Passer au contenu principal
Funds chevron_right
News chevron_right
Contact chevron_right

Le contenu de cette page relève de la communication marketing

5 min read time

SKAGEN Global: Playing the long game

After a jittery April when investors pushed back hopes for falling interest rates, global equities recovered in May and ended the month up 10.8% in EUR for the year so far[1]. Market sentiment – and appetite for AI-related stocks in particular – remains strong, despite inflation proving stubborn and company valuations generally priced above long-term averages[2].

SKAGEN Global has delivered a solid start to the year, gaining 5.4% in EUR but lagging the MSCI All Country World index largely due to companies not in the portfolio, rather than those it owns. “The world’s six largest companies – Microsoft, Apple, Nvidia, Amazon, Meta and Alphabet – have grown over a third bigger on average in 2024,” explains Lead Portfolio Manager, Knut Gezelius. “This has made it hard for active funds to keep pace with US and global benchmarks so far this year.”

After scaling back its out-sized position in Microsoft on valuation grounds in the first quarter, only Alphabet of the six names is in Global’s top ten. The Google parent company is up around 25% year-to-date and only bettered by Brown & Brown in the fund’s contributors in 2024 with the US insurance broker reporting strong growth, helped by rising policy prices.

The SKAGEN Global portfolio generally continues to perform well with the latest earnings reports mostly in-line with the fund managers’ expectations. Unfortunately, the market has taken a different view in some instances and the few holdings that have undershot consensus forecasts have been marked down.

Its solidity means that there have been no significant losses across the fund’s 30 holdings and the portfolio managers have taken advantage of share price weakness to increase several positions. The biggest drags on performance in 2024 have been Accenture with the IT consultant overshadowed by rivals with closer ties to AI, logistics company DSV which has inevitably been slowed by falling economic activity, and Nike which has struggled to recover from the pandemic but whose brand remains very strong.

Bubble territory

Despite SKAGEN Global’s short-term relative performance suffering, it will benefit longer-term from avoiding the tech bubble that commentators and market participants increasingly believe to be forming. In the US, the seven largest stocks now represent almost a third of the S&P 500’s total capitalisation (Nvidia alone is bigger than the energy sector) and over half (51%) of respondents cited them as the most overcrowded trade in Bank of America’s latest monthly global fund manager survey.

Gezelius agrees: “Following the Magnificent Seven, we’ve seen similar acronyms emerge for stocks in Japan, Europe and even Pakistan. This is probably a sign that this area of the market is getting over-hyped and the risks of losing money are now much bigger than from missing out.”

Another parallel with the dot com bubble at the turn of the century is that the companies driving the AI revolution today won’t all be longer-term winners. “In the same way that those selling picks and shovels made more money than the diggers during the gold rush, our holding ASML provides the machines that produce the chips needed to make AI work and will triumph whoever wins the race,” believes Gezelius. “We also own companies like RELX which has a generative legal AI platform, and Intuitive, a leader in surgical robotics, which could be among the main beneficiaries as AI develops and usage expands.”

Attractive entry point

SKAGEN Global’s portfolio is attractively valued with estimated upside of 47% over a 2–3 year investment horizon, up from 39% at the end of the first quarter. There is particular potential in the fund’s two largest holdings, Canadian Pacific and DSV, as Gezelius explains: “Freight companies tend to be fairly cyclical and have faced sluggish market dynamics of late, but we expect this part of the portfolio to outperform when global economic growth begins to accelerate. Our aim is to always have an all-weather portfolio that is built for a range of scenarios, which means that some holdings will do better at different stages of the economic cycle and in different market conditions.”

image3x5y7.png

Similar caution is applied to protecting the portfolio on the downside, particularly in an environment like we have at present with elevated valuations and an uncertain economic outlook. “The best protection comes from selecting strong companies in terms of business models, competitive advantages and especially balance sheets,” explains Gezelius. “Our unconstrained mandate also means that we can avoid countries where we consider the geopolitical risks are likely to go unrewarded. We haven’t owned anything in Russia or Turkey, for example, for a number of years.”

All info as at 31/05/2024

[1] MSCI ACWI in EUR as at 31/05/2024.
[2] Source: JP Morgan, MSCI World forward P/E 18.3x at 31/05/2024 vs. average 16.3x since 1990.

Equity Funds

CIO Update: Beware what lies beneath the rising stock market tide

Global equities maintained their ascent in the second quarter, but fewer stocks are generating the ... Read the article now arrow_right_alt

More about Equity Funds

SKAGEN Global: Finding many ways to win

At a time when the market has become highly concentrated, picking winners rather than backing the ...

SKAGEN Vekst wins Best Global Equity Fund Award in Belgium

The fund is the 2023 winner of the Sicav de Cristal – Kristallenfondsen LA LIBRE Belgique - De ...

SKAGEN Kon-Tiki: The common sense fund delivering uncommon returns

Our emerging markets fund is flying high, delivering benchmark-beating returns through a ...

Les rendements historiques ne constituent pas une garantie pour les rendements futurs. Les rendements futurs dépendront, entre autres, de l'évolution du marché, des compétences du gestionnaire du fonds, du profil de risque du fonds et des frais de gestion. Le rendement peut devenir négatif en raison de l'évolution négative des prix. L'investissement dans les fonds comporte des risques liés aux mouvements du marché, à l'évolution des devises, aux niveaux des taux d'intérêt, aux conditions économiques, sectorielles et spécifiques à l'entreprise. Les fonds sont libellés en NOK. Les rendements peuvent augmenter ou diminuer en raison des fluctuations des devises. Avant d'effectuer une souscription, nous vous encourageons à lire le prospectus du fonds et le document d'information clé pour l'investisseur qui contiennent des détails supplémentaires sur les caractéristiques et les coûts du fonds. Ces informations sont disponibles sur le site www.skagenfunds.fr. Storebrand Asset Management administre les fonds SKAGEN qui sont, par convention, gérés par les gestionnaires de portefeuille de SKAGEN.

keyboard_arrow_up