VAM Funds (Lux) Commentaries

VAM US Micro Cap Growth Fund*

Holdings in the information technology and consumer discretionary sectors detracted from relative returns. Relative performance benefitted from holdings in the energy and consumer staples sectors. At month end, the Fund was overweight the energy, consumer staples, information technology and consumer discretionary sectors.

The holding that detracted the most from the Fund’s relative returns during the month was Cambium Networks (Ticker: CMBM). Cambium Networks sells wireless broadband networking infrastructure solutions for network operators. In June, the company conducted a secondary offering on behalf of a pre-IPO private equity investor that owns over 50% of the stock to improve trading liquidity. This additional supply of shares pressured the stock. No changes were made to the position.

The holding that contributed the most to the Fund’s relative returns during the month was Intellia Therapeutics, Inc. (Ticker: NTLA-US). Intellia Therapeutics, Inc. is a development stage therapeutics company. In June, the company reported initial clinical data that demonstrated proof of concept for their in vivo gene editing technology that surpassed market expectations. The Fund held a position heading into the data and added following the data release.

VAM US Small Cap Growth Fund

The Fund’s holdings assigned to the health care and financials sectors detracted from relative returns. Holdings assigned to the consumer staples and communication services sectors benefitted from the Fund’s positive relative returns. At month end, the Fund was underweight the consumer staples, communication services, financials and health care sectors.

The holding that detracted the most from the Fund’s relative returns during the month was Cambium Networks (Ticker: CMBM). Cambium Networks sells wireless broadband networking infrastructure solutions for network operators. In June, the company conducted a secondary offering on behalf of a pre-IPO private equity investor that owns over 50% of the stock to improve trading liquidity. This additional supply of shares pressured the stock. The Fund participated in the secondary offering and added to the position.

The holding that contributed the most to the Fund’s relative return during the month was Roku (Ticker: ROKU). Roku is an Over-The-Top (OTT) streaming platform company. In June, the company announced the launch of recently-acquired Quibi content as Roku Originals on The Roku Channel (TRH), which resulted in a record number of unique accounts streaming them over a two-week period on its platform. The Manager made marginal adds to its position.

VAM US Mid Cap Growth Fund

Holdings in the industrials and consumer discretionary sectors detracted from relative returns. Performance benefitted from holdings in the communication services and health care sectors. At month end, the Fund was overweight the communication services, industrials, consumer discretionary sectors, and underweight in the health care sector.

The holding that detracted the most from the Fund’s relative returns during the month was DocuSign (Ticker: DOCU). Docusign provides cloud-based electronic signature solutions. In June, the company reported earnings results above consensus expectations, which was positively received by the markets. The Fund did not have a position in the stock, as the company is seeing tough comparisons in the second half of 2021, with a decelerating profile to its revenue growth rates while it also trades at premium multiples versus peers.

The holding that contributed the most to the Fund’s relative returns during the month was Intellia Therapeutics, Inc. (Ticker: NTLA-US). Intellia Therapeutics, Inc. is a development stage therapeutics company. In June, the company reported initial clinical data that demonstrated proof of concept for their in vivo gene editing technology that surpassed market expectations. The Manager held a position heading into the data and added following the data release.

VAM US Large Cap Growth Fund

Holdings in the information technology and communication services sectors detracted from relative returns. Performance benefitted from holdings in the consumer staples and energy sectors. At month end, the Fund was overweight the energy and communication services sectors, and underweight in the consumer staples and information technology sectors.

The holding that detracted the most from the Fund’s relative returns during the month was Weyerhaeuser Company (Ticker: WY-US). The company engages in the manufacture, distribution and sale of forest products. While nothing company-specific, the company detracted from portfolio returns in line with lumber pricing and industry peers.

The holding that contributed the most to the Fund’s relative returns during the month was Devon Energy Corporation (Ticker: DVN-US). Devon Energy Corporation engages in the exploration, development, and production of oil and natural gas properties. While nothing company-specific, the company contributed to the portfolio in line with the appreciation of the energy sector. The company also benefitted from analyst upgrades as well.

VAM Emerging Markets Growth Fund

VAM Funds (Lux) – Emerging Markets Growth Fund performance was aided by holdings in the materials and information technology sectors, as well as in China and the United States. Exposures to the financials and consumer discretionary sectors, as well as Hong Kong and Saudi Arabia, detracted from relative returns. At month end, the Fund was overweight Hong Kong and underweight China.

The holding that contributed the most to the Fund’s relative returns during the month was NVIDIA Corporation (Ticker: NVDA-US). Nvidia rallied throughout June after posting strong quarterly results in late May. The company is seeing strong demand growth in its two key segments, gaming and data centre. They are also benefitting from a new product cycle in each. Additionally, a few other semiconductor companies came out in favour of Nvidia’s acquisition of ARM, which is under regulatory review in multiple jurisdictions. The consensus view is that, while this acquisition would be a positive, there is a very low chance of approval. The public support of its peer companies could improve the chances that the acquisition gets approved.

The holding that detracted the most from the Fund’s relative returns during the month was AIA Group Limited (Ticker:1299-HK). AIA is a leading Asian insurance company, with strong presence in Hong Kong and growing exposure to the mainland Chinese market. The stock corrected in June after a strong April and May. Sentiment softened after Covid continued to spread in Hong Kong, delaying the earnings recovery associated with a return of mainland Chinese arrivals in Hong Kong. Further, the company has a positive earnings exposure to higher global interest rates and the fall in yields in June thereby weighed on sentiment.

