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During April the Columbus Fund rose by 1.20%. Over the past six months the Fund has risen by 23.56%, and by 33.26% over the past 12 months. Since inception in June 2008, Columbus’ return has been 140.41%, comfortably exceeding the broad European equity index.

The European equity market continued its positive trend through April although ceded its position as best performing region year to date as the US market benefitted from the huge Biden stimulus program, the American Rescue Plan. The slower start to the vaccination program in Europe has also weighed on the economy where we are seeing a slower recovery rate than in the US and UK, both of which have now provided a first dose to around half of their respective populations. However, activity in Europe has accelerated and the direction of travel is now very clear.

The most significant positive contributor in the month (+12.3% in April) was Royal Unibrew (Brewer, Denmark) which continued its positive trend from March, buoyed by a positive trading statement. Dalata Hotels (Hotels, Ireland) also performed well after appointing the new Chief Financial officer and providing an upbeat outlook for the coming season. AMS AG (Austria ,sensors) was a poor performer in April as rumours circulated of a possible large contact loss to Apple. The company reported in the last few days and cleared the uncertainty and the stock responded by rebounding 10% on the day.

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We thank you for 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.

During March the Columbus Fund rose by 3.59%. The Fund has beaten the market both over a 12-month period (+44.61%) and since the market reached its lowest point on the 18th March 2020 due to the coronavirus-induced market crash (73.03%). Since inception, in June 2008, Columbus’ returns have been 141.36%, comfortably exceeding the broad European equity index.

Over the first quarter of the year, investors have experienced a sharp rotation away from the more growth-oriented sectors, such as Technology, into more cyclical areas such as Commodities and Materials. In addition, the focus has shifted towards stocks which are traditionally seen as ‘value’, a style that had consistently underperformed over the past decade. This notable change of focus stems from a combination of rising bond yields and an increasing confidence in an economic recovery as the global vaccination program gathers momentum.

As mentioned in last month’s report we have been able to take advantage of the performance of some of our longer-term holdings to switch into opportunities which offer a more attractive risk-reward. Amplifon and Avast, for example, were sold during the month and have provided a combined return of more than 90% since purchase. The proceeds from the sale helped to boost some of our exiting holdings as well as starting a position in DormaKaba, a Swiss listed access control group which enjoys strong market shares in the European lock markets and significant growth opportunities elsewhere, most notably in the US.

The best performing holdings during March were our two Spanish banks, Liberbank and Unicaja Banco which agreed a merger deal to form the 5th largest bank in Spain. Zooplus, the German listed online pet products retailer also performed strongly after releasing ambitious growth targets for the coming few years. That said, the bulk of the underperformance in the month came from only two stocks, one of which, Neoen, initiated a large capital raise during the month to fund the raft of opportunities they see ahead. The other, AMS AG, suffered in March despite no negative news of note. Beyond these outliers the bulk of the fund has coped well with the changes in the market, and we remain very comfortable with our positioning.

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We thank you for 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.

During February the Columbus Fund rose by 2.48%, slightly ahead of the benchmark STOXX 600 index which returned 2.31%. Over the past six months the Fund has risen by 12.2%, and by 12.5% over the past 12 months. Since inception in June 2008, Columbus’ return has been 129.7%, comfortably exceeding the broad European equity index. It remains notable that the higher returns do not come with higher risk as the volatility of the portfolio over the last twelve months stands at 26 % vs. 30 % for the STOXX600.

Since the new year equity investors have experienced a considerable shift in market dynamics with the dominance of growth companies over the past few years giving way to more cyclical business models. This resulted from a shift of focus towards economic recovery across Europe as Covid restrictions begin to lift, as well as a notable rise in bond yields, particularly in the US. Commodity prices have been rising steadily, leading to a general reappraisal of inflationary risks across the developed world, which affects the very high valuation multiples of companies in sectors such as technology or biotech. The fund stood up well to this rotation and we have been able to take advantage of a number of opportunities that arose as a result.

