Looking back at a successful stock market year 2017
The year 2017 took a very positive course for stocks, and the Mellinckrodt fund, too, showed a very encouraging development with a price increase of +18.32%. Since the fund launched in late 2013, the capital gain has totaled +47.79%.
Mellinckrodt as European all-cap fund with focus on Switzerland and Germany was able to further increase its lead over the ETFs at the DAX and the Stoxx 600 in 2017. The theme-based stockpicking proved successful again last year.
Highlights as key performance contributors are companies whose stocks we continue to hold in our portfolio: Uniper, Teradyne, Lam Research, and Bobst each rose by significantly more than 50%. Numerous other securities developed very positively in 2017. We have completely parted from some companies that have shown a very good market trend as well. Among them are, in the area of small caps, Technotrans and Nabaltec.
In addition, we have sold almost all companies in the transportation field with focus on container shipping (Hapag-Lloyd, Maersk, Hamburger Haafen) after the revaluation of the sector has far advanced in 2017.
In the second half of the year, the focus was shifted especially in the topic area of materials. Parts of the sharply risen Glencore stock were regrouped into the Canadian mining blue chip Teck. Teck, also active in copper, zinc, and coal, stands out with a completely different geographic distribution of activities. While Glencore is holding extensive mining shares in difficult regions such as the Congo, Teck is focused exclusively on North America and stable countries in Latin America, such as Chile. A very good complement from a geographic standpoint. In addition, Teck is one of the best positioned mining corporations in the world from the aspect of sustainability. During the course of the year, we have expanded the area of companies connected with oil and soft commodities in order to shift the focus more toward late-cyclic raw materials.
In the technology field, we have held on to our top securities with a focus on vacuum. A few smaller positions such as KLA-Tencor or Soitec have been sold with a price gain. As malinvestments of the year 2017, ADVA Optical and Burckhardt Compression stand out negatively. After several assessments, we were not quite convinced that the owners and managers of both companies are able to change tack in the right direction and, as a result, we sold both stocks completely. Both stocks have slightly recovered since. However, the stocks that we newly bought with the return on sales from the former are in no way inferior to them.
In 2017, Mellinckrodt published a number of articles “On Stocks” again for the information of investors on important investment hypotheses.
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In this context, we emphasize that we have, for the most part, phased out of small and micro caps, which is explained in detail in our article “What does Zurich’s Bahnhofstrasse have to do with your liquidity?”
At the end of 2017, 96.5% of our company’s funds were invested in stocks. Approximately two-thirds of the stocks have their company headquarters and/or focus on business activities in Switzerland or Germany. Only three stocks (Lam Research, Teradyne, and Teck) are not from Europe.
With our active risk management, we were able to reduce the effects of market corrections on the fund price again last year. The result is a continuously low volatility.
The outlook for the year 2018 is positive. The start of the year at the world stock exchanges can only be called successful. Even if turbulences can always arise, we expect that the positive trend in our key topic areas technology, materials, and consumption will continue in 2018.