Levitas Portfolio Update - Q4 2019

Levitas A

The portfolio outperformed the IA Flexible sector and also provided positive absolute returns over the quarter.

Political issues tended to dominate asset returns over the quarter although the conservative majority eased some investor concerns towards the end of the year. This had an impact on UK positions which were the top performing assets over the period. UK small and mid sized companies performed particularly well.

There was also some easing in the US / China trade dispute which led to international markets generally performing well. Emerging Markets and Asia were the main beneficiaries although US markets also delivered solid performance. Returns from these positions were hindered somewhat by a strengthening sterling so currency hedged positions tended to outperform.

Over the quarter we reduced the portfolios overall exposure to Japan as we remain concerned regarding the drop in manufacturing output. We also reduced cash exposure that had been built up over the summer as concerns regarding a potential mid-cycle correction diminished.

Levitas B

The fund delivered solid absolute returns but slightly underperformed the IA 0-35% Sector.

Political issues tended to dominate asset returns over the quarter although the conservative majority eased some investor concerns towards the end of the year. This had an impact on UK positions which were the top performing assets over the period. The portfolio also enjoyed strong returns from its property tracker which is exposed to UK property companies which enjoyed a bounce towards the end of the year. There was also some easing in the US / China trade dispute which led to international markets generally performing well. Returns from these positions were hindered somewhat by a strengthening sterling so currency hedged positions tended to outperform.

Non-equity positions were more varied. Convertibles performed well although other alternative funds lagged. More aggressive high yield debt delivered solid performance and sovereign debt yields rose although this was a benefit on a relative basis as we remain underweight. Global corporate debt also struggled primarily due to some unhedged positions which were impacted by an appreciating sterling.

Over the quarter we sold out of underperforming absolute return fund as well as slightly reduced overall cash exposure that had been built up over the summer as concerns regarding a potential mid-cycle correction diminished.

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