IT WAS a disappointing start to the year for the Rehab Great Investment Race, with only two of the five teams making advances in January, despite the strong performance of equity markets generally.
While events in Egypt and concern about the risk of accelerating inflation on the back of rising oil and commodity prices weighed on market sentiment, in general January was a strong month for equity markets. The SP 500 Index gained 2.37 per cent in the month, its fifth straight monthly gain and its strongest start of a year since 2006, while the MSCI World Index rose by 7.2 per cent and the MSCI Emerging Markets Index increased by 7 per cent.
The Rehab Investment race – which sees five investor teams invest €100,000 in equity markets with the aim of raising money for Rehab – failed to benefit from the strong market performance in January. While the fund is still in positive territory, it lost most of the gains posted in December, with the combined value of the fund standing at €538,784 on January 31st, compared to €550,565 at the end of December. Two of the five teams – AIB Investment Managers, and the Rehab team – are now in negative territory, with the value of their fund standing below the initial investment of €100,000.
Nonetheless, there were strong performances in the month. Merrion Investment Managers, which has been a consistently strong performer since the charity investment race kicked off in November, continued to shine, advancing 4.3 per cent in the month, bringing its total return to date to 32.2 per cent.
According to Alex Kinsella of Merrion Investment Managers, Irish airline Aer Lingus and Dutch logistic company TNT were the two largest contributors to the portfolio’s performance in January, with Aer Lingus up 4.1 per cent on the month, and TNT up 6.9 per cent. “We invested in Aer Lingus late in January and sold three quarters of the holding before the end of the month at a gain of 4.1 per cent, while we invested in TNT late in December and sold it mid-way through January at a gain of 6.9 per cent.”
The best performing position during the month was the Norwegian gas transport company Golar LNG Energy, which delivered a return of 13.1 per cent.
Irish Life Investment Managers maintained its position in second place, posting a small positive gain of 0.4 per cent, bringing its overall return to date to 7.6 per cent. The fund made a loss on ITT which it sold in the middle of the month, according to fund manager Seamus Magner, though it made an extremely good profit on Irish name Norkom.
January saw a sharp reversal in fortune for KBC Investment Managers. While it still maintains its third-place position in the race, the fund finished bottom of the race in January, losing 8.3 per cent in the month. The losses were due to the strong underperformance of one holding, China Valve Technology, which was down 20 per cent.
Rehab’s own team, which got off to a slow start for the first two months of the investment race, moved up to fourth position in the overall race last month. Though it lost 1.8 per cent in January, its performance was third in rank in the month. The improved performance was down to a relatively strong performance by Royal Dutch Shell and Next.
AIB Investment Managers, which focuses on emerging markets names, maintained its position at the bottom of the table in terms of overall performance, although it was in fourth place in terms of performance last month. The fund’s lack of exposure to the euro meant it failed to benefit from the strong performance of the single currency in January.
Japanese names such as Hitachi Construction and Toyoto Tsusho were bought and sold during the month, with the fund making losses on auto supplier Musahi Seimitsu.
