Trading Updates 27/02/2020
Trading Update - 27 February 2020
Further trades have taken place in the funds in February 2020.
We decided to reduce the funds’ exposure to equity risk further on Monday as the near term profit outlook for companies with complex supply chains or a reliance on industrial commodity demand is looking increasingly uncertain due to the Coronavirus outbreak. Furthermore, companies may start to announce a rise in bad debts.
We, therefore, reduced exposure to the Japanese and European ETFs held.
We also reduced exposure to UK equities somewhat, by selling the funds’ holding in half weighted Melrose Industries and reducing exposure to Royal Dutch Shell.
Melrose Industries share price has performed well over the last year and although we continue to believe the management team’s efficiency efforts will be carried out successfully, we are concerned that the challenging conditions in both automotive and aerospace end markets will hamper the overall outcome. Also, given the current considerations around economic activity and supply chain disruptions, this may prove a more difficult environment to obtain attractive prices for any of their businesses which are earmarked for disposal.
Separately, we have removed the remainder of the Sterling hedge we had in place over some of our US equity exposure believing that safe haven flows may boost the value of the US Dollar at a time when the UK’s fiscal position is likely to come under increased scrutiny.
Cornelian Investment Team