European Equity Strategy 1Q 2019


Key Takeaways

  • After a treacherous fourth quarter, European equity markets had a strong start to the year, bolstered by the Fed’s pause in interest rate increases and improving sentiment on U.S.-China trade tensions. The Vontobel European Equity strategy performed in-line with the MSCI Europe Index, which advanced 12.84% (in euros) for the first quarter.
  • Our holdings in the consumer staples and information technology sectors had a positive impact on relative returns, while consumer discretionary and materials detracted from performance over the quarter.
  • Despite the first quarter equity market rebound, a host of significant risks remain from political headwinds, such as the outcome of Brexit, to structural risks that are lingering below the surface. Rising populism in many countries is posing risks to the global trade regime, which in turn has implications for some companies’ profit margins.
  • As quality growth investors, we differentiate between growth driven by secular and cyclical forces in our portfolio companies. Even if the cycle turns down, we see opportunities for structural growth to drive earnings at many of our holdings. If we get the structural growth story correct, that should help with downside protection. In tough economic times, this protection is a hallmark of our investment style and a compass for portfolio construction.

Trailing Returns: European Equity Composite(As of 03.31.2019)

Calendar Year Returns

Source: NorthernTrust
All results portrayed are expressed in U.S. dollars. Periods under one year are not annualized.
Past performance is not necessarily indicative of future results. For full disclosure and for further information regarding comparison to an index, see the Disclaimer and Performance Disclosure.