Was hat sich zuletzt bei den Aktien aus den Bereichen IT-Sicherheit und Security getan, die das Portfolio des Pictet Security P EUR (WKN A0LC44, ISIN LU0270904781) dominieren? Das aus Yves Kramer, Alexandre Mouthon und Rachele Beata bestehende Pictet Security Management Team hat die Antworten für alle Investoren der SJB Strategie Nachhaltig parat. Der aktuelle Marktbericht per Ende Februar thematisiert die FondsPerformance, die Veränderungen im Portfolio sowie den Ausblick für die Aktienmärkte des Security-Sektors.
Market review
Global markets did come close to a bear market correction in Q4 2018, but have recovered nicely since then. February’s 3% market rise in USD was a more timid continuation of the recovery we saw in January. More positive macroeconomic newsflow from multiple fronts as well as a decent earnings season helped markets continue their ascent. Trade tensions seem to be easing, Chinese monetary easing is impacting credit growth and the Fed is less hawkish and signalled flexibility in its interest-rate path. The strongest performance came from the IT and industrials sectors, while consumer discretionary and communication services lagged behind. Emerging markets underperformed developed markets in February as Latin America declined. Within developed markets, both Europe and North America performed better than Japan. In the security universe all sub-segments were in positive territory during the month. The IT security products segment recorded the strongest performance, followed by security services and physical security products.
Performance analysis
The portfolio strongly outperformed the global equity market during the month by more than 300 bps. Every segment contributed positively to performance. In IT security products our cybersecurity names contributed the most. Within security services, both secured processing services and specialised security services were positive contributors. Physical security’s contribution was driven by access control and environmental & food safety companies. This segment was also helped by acquisition rumours surrounding Wabco.
Portfolio activity – overweightings & underweightings
We made some changes to the portfolio. First, we continued to reduce our overall exposure in the security services sub-segment, favouring instead both the physical security products and IT security products sub-segments. In the security services subsegment we therefore made some selective adjustments by reducing our REITS and secured electronic payment exposure. In the physical security products sub-segment we increased our weighting in our surveillance & access control equipment and infrastructure safety. On the cybersecurity side the demand environment for cybersecurity solutions remains favourable and results were very strong across the board. None of the companies in this segment show signs of any negative impact from the uncertain economic outlook. Consequently we see favourable upside potential and have added into it. During the fourth quarter earnings season we also saw that secured electronic component companies continue to cut estimates but now stocks are outperforming. We expect that trend to continue as lots of bad news is backed into stocks. We have slightly increased our exposure in that 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 is a top priority. 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, and IT systems and cybersecurity remain a priority for governments and companies. As such, we are confident that the fund is an attractive investment opportunity for capturing a long-term trend with strong fundamentals and good diversification properties.
Portfolio strategy
The global economy is cooling. Concerns about a full-blown trade war between the US and China have led to a deterioration in business confidence and economic activity, particularly in the developed world. However, central banks are once again taking action to support growth. The US Federal Reserve has signalled a halt to rate increases, and it may also slow the pace of sales in its bond portfolio. What is more, China has implemented monetary stimulus on top of fiscal measures to stabilise economic growth. Together, the actions of the world’s most powerful central banks are likely help calm investors’ nerves following the market rout at the end of 2018. Still, central bank action cannot completely eliminate investment risks. Tensions between the US and China will linger for some time to come. Following the good performance of riskier asset classes last month, valuation metrics are now back in neutral territory. Consequently, we currently believe that a portfolio well balanced is likely to deliver stronger results. We favour companies that have strong structural positioning, can expand margins, grow earnings and have plenty of cash.
Pictet Security Management Team
Yves Kramer
Alexandre Mouthon
Rachele Beata
