Im August legten die globalen Aktienmärkte weiter zu, da verbesserte Wirtschaftsdaten, Fortschritte in der Entwicklung eines Corona-Impfstoffes sowie positive Quartalsberichte der Unternehmen für gute Stimmung sorgten. In diesem Marktumfeld entwickelte sich der Pictet – Smart City P EUR (WKN A1CYMG, ISIN LU0503634577) etwas schwächer als der MSCI World, verzeichnete aber eine positive Wertentwicklung von +3,80 Prozent auf Monatsbasis. Pictet-FondsManager Ivo Weinöhrl berichtet für alle Investoren der FondsStrategie SJB Nachhaltig über die neuesten Veränderungen im FondsPortfolio. Der aktuelle Monatsbericht für August thematisiert die Performance-Ergebnisse sowie den Ausblick für die Aktientitel, die von den Entwicklungen hin zur modernen Stadt profitieren.
Market review
In August, global equities continued to move higher, driven by continued liquidity support, improving economic activity data, reported progress on the development of a vaccine against Covid-19, and corporate earnings that exceeded expectations. The MSCI All Country World Index (in USD terms) recorded a gain of 6%. Market participants focused on the improving economic picture despite a pick-up in infection numbers in Europe, the US failing to deliver a fifth stimulus package, and rising US/China tensions. Europe saw a worsening of infection rates, yet coupled with falling deaths and hospitalizations, while the US moved past the peak in case numbers. Global PMIs continued to improve, though at a slower pace, while the US unemployment rate decreased to 8.4%. On the economic stimulus front, the US Congress failed to make progress on a new coronavirus relief bill. Tensions between China and the US escalated with the imposition of new US restrictions. However, both parties reaffirmed their commitment to the Phase-1 trade deal. The US Federal Reserve adjusted its strategy to target inflation, averaging 2% over time, to account for the persistently low rate environment. 10-year Treasury yields rose to 0.70% (+18bps). Consumer Discretionary, Information Technology and Industrials were the strongest performing sectors while Utilities, Energy and Real Estate ended at the bottom.
Performance analysis
During the month of August, the SmartCity strategy underperformed global equities. Running the City acted as the biggest detractor, Building the City slightly lagged behind the market, and Living in the City outperformed the market. Within Living in the City, Intelligent Workplace was the best performing subsegment overall. The main contributor was a childcare provider that updated its market outlook to reflect a faster-than expected reopening pace for its centers, reaching over 85% utilization by the end of Q3. Within Building the City, the underperformance was driven by the Urban Development subsegment. The main detractor was a Chinese residential real estate developer as the market worried about an increasingly competitive environment. On the other hand, the Intelligent Buildings segment was strong. The main contributor was a home improvement retailer, which reported very high sales numbers, driven by strong demand from both private and professional customers as people spend more money on renovating their homes. Within Running the City, Traditional Infrastructure was the biggest drag on performance overall. The main detractor was a US utility company. Despite reporting solid results and minimal impact from Covid-19, the stock was weighed down by a rotation out of defensives and into cyclicals.
Portfolio activity – overweightings & underweightings
During the month of August, we added to our positions in two title insurance providers. The companies reported a strong rebound in the mortgage purchase market and also saw signs of recovery on the commercial real estate side. The refinancing market remained extremely strong, fueled by borrowers refinancing their mortgages due to very low interest rates. Overall, this resulted in strong margin performance. Despite these positive dynamics, the stocks are being weighed down by their classification as financials, which is one of the worst performing sectors year to date. We also made small additions to our stake in a leading player in the communication infrastructure area, benefiting from weakness post results. We slightly increased our position in a payment network, which reported better than expected volume recovery in all of its segments except for cross-border transactions. Finally, we slightly trimmed our stake in a manufacturer of electrical power products after strong performance, driven by the expectation that the company will be a key beneficiary of government stimulus initiatives.
Market outlook
The secular outlook for the three building blocks of our SmartCity strategy remains highly attractive. Cities around the globe have recognized the need to invest in their aging infrastructure and deploy smarter solutions and technologies to improve their citizens’ quality of life. The current health crisis has accelerated many trends, such as the adoption of digital solutions in almost all areas of our daily lives, by several years and will provide a tailwind for the providers of those solutions for years to come. From a shorter term perspective, the path of global equity markets will depend on the dynamics between re-accelerating infection numbers, potential renewed shutdowns and therefore curtailment of economic activity, the availability of a vaccine and the impact of giant amounts of fiscal and monetary stimulus measures. With markets back to and in some instances above precrisis highs, we see some risks on the horizon that might or might not materialize. We thus remain prudent and adhere to our disciplined investment approach trying to identify long-term winners in their respective fields that we think will fare well across economic and market cycles and increasing our stakes in those companies if and when opportunities arise.
Portfolio strategy
Our goal is to gain exposure to companies that stand to benefit most from their ability to provide solutions to the meaningful challenges posed by rapid urbanization as well as changing demographics and consumer lifestyles. In light of fast-growing populations, cities around the world will have to undertake investments to protect human well-being and promote environmental sustainability. We find companies across a wide variety of sectors that make cities smarter, i.e. more efficient, sustainable, safer or better adapted to their citizens’ needs. The investment strategy is unconstrained across geographies, market capitalizations or sectors.
Pictet – Smart City Management Team
Ivo Weinoehrl
Lucia Macaccaro