Looking within the portfolio we can see the effect of the rotation in the individual stock performances. The best of which came from our more cyclically sensitive holdings which will benefit as lockdowns ease across Europe and travel is once again permitted. Both Melia Hotels (Spanish listed resort hotels) and Fraport (German listed airport operator) contributed strongly as expected but remain considerably below the valuations they would justify in a ‘normal’ environment. Ageas (Belgium listed insurance group) also performed well as a beneficiary of the rising bond yields. Our biggest detractors in February included two excellent companies that are long term holdings on the fund; Reply (Italian listed consultancy) and SIG Combibloc (Swiss carton producer) both of which suffered in the under-current of style rotation.

The valuations of many companies impacted by the pandemic remain well below pre-Covid levels and one example of this is Dalata Hotels which operates in the UK and Ireland. Not only has the company weathered the lock-downs well but they have a considerable pipeline of new capacity ready to come on stream when the environment allows. We have built a position in the stock and see considerable upside as the environment normalises and they are able to restart their planned expansion.

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We thank you for 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.

During January, the Columbus Fund saw a decline of -3.33%, which lagged the -0.8% decrease in the STOXX 600. This fall was driven by some profit taking over the month in stocks that have performed well over the last year. Over the past six months the Fund has risen by +16.08%, and by +63.06% since the market’s low on March 18th. For the full year 2020 Columbus achieved a positive return of +7.04% which compares favourably to the official benchmark for the fund, the STOXX 600 which achieved a loss of -4.04% for the year.

Since inception in June 2008, Columbus’ return has been 127.06%, comfortably exceeding the broad European equity index. It remains notable that the higher returns do not come with higher risk as the volatility of the portfolio over the last twelve months stands at 26.5% vs. 30.0% for the STOXX600.

As the roll-out of the Covid vaccines began in earnest across much of Europe, equity investors started to focus on the light at the end of the tunnel, and the prospect of a return to economic growth later in the year. This led to a rotation within markets away from some of the higher quality, more stable growth companies towards the more cyclical businesses which had underperformed over much of the last few years. This rotation was supported by rising commodity prices, and subsequent concerns about a possible return of inflation. While more recent news of vaccine delays and persistently high Covid statistics has tempered this early enthusiasm somewhat, investors continue to look through to the summer with optimism.

The Columbus portfolio was partially impacted by this shift in style preference as we entered the new year, with two of our very long term winners, Interpump (Italian specialist engineering) and Royal Unibrew (Danish brewery) experiencing some profit taking as investors shifted into more cyclical holdings. However, the most significant negative impact came from Neoen, the French listed renewables energy producer which had been a star performer on the fund in 2020, having risen as much as 139% from the market low point in March. We remain positive on these companies and see them as quality long term winners. The biggest contributions over the month came from our two Austrian listed holdings, S&T (technology consultancy), which reiterated their guidance for 2021 of at least € 1400 m sales and EBITDA € 140 m, and AMS AG (semiconductors). Both staged solid recoveries after short-term weakness in late 2020.

 

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We thank you for 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.

During December the Columbus European Mid Cap Equity Fund rose by +5.2%, comfortably ahead of the +3.7% increase in the MSCI European Mid Cap and +2.4% in the STOXX 600. Over the past six months the Fund has risen by +21.7%, and by a remarkable +68.7% since the market’s low on March 18th. For the full year Columbus achieved a positive return of +7.04% which compares extremely favourably to the official benchmark for the fund, the Stoxx 600 which achieved a loss of slightly more than -4% for the year.

Since inception in June 2008, Columbus’ return has been +132.2%, comfortably exceeding the broad European equity index. It remains notable that the higher returns do not come with higher risk as the volatility of the portfolio over the last twelve months stands at 26% vs. 27.6% for the STOXX600.

