April 2023

In the wake of the first quarter, April ended on a positive note for the equity markets (European indices up around 1%).

However, investors are still faced with the same challenges that have been on people’s minds for over a year: the return of inflation and geopolitical unrest. Successive rate hikes by central banks to curb inflation have claimed their first tangible victims: Silicon Valley Bank, Signature Bank and First Republic Bank in the US and Credit Suisse in Europe. More generally, the end of the «free lunch» is hindering the return to a sustained growth rate with a lending market that is both more expensive and more cautious.

This lack of visibility on the recovery of the cycle and on the end of the conflict in Ukraine is dampening expectations of gains on the stock markets, whose gains in April were concentrated on defensive stocks such as health, luxury goods, retail and utilities in Europe, and consumer and health care in the United States. In addition, bonds are now an alternative for investors with an inverted yield curve that allows for returns of around 3-4% over 3-4 years on quality European bonds.
With this in mind, Clartan Patrimoine has sought to rebalance its portfolio by reducing the proportion invested in equities in favour of the bond portfolio. In addition to this flexibility, which is dictated by the wait-and-see attitude of the economy, quality remains a key criterion in the choice of shares: companies with a solid balance sheet and a sustainable competitive advantage. The example of Nestlé illustrates this ability to withstand headwinds: its latest release shows organic growth of over 9% in the first quarter of 2023 despite very slightly lower sales volumes; this reflects its ability to «manage inflationary pressures». What some people denounce as «greedflation» shows that the Vevey-based group is rewarded by its strategy of favouring high value-added products.

Our «Quality & Value» management approach is in sync with this strategy; finally, the sub-funds of the Clartan SICAV were all up during the month of April.