Chinese brand companies with good first quarter
In the first quarter, the Chinese brand fund „MCVM China Brands Fonds“ remained very stable in a turbulent environment, closing the quarter at -0.29% /(i) and -0.41% (r) respectively. After a strong year 2017 with a performance of +44.14% (i) / +43.56(r), the fund management is very satisfied in view of the turbulent environment. The published company results, as well as the prospects and economic data of China, give us a positive view of the future. The presence of Chinese brands in Europe is also becoming increasingly visible. Football fans will have noticed at many stadiums that more and more companies are willing to accept higher advertising expenses to promote their brand. This brings us closer to the Chinese goal of creating world-famous brands like Hyundai and Samsung in Korea.
Huawei as a mobile phone manufacturer is already well known to many people. Especially in the technology sector, most brands are emerging with strong growth (currently still predominantly in China and Asia). Analysts expect the big 3 (Tencent, Alibaba and Baidu) to increase their profits from currently USD 26 billion to just under USD 54 billion in 2020. Considering these growth rates, the profitability of companies and current valuations, we still see some potential for the equity investor.
And not only the technology companies have developed well, but also companies such as China International Travel, Kweichow Moutai, China Mengniu Dairy and Tong Ren Tang have developed very well. Also, according to the latest studies, some promising new companies have made it into the top 100 of the most valuable Chinese brands. Further information on the MCVM China Brands Fund is available at www.mcvmfonds.com
The global brand fund MCVM Global Brands unfortunately closed the first quarter less buoyantly, but the fund management is quite satisfied with the development in the difficult environment. Towards the end of the quarter, the discussion about market power among the large technology companies and the data scandal on Facebook were added. This has again had a somewhat negative effect, as these companies in particular are of course among the larger companies in the fund due to their strong brand position. Nevertheless, companies such as Apple, Electronic Arts, Netflix, Nike, Adidas and Hermes performed very well in the first quarter. Some companies have also made it into the top 100 of the world's strongest brands. For further information on the MCVM Global Brands Fund, please visit www.mcvmfonds.com
At MCVM Base Strategy Funds the first quarter of 2018 was unspectacular. The stock options were partly offset by our option strategy, but unfortunately there was a loss of XX% in the quarter due to the delta of options. We deliberately take this risk with the fund, which makes it too expensive to pull options on the current price basis, for example on a monthly basis.
This means that the fund is unfortunately included the first percentage points in a stock market decline, but is well protected against very strong fluctuations. Some of the options are currently in the money and have a high delta, which would have a positive effect on further developments. With rising markets, the advantage for investors is that they can also participate to a greater extent as a result of the almost unchanged proportion of equities. For further information on the MCVM Basic Strategy Fund, please visit www.mcvm-strategiefonds.de