Far from being a quiet end to the year, December delivered a number of significant events and provided the basis for continued strength in most equity markets across Europe. Investors responded positively to the outcome of the US elections and further positive news regarding vaccine approvals. The combination caused a shift in momentum towards more cyclical sectors such as materials and travel & leisure, and away from the growth stocks which had led for most of the year.

The long-awaited Brexit agreement was finally achieved late in the month but had a relatively muted impact on Sterling or the UK equity indices. For Europe the more notable news appears to have been the signing of the EU seven year budget of ~€1.8 trillion, including the ‘Next Generation EU’ Covid recovery fund. However, this raft of positive news has been tempered over the past few days as governments have shifted back to more restrictive lockdowns following a notable spike in Coronavirus infection rates across much of the world.

Two of the strongest contributors to the fund through the month were direct beneficiaries of the European budget agreement. As part of the package European leaders shifted to tougher 2030 carbon emission goals which will drive a notable increase in renewable energy investment. Neoen, (+23.67% in the month) the French listed renewable energy group, and the fund’s largest position, and Voltalia (+32.02%) French, also renewable energy. both rose sharply to reflect this improved outlook. Interpump, the Italian listed industrial equipment group, and a long time holding on the fund, also produced a strong return as investor focus shifted to the more cyclical sectors. The most significant detractor on the fund was AMS AG (-16.55%), the Austrian semiconductor group, which suffered following a negative rumour regarding a large client order. After speaking with the company, we remain convinced of the mid-term growth story and continue to back the management.

 

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We thank you for 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.

During November the Columbus Fund rose by 13.1%, slightly behind the 13.5% increase in the MSCI Mid Cap and 13.8% in the STOXX 600. Over the past six months the Fund has risen by 17.7%, and by +60.31% since the market’s low on March 18th. Year to date Columbus is also comfortably back into positive territory with a return of 1.7%, ahead of the -1.6% decline in the MSCI Mid Cap index and ahead of the -5.8% fall for the STOXX 600. Since inception in June 2008, Columbus’ return has been 121%, comfortably exceeding the broad European equity index.

Going into November most market commentators were focused on the US elections and the potential for instability in the case of a contested outcome. Despite this playing out as many had feared, the period of uncertainty had little or no impact on financial markets and by the end of the month the transition to a Democrat Party presidency had officially begun. For financial markets this news was overshadowed by the raft of positive vaccine news that came out during the month. Earlier in the year there had been genuine scepticism around whether a vaccine could be found at all, and any success being likely 18-24 months away. In this context it is easy to understand the very positive market response to 3 different vaccines being announced in such a short space of time. Clearly a remarkable achievement from the healthcare sector and demonstrates yet again the amazing achievements possible when the human race is faced with a problem. The travel and leisure, retail and even oil and gas sectors which had lagged over the year, rose sharply as investors looked beyond the current lock-downs towards a hopefully more normal 2021.

While there were no new positions started in November, however, we did finish acquiring our new holding in Zooplus, the German listed online pet supplies retailer. The group is the leading ecommerce petfood retailer in Europe with just over 50% of the online market. They sell into 30 countries across the region through two online brands, Zooplus and Bitiba and have shown consistently strong revenue growth. Customer retention rates are high with 91% of sales recurring, but with only ~15% of petfood sales currently online they have considerable scope for further expansion. The recent pandemic is likely to have been a positive environment for the group with both pet ownership and online shopping penetration having risen throughout.

The strongest contributions to performance in the month unsurprisingly coming from some of the more cyclically sensitive holdings. Akka Technology (French listed, engineering consultancy), Edenred (French, business services) and Fraport (German airport operator). We added Fraport to the fund in the early period of the pandemic when the valuation had collapsed in-line with air traffic. In our view the market was taking a very short term perspective towards a key asset in the European transport network which is virtually irreplaceable. Even after the very strong returns we have seen so far there remains significant further upside for the stock to regain the level of trading from before Covid. The most significant detractors, by contrast, were Rentokil (UK listed, pest control) and YouGov (UK, media services), both of which had outperformed in the period before the vaccines were announced and likely suffered some profit taking as investors raced towards the more cyclical sectors.

