Portfolio Review – September 2020 – Issue 07
This is the latest One Four Nine Portfolio Management (OFNPM) portfolio review providing investors and advisers with an easy to digest overview of what’s happening in the markets globally, alongside comparisons of OFNPM’s portfolio performance each quarter and throughout the year.
Chief Investment Officer’s comments
During September your portfolios posted either small losses (Defensive and Cautious) or modest gains (Balanced, Growth and Adventurous) ranging from -0.3% to 0.5%.
This was in the face of equity market falls globally.
The UK market fell 1.7% driven primarily by BP (-15%), Shell (-11%) and HSBC (-9%). The US market fell 3.8% in USD terms led by Apple, Amazon, Google and Facebook which all fell between 9% and 11%. Sterling weakness, which fell 3.4% against the dollar, helped mitigate some of these loses. Europe was not immune with the Eurostoxx falling 1.9% in Euros.
The one market that bucked the trend was Japan, which gained 1.3%, despite the shock resignation of Prime Minister Abe, Japan’s longest serving Prime Minister since the end of the second world war. Asian and Emerging stocks also recorded positive returns with Asia gaining 1.2% and GEM stocks returned 1.9% over the month.
World equities, in sterling terms, were flat over the month with the MSCI World returning 0%. Sterling Bonds on the other hand made gains, especially Gilts which returned 1.5%, while corporate investment grade bonds returned 0.5%. Gold however, softened 4.2% over the month in dollar terms, although again sterling weakness shielded the UK investor from most of this loss.
The majority of our funds in the portfolios posted small gains.
Leading the way was Stewart Asia Pacific Leaders fund which gained 3.5% over the month. This was led by its holdings in Taiwan Semiconductors (+6.7%) and Hoya, the Japanese electro-optics manufacturer, which gained over 18%.
Two of our global funds, Evenlode Global and Lindsell Train Global both enjoyed positive returns rising 2.8% and 1.4% respectively. Lindsell Train UK also performed well both in an absolute and relative sense. The fund returned 1.4% as the market fell 1.7%. This was primarily driven by its large holdings in Unilever, Diageo, Remy Cointreau and Burberry. Fevertree, a recent addition, while only small in size (1.7% of the fund) returned just under 15% over the month. The only significant detractors in the portfolio were Liontrust special situations which fell 1.6% and our property fund LondonMetric, which fell 6.3%.
UK – positive but patchy
Economic data over the month continued to be positive, although it was patchy.
GDP for Q2 in the UK was revised upwards slightly from -21% to -19%, but consumer confidence remains fragile and industrial and manufacturing production are both significantly negative year on year. Inflation for August was negative thanks to the Governments “Eat Out to Help Out Scheme”.
The Governments net borrowing requirement for August was £25 billion and they are on course to borrow in excess of £250 billion this year.
Unemployment ticked up to 4.1%, but the full effects of the pandemic on employment has yet to be felt with the furlough scheme set to finish at the end of October.
The Chancellor in his statement, which replaced an Autumn budget now delayed until Spring 2021, announced a much reduced scheme to replace the furlough, all while raising the spectre of a mixture of tax rises and spending cuts to help “balanced” the books in the future.
In the US Donald Trump tweeted the suspension of negotiations around a stimulus package for the economy, while the Federal Reserve told the market that rates will stay at these emergency levels for at least 3 years.
World economies are only held together at the moment by large fiscal stimulus packages, and loose monetary policy from central banks.
The removal of either of these prematurely will be catastrophic for economies and markets, as earnings continue to be depressed, in spite of higher valuations.
Find out how One Four Nine Portfolio Management invest here.
Dr Bevan Blair,
Chief Investment Officer,
One Four Nine Portfolio Management
London, Tuesday 13 October 2020.
The value of investments and the income from them may go down as well as up. You may not get back the amount you invest. The return may increase or decrease as a result of currency fluctuations. Past performance, or any yields quoted, should never be considered a reliable indicator of future returns.
All data is at 30 September 2020. One Four Nine Models are benchmarked against UK CPI and any other benchmark has been displayed for comparative purposes only and is not a benchmark for the Models. Performance figures are net of underlying fund fees and include One Four Nine Portfolio Management’s Management Fee of 0.24% (including VAT). All model portfolio performance data is sourced from One Four Nine Portfolio Management. All other data is from Bloomberg and Morningstar.
This service is intended for use by investment professionals only. This document does not constitute personal advice. If you are in doubt as to the suitability of an investment, please contact your adviser.
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