The Eclectica Fund

Eclectica Asset Management

Research

2 Pages

Eclectica Asset Management examines why defensive equities, a stronger US dollar, Japanese stocks, and short duration sovereign bonds could benefit from diverging global economic conditions. It argues consumer staples rallied 13.8% despite slowing growth, while Japan’s 20% yen depreciation marked a major policy turning point.

Key Takeaways

Consumer Staples Strength: Consumer staples gained 13.8% in Q1 2013 versus 10.1% for industrials, reflecting demand for defensive businesses with resilient cash flows.
US Dollar Advantage: US real GDP stood 3.3% above its pre crisis peak while the Eurozone remained 3.1% below, supporting a constructive view on the US dollar.
Japan Policy Shift: A roughly 20% yen depreciation following aggressive policy changes reinforced the case for Japanese equities and property companies after years of deflationary pressure.
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