LHV World Equities Fund

In July we continue to position the fund towards more conservative investments. Our focus in current uncertain environment is on investing into specific value stocks, ideas with high dividend yield and different correlation assets, which offer reasonable compensation for risks taken. At the moment our biggest positions are related to Scandinavian and Baltic equities, other European and Asian markets and gold related names. We are interested in Finnish market since it has one of the highest dividend yield across Europe. Our largest position from there is Stora Enso that has a market capitalization below the fair value of its forest reserves. Opportunities are also in Swedish market, where we bought the confectionery manufacturing company Cloetta shares that has less cyclical business model. Most extreme valuation can be found among Europe banks. European banks combined market capitalization is lower than one single bank in US – JPMorgan. Our biggest position among the European banks is Banco Santander that trades 40% below its book value. Barrick Gold has grown to become our biggest position after the recent gains. We believe 5-10% position offers good protection from negative interest rates, political uncertainty and possible debt problems. From other subjects we have looked more closely into European defense expenses that support the growth of French industrial company Thales. In July we took profit from TE Connectivity position and sold Kion equities. In conclusion we keep our equity investments diversified across different sectors and regions. Current equity positions yield about 4% and we keep some cash buffer to use the funds available for opportunities should they arise.