SEARCH A FUND

1st quarter 2023

Strategy Update

BL American Small & Mid Caps aims to gain exposure to the most dynamic segment of the US equity market by constructing a concentrated portfolio of high quality growth companies with a market capitalisation of less than 30 billion USD.

The manager distinguishes between mid-cap companies (7.5 billion to 30 billion USD) and small caps (500 million to 7.55 billion USD).

By combining companies with growth potential (‘Growing Franchise ') with companies with more stable profiles (’ Consistent Earners'), he is able to build a portfolio with long-term attractive risk-return characteristics and reduce volatility in the portfolio.

Positioning and Recent Developments

At the end of March 2023, BL American Small & Mid Caps was invested in 45 individual stocks, with the top 10 representing 31.8% of the portfolio.
The Fund held 1.5% in cash.

Reflecting the Business-Like Investing methodology, sector allocation is focused towards IT, Industry, Health Care, Consumer Discretionary and Consumer Staples. Conversely, the Financials sector remains underweighted, with no banking stocks. The Real Estate, Utilities and Energy sectors are absent.

Graphique

In terms of market capitalisation, approximately 3/4 of the Fund's assets are invested in mid-cap stocks.

Graphique

The Fund Manager made few changes to the portfolio during the quarter. No new stocks were added to the portfolio. In March, he sold Lancaster Colony on valuation grounds as the stock performed strongly; and Advanced Auto Parts, one of the portfolio's few ‘value 'stocks, was sold due to operational inefficiencies. Unfortunately, the company has not been able to achieve sustainable revenue growth on a like for like basis or improve margins as the Fund Manager anticipatef.

Performance

Note : Performance data net of fees in USD. Past performance is not a guide to future performance. References to a market index or peer group are made for comparison purposes only; the market index is not mentioned in the investment policy of the sub fund.
Source: BLI/Lipper. Data as of 31 March 2022.
3 months 1 year 3 years Since inception (16/11/2015)
Fund +7,1% -0,6% 66,7% 129,8%
MSCI US Small + Mid NR USD +2,7% -10,2% 72,6% 91,0%

This was a quarter that will be written into the textbooks and studied for years. The second and third largest bank failures in history did not stop the Fed from continuing to raise rates in efforts to curb what has become a prolonged inflation problem. It has not been an easy ride for investors as headline risks and volatility swings have shaken markets. Investors favored large- over small-caps and Growth over Value with Technology as best and Financials as worst performers.

Over the quarter, not surprisingly, the lack of investments in banking stocks benefited the portfolio as March was marked by the failure of several major US banks. The absence of Energy, Real Estate and Utilities and the overweight in IT also contributed to the Fund's relative performance over the period. Conversely, the overweighting in Health Care and Consumer Staples slightly penalised the portfolio.

Among the main individual contributions, we can highlight the positive impact generated by a number of technology (Ansys, Littelfuse, CDW) and Industry (SiteOne Landscape Supply and Watsco) stocks. In the Financials sector, MSCI also brought positive contribution. On the negative side, we note several stocks from the Health Care sector (Globus Medical, Waters Corp, Insulet) as well as Domino's Pizza (Consumer Discretionary) and Nordson (Industrials).

Legal notice

This is a marketing document strictly for information purposes. It refers directly to one or more financial products (the "Financial Product"). The economic and financial information contained in this publication is provided solely for information purposes based on data known at the date of publication. This information does not constitute investment advice or a recommendation to invest, nor should it be construed under any circumstances as legal or tax advice. No guarantee is given as to the accuracy, reliability, recency or completeness of this information.

BLI- Banque de Luxembourg Investments ("BLI") draws the attention of every recipient of this document to the need to apply the utmost caution when using any information relating to a Financial Product, in particular data relating to the performance of this Financial Product:
• Where applicable, any scenarios relating to future performance presented in this document are an estimate of future performance based on past data relating to the stocks held by the Financial Product and/or current conditions. They are not an exact indicator and other factors relating to market developments and the length of time the Financial Product is held should be considered.
• Likewise, the past performance of the Financial Product is no guarantee of the future results of the Financial Product.

In general, BLI does not assume any responsibility for the future returns of these Financial Products and shall not be liable for any decision that an investor may make on the basis of this information. Interested parties should ensure that they understand all the risks inherent in their investment decisions and should refrain from investing until they have carefully assessed, in collaboration with their own advisers, the suitability of their investments for their specific financial situation, especially with regard to legal, tax and accounting aspects.
Furthermore, they must take into account all the characteristics and objectives of the Financial Product, in particular where it refers to sustainability aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services.

Subscriptions are only permitted on the basis of the current prospectus, the latest annual or semi-annual report and the Key Information Document (KID) (the “Documents”). The Documents may be obtained free of charge from BLI at any time. All the Documents, including the sustainability information, are available on BLI's website: www.bli.lu

Any reproduction of this document is subject to the prior written consent of BLI.

Specific Information concerning MSCI Data:
All MSCI data is provided “as is”. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the result to be obtained by the use thereof) and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

Specific Information concerning GICS Data:
The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed to use by Banque de Luxembourg S.A.. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if noticed of the possibility of such damages.