Fund Update: LO Funds - Eurozone Small & Mid Caps P A

Investment Universe, Process, Strategy and Benchmark – How does the Fund Manager invest? (ISIN: LU0256787531)

Universe: European Small and Mid Caps, excluding the UK
Objective: Outperformance of the FT Mid Cap Europe ex-UK TR
Investment approach:
- Fundamental stock-picking, supported by numerous company meeting and strong proprietary screening model
- Firmly believe in companies with strong competitive position (product or market) and consistent growth
Key Portfolio characteristics:
- Long-only portfolio of 60 to 100 stocks
- Strong focus on liquidity: 94% of the fund could be liquidated in less than 5 days
- No position above 3% of the total assets nor more than 5% in the float of any stock
- Outperformance generation derives mostly from stock selection (80%), whilst industry selection and country selection each account for 10%
Investment Process

1/ Research & screening
Two sources of investment ideas:

Screen the investment universe through quant screening
Meet as many companies as we can regardless of ranking to remain opportunistic

2/ Analysis & valuation
The investment case has to go through:

A fundamental analysis: valuation, balance sheet quality, growth, quality of management, competition structure, etc.
A proprietary price target based on average of PE, EV / EBIT, and DCF

3/ Portfolio construction
Portfolio construction aims at:

Selecting high conviction stocks
Focus on liquid names

Risk management
Risk is controlled through 3 lines of defense:

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Responsible Investing Report 2019

Verantwortungsbewusstes Investieren bildet den Kern unserer Anlageprinzipien. Unser RI Report erklärt die Philosophie hinter unserem Ansatz. Er zeigt, wie wir investieren und dafür sorgen, dass die uns anvertrauten Gelder wirklich etwas bewirken.

Lesen Sie unseren Bericht für 2019

Instrument selection, sizing constraints
Stop losses per individual name
Stop loss at the portfolio level

Performance Review 2007

Xavier Lagrandie and Michel Leblanc: "- Outstanding performance (around 9%): fund was positive while benchmark was negative => good sectors selection + stock picking in the fund
- strong positive contribution from overweight in Industrials and IT sectors
- exposure to cyclical stocks which outperformed the defensives ones especially in the first semester
- underperformed in consumer staples and healthcare."

Performance Review 2008

Xavier Lagrandie and Michel Leblanc: "- Good stock picking for IT whereas stock selection for Materials and Consumer discretionary had a negative impact
- Overweight in Industrials vs. underweight in Financials sector paid off, respectively +2% and +1.5%
- France and Germany exposure was well rewarded while Switzerland contribution was significantly negative (currency effect + stock selection) around -2%."

Performance Review 2009

Xavier Lagrandie and Michel Leblanc: "- Overweight in Industrials definitely paid off thanks to good stock picking / Same scenario for Materials and Energy sectors very good stock selection
- Strong negative impact with our overweight in IT combined with poor stock picking compared to the benchmark / same for consumer staples
- underweight in Italy and overweight in Switzerland vs. the benchmark had a positive impact while underweight in Sweden stocks was unfavourable." (ISIN: LU0256787531)

Performance Review 2010

Xavier Lagrandie and Michel Leblanc: "Fund outperformed +33%
- Top 3 sectors : Industrials, Consumer Discretionary and Materials highly outperformed
- Overweight in Industrials paid off
- Outstanding stock picking especially in Financials and Consumer Discretionary + underweight in financials paid off
- Negative currency effect due to underweight in Sweden."

Performance Review 2011

Xavier Lagrandie and Michel Leblanc: "- Good stock selection in Materials sector which underperformed in the overall market
- poor stock picking in Industrials and Consumer staples sectors
- underweight Swedish match position was negative."

Performance 2012 - Year-to-Date

Xavier Lagrandie and Michel Leblanc: "- Strong underweight in financials + good stock selection pay off
- Good stock picking in industrial sector vs. poor stock selection in consumer staples and discretionary
- Underweight in Spain and overweight in Switzerland => positive contribution to the fund’s performance."

Performance since 2007

Xavier Lagrandie and Michel Leblanc: "Over the period since 2007, the relative performance of the fund is favourable and promising in a very volatile situation knowing that 2008 was a very difficult year for the market.
Neutral positioning vs. benchmark + cash slightly high in average => safe behaviour."

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