LHV World Equities Fund

In March, after a strong start to the year, we saw some profit taking in our investments. We used this correction for increasing our existing investments and adding new positions. Fund unit value fell by 0.4% in March, but ended the first quarter with a solid 9.3% gain. Positive news in the global economy came from China, where the industrial activity made a rebound. Stabilization of growth in the Chinese economy is positive for our Asian and European investments to whom China is a key growth market. Looking forward, we still see good risk-reward in emerging markets equities that are trading with a discount to the more matured markets. We are more positive on emerging markets after the recent news that the US Federal Reserve will probably not hike interest rates in 2019. In March, the Federal Reserve announced that as the uncertainty in the economy remains high, they are willing to postpone the interest rate hikes that were expected in the beginning of the year. According the BofA Merrill Lynch, shorting European equities is right now the most crowded trade in the market. We believe that most of the bad news in Europe are already in the stock prices. Very negative positioning of the consensus could cause a strong buying interest if we do see some signs of improvement in the European economy. The weakness in the European economy is currently mainly related to the export industries. According to purchase managers survey, 80% of European economic sectors are still in growth phase, meaning growth is indeed low but relatively broad. LHV World Equities Fund positions are diversified between 24 different investments. In March, we added to the fund Danish stone wool producer Rockwool shares that gain from long-term more energy efficient construction trends. The Fund also holds a relatively sizable cash positions which we plan to use for adding positions from a more nervous market environment at the lower prices.