Best performing sectors: communications services and finance companies
Carnegie Global Quality Companies returned -0.1 percent during the month and is therefore up 8.7 percent so far this year. The best-performing sectors in April were communications services and finance companies.
The best returning companies were Alphabet (+14.1%), SAP (+11.8%) and S&P Global (+10.6%). Yields were weaker in traditionally defensive sectors such as healthcare and groceries, driven by increased economic optimism. The fund’s performance was reduced by currency exposure, with the US dollar weakening more than three percent against the krona during the month.
April was marked by interest rate announcements from a number of central banks, and in summary they are sticking to more expansionary monetary policy. The data released this month reflects a continued recovery, with strong industry numbers, rising consumption figures and rising employment, which continued to support more cyclical assets.
Several companies in the portfolio reported quarterly results during the month. Alphabet’s sales increased by 34 percent over the same quarter last year, while profits doubled, driven partly by very strong growth in YouTube. Both sales and profit came in well above analysts’ expected figures. SAP’s report showed good profit growth, with efficiency measures starting to take hold. Sales growth was weaker as licensed products declined, but sales of cloud-based services increased 7 percent while the order backlog grew 19 percent. Management also expects growth in cloud services to accelerate to 14-18 percent in the coming year.
The fund’s focus on safe quality companies to own long-term has since its inception delivered a better risk-adjusted return than global equity indices. The low economic sensitivity of the holdings also makes the fund resilient if the economy turns. From a valuation perspective, the portfolio continues to trade without a premium to the stock market, despite stronger key figures for growth, profitability and risk.