Stand 31.10.2021
Global stockmarkets rebounded in October following declines in September. Although investors remained concerned about rising inflation, which is increasing the likelihood of higher interest rates, as well as slowing economic growth, it appeared that robust corporate earnings kept demand for equities high. Commodity prices continued their strong run too, led by oil and gas. Copper and silver also appreciated. The S&P 500 Index rallied 7.0% (in US dollars) to end the month at an all-time high. Year to date, the index has risen 24.0%. In terms of investment style, value trailed the broader market as the market rally was driven largely by mega-cap growth stocks. From a sector perspective, energy was one of the best-performing areas as oil prices extended their year-to-date advance. Consumer discretionary and information technology also outperformed the broader market. In contrast, defensive areas were out of favour; consumer staples, communication services, which includes telecoms stocks, and utilities were notable laggards. Against this background, the fund rose but was behind the benchmark index, with our underweight to mega-cap stocks holding back relative returns. In particular, not owning electric car maker Tesla or technology firm Microsoft proved costly. Teslas share price jumped 44% in October, while Microsoft became the worlds most valuable company following better-than-expected results, due to robust demand for its cloud-based services. In terms of portfolio holdings, stock selection in consumer staples detracted from relative performance, with drinks distributor Coca-Cola Europacific Partners and supermarket operator Kroger notable detractors. Neither stock performed particularly poorly but they lagged a very strong equity market. Elsewhere, media group Comcast and telecommunication firm Verizon Communication cost some performance as they declined in a rising market. On a positive note, healthcare holdings Anthem and Merck & Co were leading contributors. The share price of health insurer Anthem reached record highs when the company reported better-than-expected quarterly results and raised its annual profit forecast. Anthem expects the COVID-19 pandemic to have less of an impact on performance next year, as infections decline. In addition, not holding any shares in Meta Platforms, formerly Facebook, or Amazon.com was helpful as the large index constituents underperformed. Amazons earnings were weaker than expected and the company warned that supply-chain issues and labour problems would continue to affect performance.