Investment Manager’ Commentary
IGF grew by 0.5% in August. The local portfolio contributed positively to performance during the month whereas the foreign portfolio was a drag to returns.
In Mauritius, the SEMTRI strengthened by a further 3.5% in August, bringing its calendar YTD return to +4.0%. Hotel stocks posted compelling gains, with the share prices of LUX Island Resorts (IGF’s second largest holding locally), SUN and NMH increasing by 18%, 23% and 35% respectively. Other major gainers in IGF’s local portfolio included Alteo (+25%) and The Bee Equity Partners (+46%). On the local fixed income side, yields continued to weaken, though by more modest amounts compared to the drops observed in July. In terms of portfolio changes, IGF topped up its position in VIVO Energy and MUA during the period. The fund’s private equity investment into Datanalysis Ltd, a Mauritian data specialist firm with a Reunion-centric client base, was completed in August.
Internationally, August saw Fitch downgrade the long-term credit rating of the United States from AAA to AA+, citing an expected deterioration of fiscal conditions as well as an erosion of governance as seen through the repeated debt limit standoffs and last-minute resolutions. The month was also marked by the annual Jackson Hole Symposium where the FED re-iterated its commitment to reining in inflation. The US 10-year yield reached a 15-year high of 4.3% during the month before subsequently cooling off. Against this background, foreign equities and bonds exhibited a fair amount of volatility during the period under review, selling off during the first part of the month and partially recovering in the second half. The MSCI All Country World Index ended August in the red with -2.8%. Developed markets (-2.4%) held up better compared to Emerging Markets (-6.2%) which were pulled down by the heightened focus on China’s property and banking sector challenges. The Bloomberg Global Aggregate Bond Index, on its end, shed 1.4% during the month. On the trading front, IGF conservatively exited its position in Chinese fixed income in August and topped up its position in gold.
On a brighter note, we highlight that the calendar YTD and 1Y return of IGF stood at 6.9% and 6.4% respectively as at 31st August 2023.
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