Quarterly report LiLux Convert


ISIN: LU0069514817

Updated: 1st quarter 2024

The stock markets have been on a broad upward trend for more than half a year, which is causing concern among many investors, as the continued momentum does not appear sustainable in the long term. Numerous indicators and surveys are already pointing to an imminent correction. Despite these signs, however, the market is continuing its positive movement and is being driven by speculation about interest rate cuts and the current hype surrounding artificial intelligence. The positive trend is supported by considerable liquidity that wants to be invested. European equities offered a positive surprise in the first quarter, particularly in the mega cap segment, with higher-than-expected earnings growth. This was generally favoured by better-than-expected economic data. In addition, European equities have increasingly become the focus of attention, as they have significant valuation discounts compared to US equities. Investors are concerned that the US equity market could rise even further and see European equities as a comparatively ‘favourable’ alternative. In contrast, emerging market equities clearly underperformed in the quarter, although they still closed in positive territory. This is partly due to the positive development of the Chinese stock market, which experienced a strong upswing following the government’s announcement to support the market. Developments on the commodities market were also positive across the board, with an excellent performance in the oil sector in particular. The reasons for this are concerns about a possible escalation of geopolitical conflicts, drone attacks on Russian oil refineries and a surprisingly high demand for oil. However, soft commodities (agricultural commodities) were particularly outstanding in terms of their performance. The prices of some components such as cocoa and sugar rose significantly due to poor harvests caused by bad weather.

The euro stabilised around the USD 1.08 mark towards the end of March, losing almost 2 % in value against the US dollar during the quarter. The weakness of the euro was caused by the ECB’s confident statement that the 2 % inflation target is getting closer. Investors are therefore expecting the first interest rate cut for the eurozone in June. On the other side of the Atlantic, the expectations of market participants have changed, as the robust US economy, the strong labour market and continued high inflation have postponed the first rate cut fantasies.

The LiLux Convert fund recorded attractive price gains of 41 % to 47 % in the first quarter of 2024 with two convertible bonds from Rheinmetall. Overall, the fund recorded an increase in value of 1.49 % in the first quarter of this year.

Performance

Source: Reuters LiLux Convert
29.12.2023 Price 245.51
28.03.2024 Price 249.18

In the quarter

1.49%

Im Quartal

1.37%

 

Core activities  

Purchases

First day price
Current price
6 million EUR 2.00% Deutsche Lufthansa 28 CV 17.11.25 102.833 102.352
3.5 million EUR 4.125% Anglo Amer Capital 32 15.03.32 99.893 100.404

Sales

First day price
Sale price
4 million EUR 1.875% Rheinmetall 28 CV 07.02.28 100.00 141.21
4 million EUR 2.25% Rheinmetall 30 CV 07.02.30 100.00 147.30
700 million YEN 0% Maeda Kosen 24 CV 18.04.24 103.00 105.64