VAM World Growth Fund

Exposures in the industrials and financials, as well as in the Netherlands and Thailand, detracted from relative returns. Performance was aided by exposures in the information technology and communication services sectors, as well as in China and Israel. At month end, the Fund was overweight the Netherlands and China.

The holding that detracted the most from the Fund’s relative returns during the month was Alcoa Corporation (Ticker: AA-US). Alcoa is one of the largest global producers and suppliers of aluminum-based and related products for the automotive, aerospace and industrial markets worldwide. Like most commodities, they have been benefitting from global economies reopening following the pandemic. Also, like most commodities, they are benefitting from a strong pricing environment due to years of underinvestment in the industry and a strengthening demand environment from accelerating economic reopening. There was no negative news to cause the stock drawdown, just a correction after a strong advance in prior months.

The holding that contributed the most to the Fund’s relative returns during the month was Roku (Ticker: ROKU). Roku is an Over-The-Top (OTT) streaming platform company. In June, the company announced the launch of recently-acquired Quibi content as Roku Originals on The Roku Channel (TRH), which resulted in a record number of unique accounts streaming them over a two-week period on its platform.

VAM International Opportunities Fund

Exposures to the consumer discretionary and industrials sectors, as well as in Japan and Taiwan, detracted from relative returns. Performance was aided by holdings in the information technology and communication services sectors, as well as in Germany and Canada. At month end, the Fund was overweight Germany and Japan.

The holding that detracted the most from the Fund’s relative returns during the month was Meltwater B.V. (Ticker: MWTR-NO). Meltwater is an Amsterdam-based social media data analytics company whose technology and management tools are used for tracking, contact management, lead generation, and reporting and analysing social media trends and data. Companies across multiple industries are increasingly turning to data analytics companies to track customer data, feedback, generate sales and increase the end customer experience. They have been reporting accelerating top- and bottom-line growth for the past several quarters, and the Manager sees a long runway for growth in the years ahead.

The holding that contributed the most to the Fund’s relative returns during the month was AT & S Austria Technologie & Systemtechnik Aktiengesellschaft (Ticker: ATS-AT). Austria Tech and System is a leading European based manufacturer of printed circuit boards and semiconductors, used mobile telecom (cellphones), laptops and GPS devices. They have been benefitting from accelerating demand trends in a range of consumer electronics, as well as broader industrial- and automotive-end markets, supplying some of the world’s top blue-chip telecom, auto and industrial companies. At the end of May, they reported very strong first quarter results and gave a stronger outlook for the remainder of the year, which led to strong outperformance during the month.

VAM Funds (Lux) – VAM Global Infrastructure Fund

The VAM Global Infrastructure Fund was launched in June 2021. The Fund’s performance in June 2021 benefitted from a resurgence in global renewable energy stocks, with notable performance coming from US-listed companies Hannon Armstrong Sustainable Infrastructure and Next Era Partners, which returned 14.10% and 11.69% respectively. Renewable energy remains the Fund’s largest sector exposure. The Manager believes this is a highly compelling long-term allocation despite recent volatility. The Fund’s holdings continue to perform well operationally and are benefitting from the growth of renewable energy demand.

Scatec, a Norwegian-listed owner of renewable energy projects in Emerging Markets, announced significant updates for two of the projects held in its short-term pipeline. The first was the award of preferred bidder status for a $1bn 540MW solar and storage development in the Northern Cape Province of South Africa. This project is unique in that the solution requires dispatchable power from 5:00am in the morning to 9:30pm at night. This is achieved using batteries to store excess energy during peak sunlight hours and distributing it when solar radiation is less prevalent. This solution better fits the electricity grid’s supply/demand balance. The second announcement was a partnership with renewables developer ACME to build a 900MW solar project in Rajasthan, India. This is an asset with significant scale and it will materially increase Scatec’s exposure to India, which is one of the fastest growing renewable energy markets in the world.

Canadian-listed renewable energy owner Boralex provided investors with its updated strategic plan and investment objectives for 2025 at its virtual investor day. The company aims to double installed capacity to 4.4GW by 2025 and expects to significantly increase its solar capacity in the US which has now become its primary market. Boralex also announced that it is looking to enter new markets in Europe and expects to invest $6bn of additional capital over the next five years.

Further positive news came from Canadian company Northland Power, which announced that Poland’s Energy Regulatory office had awarded the company an Index-linked 25-year Contract for Difference (CfD) for its 49% stake in the Baltic Power Offshore wind project. This will supply the company with long-term contracted cash flows, protected against inflation, once the project is operational.

The Fund is already seeing support from investors with NAV of $14.45m at the end of June 2021.

*Fund is currently closed to new subscriptions.

Sources: Driehaus Capital Management LLC, Foresight Capital Management, FactSet Research Systems, Inc., Reuters, Yahoo Finance and Bloomberg.

Featured securities were the top contributor to or detractor from return and were held by the Fund at some point during the month of June 2021. The performance numbers for the Funds are provided by VAM Funds (Lux). The performance discussed above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance quoted.

The information presented is intended for the sole and exclusive use of VAM Funds and contains confidential information that should only be relied on by the intended recipient.

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