Im Juli konnten sich die globalen Aktienmärkte weiter nach oben bewegen, da verbesserte Wirtschaftsdaten, Fortschritte in der Entwicklung eines Corona-Impfstoffes sowie positive Unternehmensergebnisse für eine freundliche Stimmung sorgten. In diesem Marktumfeld generierte der Pictet – Smart City P EUR (WKN A1CYMG, ISIN LU0503634577) eine positive Wertentwicklung von +0,56 Prozent auf Monatsbasis. Pictet-FondsManager Ivo Weinöhrl berichtet für alle Investoren der FondsStrategie SJB Nachhaltig über die neuesten Veränderungen im FondsPortfolio. Der aktuelle Monatsbericht per Ende Juli thematisiert die Performance-Ergebnisse sowie den Ausblick für die Aktientitel, die von den Entwicklungen hin zur modernen Stadt profitieren.
Market review
In July, global equities continued to move higher, driven by a combination of improving economic activity data, reported progress on the development of a vaccine against the novel coronavirus and corporate earnings reports that were generally ahead of expectations. The MSCI All Country World Index (in USD terms) recorded a gain of 5.1% for the period. Market participants focused on the generally improving economic picture despite a pick-up in infection numbers in the US, which forced many states to halt or reverse their re-opening efforts. An uptick in cases was also observed in Asia and Western Europe, which led to localized impositions of new restrictions. Global purchasing manager indices (PMIs), on the other hand, rebounded to higher-than-pre-crisis levels and labour markets saw signs of improvement, with the US unemployment rate declining to 11%. On the economic stimulus front, the picture was more mixed. EUR 750 billion was added to the EU recovery fund while Congress in the US failed to meet the deadline for a further stimulus package approval. Interest rates continued their decline, with the 10-year US benchmark yield reaching a new low of 0.53%. From a sector standpoint, Consumer Discretionary, Materials and Information Technology were the strongest performers. Energy, Financials and Real Estate ended the month at the bottom.
Performance analysis
During the month of July, the SmartCity strategy slightly outperformed global equities. While Living in the City and Building the City were detractors, Running the City outperformed the market. Within Running the City, Mobility Solutions was the best performing sub-segment overall. The main contributor was a components supplier to the passenger railway industry. Strong execution during the current economic crisis led to a significant beat of earnings expectations in the second quarter. Another positive contributor was an owner and operator of logistics facilities, which benefited from strong additional demand for space from online retailers. Within Building the City, the underperformance was driven by Financial Solutions. The main detractors were two Asian banks as the market started to worry about the negative impact from lower interest rates on their results as well as a newly announced limitation in the amount of dividends they are allowed to distribute. Within Living in the City, Intelligent Workplace was the biggest drag on performance overall. The main detractor was a leading provider of Health Saving Accounts in the US, whose stock was weighted down by concerns of a slowdown in the recovery trajectory of elective procedures due to a surge of Covid-19 cases.
Portfolio activity – overweightings & underweightings
During the course of the month, we exited our position in a leading provider of fitness-at-home solutions. While we like the company’s innovative business model and it has proven to be a major beneficiary of lockdowns in the course of the current health crisis, its valuation now more than fully reflects this, in our view. We added to our stake in an owner and operator of apartment units in US metropolitan areas on weakness. We like its rental growth profile and the resilience of its operations, confirmed by its constant reporting of high levels of monthly rent collection. We took part in an equity raise by a payment solution provider focused on the Middle East and Africa. The main use of funds was to finance the acquisition of an African online payment platform. We see this move as very positive as it allows the company to expand its online offering and its presence in high growth African markets. We also added to a European payment player, whose results confirmed the resilience of its business model. It has seen its payment volumes recover to preCovid levels or higher in most of its geographies, boosted by very strong growth in online transactions. Finally, we increased our position in a provider of after-school tutoring services in the Chinese market, taking advantage of a temporary pullback in the stock.
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 by-and-large back to pre-crisis 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
