VAM Managed Funds (Lux) Commentaries

August 2020 (click here to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 6.12% and the S&P 500 was up 7.19% for the month. On a relative basis, the VAM Driehaus Fund’s return was hurt on a relative basis by its exposures to smaller cap equities as well as emerging markets equities.

From a market perspective, the progress from a policy and economic perspective has been impressive and equities have responded better than most expected. The near-term outlook, while generally positive, is counter-balanced by several factors including the fact that parts of the US fiscal relief package have expired, and the US Congress has still not passed an extension of the fiscal stimulus. The second half outlook will depend on how the spread of the virus is managed as schools reopen (many are going virtual) and colder weather shifts activities back indoors. The US Presidential and Congressional election in November will also be a major focus.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

Equity markets rose by almost 7% in Dollar terms throughout August, continuing the persistent upward trend since March and widening the gap between markets and economies. The picture is only slightly less positive in Euros and Sterling, closer to 5% returns throughout the month on further Dollar weakness reflecting concerns around the Federal Reserve’s unwavering commitment to do all that is necessary to prop up the US economy. The S&P 500 hit an all-time high in August, demonstrative of expensive valuations across the board; multiples are back to pre-crisis levels despite the subdued economic background limiting opportunities for earnings growth. In fixed income, spreads tightened throughout the month as both US and UK inflation surpassed estimates; government bond yields picked up in response to inflationary concerns exacerbated by a change in Federal Reserve policy to allow inflation to run ahead of target before it raises rates. Security selection will be pivotal in both equities and fixed income as many companies will need to deliver on demanding assumptions in order to justify current valuations, and low yielding investment grade credit increasingly requires investors to take credit risk.

VAM Balanced Fund

Equity markets rose by almost 7% in Dollar terms throughout August, continuing the persistent upward trend since March and widening the gap between markets and economies. The picture is only slightly less positive in Euros and Sterling, closer to 5% returns throughout the month on further Dollar weakness reflecting concerns around the Federal Reserve’s unwavering commitment to do all that is necessary to prop up the US economy. The S&P 500 hit an all-time high in August, demonstrative of expensive valuations across the board; multiples are back to pre-crisis levels despite the subdued economic background limiting opportunities for earnings growth. In fixed income, spreads tightened throughout the month as both US and UK inflation surpassed estimates; government bond yields picked up in response to inflationary concerns exacerbated by a change in Federal Reserve policy to allow inflation to run ahead of target before it raises rates. Security selection will be pivotal in both equities and fixed income as many companies will need to deliver on demanding assumptions in order to justify current valuations, and low yielding investment grade credit increasingly requires investors to take credit risk.

VAM Growth Fund

Equity markets rose by almost 7% in Dollar terms throughout August, continuing the persistent upward trend since March and widening the gap between markets and economies. The picture is only slightly less positive in Euros and Sterling, closer to 5% returns throughout the month on further Dollar weakness reflecting concerns around the Federal Reserve’s unwavering commitment to do all that is necessary to prop up the US economy. The S&P 500 hit an all-time high in August, demonstrative of expensive valuations across the board; multiples are back to pre-crisis levels despite the subdued economic background limiting opportunities for earnings growth. In fixed income, spreads tightened throughout the month as both US and UK inflation surpassed estimates; government bond yields picked up in response to inflationary concerns exacerbated by a change in Federal Reserve policy to allow inflation to run ahead of target before it raises rates. Security selection will be pivotal in both equities and fixed income as many companies will need to deliver on demanding assumptions in order to justify current valuations, and low yielding investment grade credit increasingly requires investors to take credit risk.

Sources: Driehaus Capital Management LLC and Sanlam Private Wealth.
Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd.

Disclaimer

VAM Driehaus, VAM Cautious, Balanced and Growth Funds are compartments of VAM Managed Funds (Lux).

This document is intended for use by professional financial advisers only. The distribution of VAM Funds and the offering of the shares may be restricted in certain jurisdictions. Private investors should contact their financial adviser for more details on any of the products featured. It is the responsibility of any person in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdictions. Prospective applicants for shares should inform themselves as to the legal requirements and consequences of applying for, holding and disposing of shares and any applicable exchange control regulations and taxes in the countries of their respective citizenship, residence or domicile. Click for Important Information