"The ABN AMRO Utility has dropped 6% since beginning of June. The utility sector has been hard hit due to high interest rate expectation which believed to slow global economy growth. With the weakness in the Euro (from 1.3680 to 1.3333) lately, the fund has been hit in both underlying assets and currency (or country) exposures. For example, E.On, 8.5% exposure in the fund, has dropped 10% in the last few days. Together with the drop in Euro (more than 2%), the weighting of almost 45% exposure in Europe caused the fund to drop dearly in such a short period of time.
However, our view on utility has not changed. We share the same view with the fund manager as the M&A activities will continue to drive the sector and the energy prices will remain high. Hence we remain fairly positive in this sector. However, high volatility is still expected within the market."
Quoted from Pharaoh - Strategist of Research Department
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