high valuations, the persistently high Covid-19 infection rates and delays in the rollout of vaccinations. The fourth quarter earnings season has so far been positive, but companies’ lack of clarity on 2021 prospects also weighs on stocks. The MSCI World Index of global stocks ended marginally down on the month in US dollar terms while US stocks fell by almost 1%. Regarding the security universe, Physical Security was positive over the month and IT Security Products and Security Services were negative over the month.
Performance analysis
The strategy outperformed the MSCI AC World over the month, with Physical Security Products and IT Security Products contributing positively and Security Services contributing negatively. The performance of Physical Security Products was mainly driven by life science and some industrial safety names. Security Services was negative over the month due to a pullback in the fintech names and the credit bureaus. Within the IT Security Products pocket, the main performers were the semiconductor names, as they tend to benefit from a cyclical perspective. Furthermore, cybersecurity names continued to gain traction following the SolarWinds breach as this could represent, among others, a catalyst for increased security spending.
Portfolio activity – overweightings & underweightings
Over the month, our trading activity led to an increase in Physical Security Products and IT Security Products and a decrease in Security Services. In Physical Security Products, we have increased our life science and our industrial safety names. Though in Security Services, we decreased some of our fintech names and some data and physical storage names. In IT Security Products, we increased some of our cybersecurity and hardware security stocks. We sold two stocks and bought one in the Security Services segment.
Market outlook
Given the persistent uncertainty surrounding the current state of the economy, we believe that securing the critical infrastructures of countries, protecting citizens’ integrity and ensuring the ability of businesses to meet their objectives are a top priorities. We therefore remain confident about the fund’s ability to outpace the global equity market on earnings and cash-flow growth over the next few years, as stricter regulation (such as PSD2, GDPR) is likely to remain a key driver for security going forward; and IT systems and cybersecurity remain a priority for governments and companies. We are therefore confident that the fund is an attractive investment opportunity to capture a long-term trend with strong fundamentals and good diversification properties.
Portfolio strategy
With the US election risk out of the way and the positive news on a vaccine, the trend for equities is looking good. The Covid-19 vaccines allow us to look beyond the pandemic and focus on the strengthening economy, which remains supported by substantial flows of emergency fiscal spending. This benevolent macroeconomic backdrop is a boost to corporate profits and should offset any decline in stocks’ price-earnings multiples caused by a wind down of monetary stimulus. Looking at China, the country remains ahead in terms of the extent of its recovery, which, along with a weaker dollar, should be supportive for emerging markets. With such a backdrop, we continue to focus on growth and quality names within the portfolio. The Security Services exposure is around 32%. We will continue to be opportunistic by raising exposure to cyclical names when appropriate.
Pictet Security Management Team
Yves Kramer
Alexandre Mouthon
Rachele Beata
