Time in the market beats timing the market
What we watched last month
In March, many markets reached new all-time highs, among them for example in the USA the S&P 500 and Nasdaq 100 Indices, while in Europe the Stoxx 600 Index reached 500 points for the first time. Gold and Bitcoin reached new record highs, Cocoa doubled since the start of 2024, while on the other hand prices for CO2 emission rights (Carbon Futures) hit the lowest level since the end of 2021. Money Market Fund assets hit new records as well, as higher inflation is seen as the biggest tail risk according to a prominent fund manager survey.
Most inflation data, especially in the US, came in hotter than expected, so it was a certain relief that the FED held interest rates steady and signalled that it still plans multiple cuts before the end of this year. While at the start of the year, many people expected 7 or even more rate cuts, markets currently price in less than three FED rate cuts in 2024, and asset manager Vanguard said that it does not believe the FED will cut rates at all this year. The Swiss National Bank SNB cut interest rates by 0.25% while the Bank of Japan raised rates to the policy range of 0% to 0.1%, the first such rate hike in over a decade (and as a result of that, the yen slid to the lowest level versus the dollar in 34 years).
Volatility wise, the VIX index has averaged 13.7 thus far this year, which is well below the historical average of 19.5.
What happened in the fund last month
Among others, D’Ieteren and Amplifon announced record results.
D’Ieteren is a holding company, and its most important growth engine has been a company called Belron. While this name may not be very well-known, its brands include Autoglass in the UK, Ireland and Poland, and Carglass in most of Europe. Belron brands repair and replace damaged vehicle glass, and these jobs are getting more and more complicated, as 36% of windscreen replacement jobs included a recalibration of ADAS (advanced driver assistance systems). Last year, Belron’s sales increased by 9% organically. In addition to that, another division of the company is D’Ieteren Automotive, which has a net market share in Belgium of 24.2%. The company imports and distributes Volkswagen, Audi, Skoda, Seat, Cupra, Porsche, Bentley, Lamborghini, Bugatti and Maserati vehicles across Belgium. This market had suffered from problems in its supply chain in 2022 and rebounded strongly in 2023 with a sales increase of more than 40%. Other activities of D’Ieteren are Moleskine, Parts Holding Europe (active in the independent distribution of spare parts) and TVH (a parts manufacturer and retailer specialised for industrial and agricultural sectors). For 2024, the company expects sales growth in the mid-single- to high-single-digit range, and its profit before tax is expected to more than triple in 2025 versus 2020.
Amplifon was founded in 1950 in Milan, Italy, and is the world’s largest hearing aid retailer. Revenues last year increased by more than 10%, and for 2024, the company expects high-single-digit percentage sales growth. The company has a strong market position in Europe (especially in its home market, Italy), and is currently expanding its footprint in the USA, which it regards as the biggest growth opportunity going forward. As the second-biggest growth opportunity, the company mentioned China, a market it entered in 2018. It took 2 years to implement the correct business model, and the company had 180 shops at the beginning of 2023, which increased to 400 shops at the end of last year. Demographics are positive, as target customers are older than 65 years, and this cluster will grow strongly in the coming years. Penetration of hearing aids is only at 10%, well below levels seen in Western Europe, and it is Amplifon’s aim to become market leaders in single megacities.
So with an overall positive quarter of the year behind us, and markets still in ‘Greed’ territory, according to CNN’s Fear & Greed Index, one could be tempted to secure the profits. As outlined many times before, while this strategy may pay off in the short-term, studies over a long-term time horizon have showed that buy & hold has been the superior strategy for investing in equities in the past. Which, of course, is no guarantee for the future. According to some sources, Fidelity has conducted a study between 2003 and 2013 with clients, and looked at the client accounts that had the best returns. The accounts with the best returns belonged to people who had died, or people who had forgotten they had accounts. Apparently, Fidelity never confirmed that this study has really been conducted, but the outcome would be very logical, and confirm one of the pillars of our fund’s philosophies: time in the market beats timing the market.
On the day of writing this article, MW GESTION ACTIONS EUROPE holds the following quoted securities:
•Amplifon for 1% of its outstandings;
•D’Ieteren for 2.7% of its outstandings;
Written on April 9th, 2024
Communication-Marketing
The MW Actions Europe fund is a compartment of the Luxembourg SICAV MW ASSET MANAGEMENT. You should contact the fund management company MW GESTION or your financial advisor for more information.
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