October, 2020
The international stock selection strategy was flat for the month. Positive performance from Quality and Sentiment insight groups were offset by Momentum, Cross Border Thematics and Relative Valuation insights. In a similar vein, good performance in Europe and small positive in Asia, was offset by poor performance in the US. Financials (overweights in banks and insurers) and Information Technology (overweights in IT services) in the US were the main source of underperformance, with gains from US Industrials. The strategy also did well through overweights in Communication Services across all regions, with overweights in European and US Consumer Staples adding, as did Health care and Information Technology in Europe.
Positive contributors to performance included overweight positions in Skechers and Colgate-Palmolive.
- Skechers – The US lifestyle and footwear company posted better than expected Q3 earnings, with a strong bounce back after a tough Q2, driven by improved sales across several regions. The overweight position was a result of favourable Momentum, Quality and Valuation insights.
-Colgate-Palmolive – The household name reported double-digit increased in operating profit, net income and earnings per share, beating expectations with management increasingly confident, to the point of providing annual guidance. The overweight position was driven by favourable Sentiment, and Valuation insights. Detractors from performance included overweight positions in Mastercard and East Japan Railway.
-Mastercard – Global payments firm Mastercard reported declining revenue over Q3 as the impact of the pandemic lingered, especially with lower cross-border (international travel related) volumes. The overweight position was driven by positive Quality, Cross-Border Thematics and Sentiment insights.
-East Japan Railway – The railway operator has continued to face headwinds after posting its first operating and net losses since 1987, with revenues for the last 6 months -48.2% lower. The modest overweight position was a result of positive Sentiment and Valuation insights
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/blackrock-advantage-international-equity-fund-fund-update-en-au-2.pdfAugust, 2020
The international stock selection strategy had a very positive month in both absolute terms and relative to its benchmark. Sentiment and Momentum signals that did well, along with Cross-Border Thematics, whilst Fundamentals were not rewarded, as both Valuation and Quality insights detracted, Most of the performance came from Momentum and Cross Border Thematics in the US even though these insights were generally weak in Europe. Looking at sectors, overweights Information Technology and Consumer Discretionary in North America contributed positively to performance. Healthcare in Europe and North America also did well. Conversely, Consumer Staples in Europe was generally weak due to overweights in beverages names.
Overall
Consumer Discretionary, Information Technology, Healthcare and Materials contributed while Financials and Industrials detracted the most. Positive contributors to performance included overweight positions in Salesforce and Gap. Salesforce – American customer software firm Salesforce reported its latest quarterly results well above market expectations and provided strong forward guidance as more businesses continue to reach out to their clients through digital means. The overweight position was due to favourable views across most insight groups, especially Cross Border Thematics, Quality and Sentiment. Gap – American apparel giant Gap’s share price rallied after investors realised the strong growth potential for the company’s athletic brand, Athleta, recently valued at over $3billion. The overweight position was driven by favourable Momentum and Quality insights. Detractors from performance included overweight positions in American Tower Corp and Diageo. American Tower Corp – American Communication Services Reits missed market expectations with its latest results, blaming a decline in revenues in its property segment in Asia and Latin America. The overweight position resulted from positive views on Sentiment, Cross Border Thematics, and Momentum. Diageo – British beer and spirits producer Diageo has been struggling with the closure of bars, restaurants and clubs during the pandemic. Despite an increase in at home consumption, volumes are likely to remain low for the rest of the year. The overweight position was a result of favourable Sentiment, Cross Border Thematics, and Momentum insights.
ticker: BAR0817AU
commentary_block: Array
factsheet_url:
asset_class: Foreign Equity
asset_category: Large Blend - Quantitative
peer_benchmark: Foreign Equity - Large Quantitative Index
broad_market_index: Developed -World Index
structure: Managed Fund