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AVI Global hit by March nerves

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AVI Global Trust’s half-year figures (covering the six months ended 31 March 2023) were unfortunately dented by March’s nervous markets. At the end of February 2023, the trust was running about 1% ahead of its MSCI AC World ex US benchmark, but by the end of March it was 5% behind. The NAV return for the period was 5.3% and the share price return 5.5% against a 10.3% return on the benchmark.

March was the month that saw the collapse of Silicon Valley Bank and the rescue of Credit Suisse. The manager says that positions in Christian Dior, FEMSA and Oakley Capital Investments were the most significant contributors to returns, whilst Aker, Brookfield Corporation and Godrej Industries were the largest detractors. In addition, investments in US alternative asset managers KKR, Apollo and Brookfield Corporation were caught up in the ensuing general sell off in financials following the events at SVB. The main problem though was that the volatile market environment led to a general widening of discounts. Combined with disappointing short-term developments at Schibsted (discussed below) this has pushed the portfolio weighted average discount wider, acting as a headwind to performance. In March 2023 alone, the portfolio weighted average discount moved from 33.5% to 37.2%.

At Schibsted, in March 2023 comments from the controlling shareholder dampened expectations for a near-term distribution of shares in Adevinta [see our last note for more detail on this holding], which has seen the discount balloon to 45%. However, the manager continues to engage with all key stakeholders and has been adding to the position, which it feels could be one of its highest return potential ideas.

[The other impact that March’s upset had was to raise expectations that the US Federal Reserve would ease off on interest rate rises. That has fed through into a bounce in growth relative to value, which has an impact on AGT as it has an underweight exposure to the technology sector.]

AGT : AVI Global hit by March nerves

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