Report April 2020

During the month of April the Columbus fund rose by 9.82%, ahead of the STOXX 600, MSCI Mid Cap and the IBEX 35 indices which increased by 6.24%, 8.65% and 2.01% respectively. This performance helped to reduce the 10.93% loss of the last 12 months, which while significant, was lower than the comparable indices The volatility of the portfolio over this period has increased slightly to 17.28%, but remains low in absolute terms. Since inception in June 2008, Columbus has returned 82.65%, outperforming the European equity indices.

Although markets have rebounded sharply over the past month, we remain cautious regarding the immediate outlook. Our baseline scenario, given the extent of both fiscal and monetary containment measures in many countries, continues to be one of rapid and deep recession, followed by an equally rapid recovery. The first forecasts by the IMF point to very significant declines of around 7.5% of GDP across Europe in 2020, concentrated in the first half of the year, followed by a strong recovery of 4.5% in 2021. Translated into profits for 2020, this supposes falls from 20% to 40% according to the sectors and companies, followed by increases in 2021 of a similar order. Working this through would leave them, over the two years, slightly below the level seen at the end of 2019. While the current focus is rightly on each company’s ability to withstand this period of lockdown, once the pandemic recedes, the market will begin to focus on the expected results of 2021.

As for the Columbus portfolio, we entered the crisis with somewhat higher cash levels than normal (around 13% of NAV), and one of our main positions Ingenico, had received a public offer from Wordline. Both companies have expressed their willingness to continue with the merger that will create a European and indeed global powerhouse in the field of payments.

We have spent several months with no exposure to some of the more cyclical sectors (oil, raw materials, autos), including very little exposure to banks and other financials. We continue to be positioned in companies where we see better returns for lower risk, especially in technology, consumption and services. We have taken advantage of the fall to add to previous holdings and to take positions in securities in the infrastructure sector (Getlink and Fraport) which have seen dramatic falls, but where the longer-term potential remains undiminished. These unique assets have strategic importance which is almost impossible to replicate; and while activity remains low for now the share valuations are reflecting a structural decline which is overly pessimistic in our view. We believe that the recovery will not be uniform across all sectors and that investors will continue to focus on quality companies with healthy balance sheets and controlled levels of debt. The Fund has performed well during the April bounce, comfortably outpacing the indices and we are confident that we are well placed for when the true recovery comes.

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We thank your trust and wish the best to you and your families during these uncertain times.

Since June 14, 2018 both domestic and foreign investors have been able to access the Columbus strategy via the master-feeder structure between the Columbus 75 Sicav in Spain (feeder) and the Luxembourg registered Pareturn GVC Gaesco Columbus European Midcap Equity Fund (master). The Luxembourg vehicle offers both institutional and retail share classes.