 

Download monthly factsheet

We thank you for 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. 

We passed an important milestone earlier this week as Columbus European MidCap Equity Fund (I2-B) returned to a positive absolute performance for 2020 – something that seemed a distant prospect in the dark days of March and April when the Coronavirus first exploded onto the scene. At this stage European Markets still remain in negative territory while Columbus is back to positive return year to date, after it has risen by +24.39% over the last since 6 months, and by +58.55% since the market’s low on March 18th. Over the last 12 months the performance is +4.60%

Our attention to valuation led us to a relatively large cash position before the pandemic struck so we were well placed to capitalise on the weakness through March and April and were then fully invested while markets recovered. The weakness also provided an opportunity to add a couple of new names to the fund that we had been monitoring for some time in the infrastructure sector. As our investors know, our aim is not to time the market, but we do try to take advantage of opportunities when they present themselves – always with a focus on the long term.

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.

During October, the Columbus Fund declined by -3.06%, comparing favourably to the -3.62% fall in the MSCI Mid Cap and -5.3% in the STOXX 600. Over the past six months the Fund has risen by +7.84%, and by +41.71% since the market’s low on March 18th. Over the year to date Columbus has also fared relatively well with a fall of -10.1%, beating the closest benchmarks which range from -13% for the MSCI Mid Cap to -32.4% for the Ibex. Since inception in June 2008, Columbus’ return has been 97.3%, far exceeding European equity indices.

European equities largely traded sideways over the month against a backdrop of slightly weaker consumer confidence and a contracting PMI across much of the region. Headlines were once again dominated by Covid 19 as signs of a seasonal rise in cases led to renewed lockdowns in many European countries. The continued government furlough support across many European countries has helped to alleviate the short-term suffering of many workers but has been insufficient to prevent the eurozone unemployment rate form rising above 8%. While clearly necessary to support the many businesses affected by the government lockdowns, the increased debt will be a burden for a long time to come. Given that the result of the US presidential election remained uncertain it is unsurprising that equity markets experienced some weakness during the month.

October and November see the bulk of our third quarter reporting period and gives us a timely update of the operational performances of many of our holdings, as well as related businesses such as competitors or suppliers. Thus far the reports have been largely unsurprising with most companies still cautious regarding the near-term outlook. The unknown duration and further impact of the Coronavirus make forecasting more than usually difficult and so many firms are being purposely vague. What is clear, however, is how much has been achieved over the past months in terms of restructuring and efficiency gains to protect earnings and cash flow. In many cases the achievements are underappreciated by investors in terms of the additional workload and pressures endured across most businesses. Reviewing the relative performances within similar industries gives additional insight into the flexibility and strengths of the different business models. While none of this is to be actively desired it is incrementally useful information for assessing our convictions.

As mentioned in last month’s commentary we took the proceeds of the sale of long term holding in Ingenico and invested in a few new positions. One of these is VGP. VGP is a company we have followed for a long time and took this opportunity to add it to the fund. This Belgian listed company builds and, in some cases, operates logistics centres for industrial and retail clients in 12 countries across Europe. Still led by the founder, Jan Van Geet, the company has grown steadily from nothing to a market cap of €2.5bn over the past 22 years. Their process is consistent and proven to be highly repeatable. Although a real estate business, the company is not a REIT as they reinvest continually for growth rather than paying out to shareholders (but still providing an attractive dividend yield above 2%). A clever joint venture structure with Allianz means that they can quickly crystalise the value of newly built assets and effectively redeploy the capital. The recent acceleration in ecommerce can only be helpful to them over the coming years.

The strongest contributions to performance in the month came from Bodycote (UK listed, industrial heat treatment) and Edenred (French, business services). Edenred stood out for producing better than expected revenues during the third quarter, again demonstrating the strength of the business model. The most significant detractors, by contrast, were the software companies Avast (UK listed, security software) and Software AG (German, business software) which suffered a malware attack during the month.

