In what appears to becoming the norm, equity markets in January reversed much of the gains made in December. Having missed out on some of December’s gains, it is pleasing to be able to report that the Fund outperformed in January. Over the month, the Fund’s net asset value decreased by 0.4% against the benchmark, FTSE World Index, which fell by 3.7%. Unusually for the Fund, this outperformance was in the face of dollar strength and sterling and euro weakness, which historically has been unhelpful.
While equity markets have enjoyed a substantial rally from the low point of March 2009, we would question whether the underlying economic fundamentals for many of the mature markets warrant such strong moves. As such, it is entirely likely that these markets will consolidate until the fundamentals show more signs of sustained strength. Fortunately, this is not the case with many emerging economies where the 2009 rally has taken equities back up to fair value at best – their underlying economic positions are inherently much stronger.
The Fund remains very underweight in mature markets and overweight emerging markets and special situations. The latter have benefitted from re-ratings with discounts narrowing as the underlying value is more widely appreciated by investors. The Fund retains many holdings still trading at extremely wide discounts with the average portfolio discount approximately 24%.
Source: Lipper hindsight to 31.01.10
SVM Global Fund’s portfolio is structured into six broad themes. Specialist investments include those exposed to specific industries or areas such as Eastern Europe or emerging markets. Property exposure is concentrated in emerging Europe and the less mature areas of developed Europe. Hedge funds represent exposure less dependent on stockmarket direction. Funds with investments in resources cover a broad range of commodities both in exploration and production. Private equity exposure is targeted towards those funds in the realisation phase of the private equity cycle.