WITH THE volatility on world equity markets this summer, now is not the ideal environment for the participants in the Rehab Great Investment Race to be making a substantial return for their charity.
Nonetheless, the five participants in the competition – who between them have €500,000 to invest on behalf of Rehab – collectively managed to make a small return in July, boosting the overall value of the fund to €542,364 from €538, 861 the previous month.
July was a difficult and volatile month for markets. Renewed concern about Greece during July, coupled with disappointing jobs data and GDP forecasts from the US, meant that global equities spent most of July in the red, against a background of risk-aversion.
Nonetheless, there were some impressive performances from some players in the Rehab Race.
Merrion Investment Managers was by far the best performer, solidifying its position at the front of the pack with a 6.1 per cent advance last month and increasing the distance between it and second-placed participant, Irish Life Investment Managers (ILIM), which notched up by 0.8 per cent on the month.
The key to Merrion’s success was activity in two stocks, with the fund making a substantial gain through its exposure to Norse Energy Corp, a Norwegian-quoted oil and gas exploration and production company, and a negative beta Dow Jones Eurostoxx 50 exchange traded fund. The strong advance in July, which was achieved despite the broad equity market falling an estimated 0.9 per cent, brought Merrion Investment Managers’ total return to date to 39.1 per cent.
ILIM maintained its position, both in terms of its performance in July, and its overall performance to date. The fund, which mainly focuses on Irish and UK equities, returned 0.8 per cent on the month.
Like Merrion, ILIM traded an exchange-traded fund during the month, the Lyxor Banks ETF, taking advantage of a rebound in financials during the month. It also bought and sold Bank of Ireland following the successful completion of the bank’s rights issue.
The Rehab team succeeded in keeping its head above water in July, ending the month flat. Its 0 per cent return on the month left it in third place in July, but still in fourth place overall.
Fund manager Frank O’Brien maintained a passive approach, holding on to big names Tesco, CRH and Uniliver during the month, a strategy that paid off in light of the negative background for equities.
Kleinwort Benson Investors came in at fourth place in July, but still remains third place overall.
The fund, which has returned 7.4 per cent in total to date, lost 1.5 per cent in July.
According to fund manager Noel O’ Halloran, individual stock performances were volatile in line with the market.
Some of the names that lost ground during the month were US technology company Itron which was down 22 per cent, while Irish Continental Group fell 11 per cent, perhaps reflecting speculation during the month that One Fifty One may place their holding in the company.
However, the falls were offset by some positives, with Canadian listed potash fertilizer company Potash, which raised its outlook in July, a strong performer. Swiss based crop protection company Syngenta, which also issued a positive second half outlook in July, was up 14 per cent on the month.
AIB Investment Managers maintained its position at the bottom of the table, losing 5.2 per cent in July, as the fund continued to be hit by its focus on Japanese equities, including Hitachi and Toyota.
Overall, as the race enters its final quarter for this year, four out of the five names are now in positive territory, with the total value of the fund up 8.5 per cent since the race began last November.