 

Download monthly factsheet

We thank you for 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. 

Generally speaking, we are used to things getting better. Obviously the current pandemic is a (hopefully) temporary break in that trend, but it does not alter the fact. Life expectancy, infant mortality, quality of life, access to communication and other services are all on a generally improving line. From a global perspective, in most measurable ways there has never been a better time to be alive. This is true for us humans, but almost completely untrue for every other species on the planet.  Our trend of rising prosperity brings increased consumerism, which demands the production of ever greater quantities of goods. Not only do we want more but there are more of us to want it and as our population grows the sad corollary is that the population of every other living thing declines. As China’s failed one child policy has shown us there is no absolutist solution to population control so we must deal with this trend as effectively as we can by using innovation, improving education and applying common sense strategies in our own lives while encouraging others to do the same. Reuse, recycle, mend and maintain; think twice before buying that item wrapped in plastic; invest in ESG.

Invest in ESG – but what does that really mean? In a recent discussion with a young lady just beginning her working career we got onto the topic of ESG investing. Like most people of her generation she was (rightly) strongly supportive of the concept and made sure that her investments went into suitably labelled funds. However, beyond a broad wish to make a positive contribution with her money she was understandably vague about the sorts of companies that she would ultimately like to be invested in.

Somewhat mischievously I asked her ‘ how about an industrial heat treatment business?’ and she winced. This would be a common response I suspect yet highlights one of my concerns about the shallow thinking behind much of the investment into ESG in general.

The industrial heat treatment business in question is Bodycote Plc. This is an example of a high-quality UK based engineering company, founded between the wars in Leicestershire but which only entered the heat treatment business in the late 1970s. The company has a strong tradition of innovation and has grown organically and through acquisition to be a leading player in the industry. Unsurprisingly heat treatment is not something many people think about but is an essential process in many mechanised industries. The process dramatically improves hardness and thus durability. It significantly extends the life of mechanical components as well as allowing them to be smaller and lighter. Gears, bearings, cutting tools, fasteners and many other applications rely on this process. Without it, engines and turbines would be less efficient and require more maintenance, drive shafts and components would be heavier requiring more energy – more petrol or wiggly-amps in your car. So while the process of heat treatment is itself energy consumptive, it more than makes up for this in the energy it saves over the lifetimes of the components it creates. Wind turbines, for example, would not be viable without the process of heat treatment.

Bodycote is an example of a company whose operations are not obviously helping to reduce our environmental impact yet are clearly contributing behind the scenes. It is the contribution made by these somewhat hidden, second tier businesses which needs to be better understood by environmentally conscious investors. Like many industrial companies Bodycote has made mistakes which have led to brushes with environmental agencies and there is clearly room for improvement in their practices. But companies are ultimately beholden to their shareholders and active investors have a key role here to engage with the management and push them in a positive direction. “Responsible’ funds which avoid companies in essential industries like this and starve them of capital will not help in the joined-up process of reducing global emissions. There are many examples of industrial companies who devote enormous sums into research and development to drive efficiency gains such as better conductors for electricity distribution, improved lubricants to extend product lives and reduce energy loss, and new compound materials reducing weight without compromising strength. They play a vital role in helping to achieve the global CO2 emissions targets but get little public recognition.

Bodycote is a longer term holding for the Columbus Fund and is a great example of a well managed champion in its niche with considerable longer-term growth potential. They have consistently improved their internal carbon efficiency and water usage and are getting better at providing information across a number of  environmental indicators. On top of this the stock offers an attractive and growing dividend sourced from consistent cash flow generation with a conservatively managed balance sheet and a mid-teens return on investment.

Investing wisely for a better environmental future is essential – but let’s remember to look beyond the headlines.

Graeme Bencke

 

Photo – Bodycote Annual Report