VAM Managed Funds (Lux) Commentaries

August 2019 (click to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was down 2.37% and the S&P 500 was down 1.58% for the full month. On a relative basis, the VAM Driehaus Fund’s returns were hindered by its exposures to emerging markets equities and was aided by the performance of its ex-US small and mid-capitalisation growth-oriented
equity exposures.

 

August was marked by increased market volatility. At the outset of the month, trade tensions escalated and as market jitters permeated, investors questioned the implications and magnitude of the latest round of tariffs. Additionally, factors including Brexit, unrest in Hong Kong, inverted yield curves, and slowing growth in China, Germany and the US weighed on market sentiment. With so many of these factors influenced by geopolitics, the impact on equities to changing macroeconomic factors are inherently difficult to predict. Investors in equities should be prepared for market risks associated with investing in equities and specifically the global growth and momentum-oriented strategies employed the Fund’s investments.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

August saw equity markets initially fall as the interest rate decision which investors had been desperately waiting for disappointed the market’s expectations. After the initial fall, investors might have expected a deeper sell-off in response to the escalation of the US trade war as President Trump continued to pick a fight with anyone and everyone in his quest to make America great again, and the surprising first move of Boris Johnson to suspend the UK Parliament. However, while August continued to be a volatile month, with an unusual number of large daily moves, the negative headlines failed to drag indices down further and equity prices remained resilient. Global equities were down around 2% on the month.

 

Bond markets saw yields continue to tighten as the market consensus grew that current conditions and ongoing uncertainty mean lower interest rates are required. UK government bonds returned almost 4% as yields fell, while investment grade credit returned around 2%. High yield credit retrenched slightly to end up down around 1%.

 

We remain in an environment where slowing economic growth and pressure on margins make it tougher for companies to deliver on earnings expectations. However, it is pleasing to see that those businesses that can deliver are being rewarded via increasing share prices, and the Manager continues to put great emphasis on selecting stocks that can execute their business plan regardless of the economic uncertainty. The Infrastructure and Property sectors, in particular, benefitted from falling bond yields while their reduced sensitivity to economic growth attracted investors resulting in returns of around 2% and 4% respectively.

VAM Balanced Fund

August saw equity markets initially fall as the interest rate decision which investors had been desperately waiting for disappointed the market’s expectations. After the initial fall, investors might have expected a deeper sell-off in response to the escalation of the US trade war as President Trump continued to pick a fight with anyone and everyone in his quest to make America great again, and the surprising first move of Boris Johnson to suspend the UK Parliament. However, while August continued to be a volatile month, with an unusual number of large daily moves, the negative headlines failed to drag indices down further and equity prices remained resilient. Global equities were down around 2% on the month.

 

Bond markets saw yields continue to tighten as the market consensus grew that current conditions and ongoing uncertainty mean lower interest rates are required. UK government bonds returned almost 4% as yields fell, while investment grade credit returned around 2%. High yield credit retrenched slightly to end up down around 1%.

 

We remain in an environment where slowing economic growth and pressure on margins make it tougher for companies to deliver on earnings expectations. However, it is pleasing to see that those businesses that can deliver are being rewarded via increasing share prices, and the Manager continues to put great emphasis on selecting stocks that can execute their business plan regardless of the economic uncertainty. The Infrastructure and Property sectors, in particular, benefitted from falling bond yields while their reduced sensitivity to economic growth attracted investors resulting in returns of around 2% and 4% respectively.

VAM Growth Fund

August saw equity markets initially fall as the interest rate decision which investors had been desperately waiting for disappointed the market’s expectations. After the initial fall, investors might have expected a deeper sell-off in response to the escalation of the US trade war as President Trump continued to pick a fight with anyone and everyone in his quest to make America great again, and the surprising first move of Boris Johnson to suspend the UK Parliament. However, while August continued to be a volatile month, with an unusual number of large daily moves, the negative headlines failed to drag indices down further and equity prices remained resilient. Global equities were down around 2% on the month.

 

Bond markets saw yields continue to tighten as the market consensus grew that current conditions and ongoing uncertainty mean lower interest rates are required. UK government bonds returned almost 4% as yields fell, while investment grade credit returned around 2%. High yield credit retrenched slightly to end up down around 1%.

 

We remain in an environment where slowing economic growth and pressure on margins make it tougher for companies to deliver on earnings expectations. However, it is pleasing to see that those businesses that can deliver are being rewarded via increasing share prices, and the Manager continues to put great emphasis on selecting stocks that can execute their business plan regardless of the economic uncertainty. The Infrastructure and Property sectors, in particular, benefitted from falling bond yields while their reduced sensitivity to economic growth attracted investors resulting in returns of around 2% and 4% respectively.

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