The Altrinsic Global Equity portfolio gained 2.7% during the second quarter. By comparison, both the MSCI World and ACWI indices increased 1.0% as measured in U.S. dollars. Stock-specific factors were the primary sources of outperformance amidst an eventful macro backdrop. During the quarter, British citizens voted to leave the European Union, concerns about the European banking system intensified, Middle East unrest spread to distant lands, and the yields on U.S.
A transition appears to be underway. Global equity markets have delivered above-normal returns during the last seven years with low volatility and few lasting setbacks, but we may have entered a new environment characterized by more normal returns albeit with much greater volatility. The first quarter was reflective of this increase in volatility, as a 12% rally in the MSCI World Index during the second half of the quarter tempered anxieties that emerged during the 13% dip in the first half, as measured in local currency terms.
Global equity market returns were relatively flat for the year, measured in local currency, but this result masked the significant dispersion in performance among stock, bond, currency, and commodity markets. These muddling markets appear to be increasingly recognizing fragile underlying fundamentals including lingering global imbalances, eroding confidence in policymakers, a slowing Chinese economy, intensifying geopolitical risks, and the vulnerability of U.S. corporate profit margins.
The third quarter was particularly challenging given the broad-based nature of the selloff across
asset classes. Global equity markets declined 8.4% and 9.4% as measured by the MSCI World
and MSCI All Country World indices, respectively as measured in U.S. dollars. This weakness
was largely precipitated by a pair of factors, namely mounting concerns about China’s growth
rate and the credibility of policymakers’ efforts to revitalize economies globally. The Altrinsic
Global equity market returns were relatively flat for the year, measured in local currency, but this result masked the significant dispersion in performance among stock, bond, currency, and commodity markets as illustrated in Figure 1. These muddling markets appear to be increasingly recognizing fragile underlying fundamentals including lingering global imbalances, eroding confidence in policymakers, a slowing Chinese economy, intensifying geopolitical risks, and the vulnerability of U.S. corporate profit margins.
The Altrinsic Global Equity portfolio gained 2.0% during the second quarter, outperforming a 0.3% return by the MSCI World and MSCI All Country World indices as measured in U.S. dollars. Strong mergers and acquisitions activity involving our holdings, efforts to unlock value via prudent capital management (e.g., dividends, buybacks, divestitures), and growing evidence of positive change in Japanese corporate behavior contributed to outperformance during the quarter.
The Altrinsic Global Equity portfolio gained 4.3% during the quarter, outperforming the 2.3% gain by the MSCI World and MSCI All Country World indices as measured in U.S. dollars. Strong absolute and relative performance was led by our Japanese holdings. A combination of company-specific initiatives along with Prime Minister Abe’s aggressive macroeconomic policies boosted profits and share prices.
