«Among balanced funds, only Monocle stand out from the crowd.»

Les Echos, 1st French Business Newspaper, November 22d, 2018







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Monocle Fund Part A

March 20, 2020
 YTD:                  -8.35%

Dear Investors,

As of March 20, Monocle (part A) is at (8.35%) over 2020.

2019: +6.09%
2018: +0.11%
2017: (1.25%)
2016: +6.91%
2015: +7.32%

As of Friday, the CAC40 is at -32% on 2020 and the SP500 at -29%.
At the beginning of this week, things calmed down a bit and the indices are going up.

We have spent the last few days buying, increasing the equity exposure to 38% last night and the corporate bond portion to 14%.
These bonds offer an average yield of 12%, a level sufficient to compensate for risk.

As shown in the table below, I remind you that we had only a small equity exposure at the beginning of the year and until the beginning of March no corporate bonds as everything seemed too expensive.

Evolution of risk exposure (end of month):
    December > January > February > March
    Equities: 1% > 10% > 13% > 38%.
    Bonds: 0% > 0% > 0% > 0% > 14%.


1) part of the fall is only the correction of the irrational rise at the beginning of the year. So despite significant declines, some stocks remain expensive, especially given the worsening economic context. Apple and LVMH have just returned to their price of six months ago, while the economic situation is much more deteriorated than it was at the time.

2) the fund's performance over 2020 (-8.35% as of Friday) therefore reflects more the volatility of the markets at the moment than potential future losses as most of the purchases were made in the last few weeks so taking into account the situation. A stock bought at 40 of multiple when all forecasts were pink will probably never return to these levels. On the other hand, a stock bought at 10 multiples in the middle of the crisis may go through lower levels but should recover and exceed the purchase price much more easily.

3) despite all our efforts, we still have 48% of the fund in safe assets, mainly German short government bonds. I say despite our efforts because we spend our days looking for what we can buy but liquidity remains low. So there hasn't been a massive influx of sellers. This will happen if the situation deteriorates. On this last point, the bad news is that France, England and especially the US are entering the hard part of the crisis. These countries have much larger financial markets than Italy and their reaction is not predictable.

The good news is that the development of a treatment seems to be on the right track, in particular thanks to Professor Didier Raoult's team. On this point I confess that I don't understand the controversy: if there is a researcher who has a treatment, I see only good news and if he is French, it's even better.

Last point: since 24 hours, I have left London for the English countryside. Mimoza is working from her home in Paris, in "confinement" mode and in open communication by Zoom all day long. Finally, we have the additional help of my son Max whose internship at Société Générale was suspended because of the coronavirus; a great help with such demanding markets.

Kind regards


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