VAM Managed Funds (Lux) Commentaries

December 2019 (click to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 3.52% and the S&P 500 was up 3.02%. On a relative basis, the VAM Driehaus Fund’s return was aided by its exposures to US smaller cap growth stocks and emerging markets equities.

The sudden rotation out of defensive and consistent growth stocks and into cyclical and other value-oriented sectors in September set the stage for the December quarter’s powerful and broader equity rally. The Federal Reserve’s dovish policy pivot, better economic data and reduced odds of a recession fuelled strength and certainly boosted equities in the fourth quarter including December. The US market has impressively emerged out of a two-year consolidation and appears to be in a healthy position to potentially sustain its advance. The equity outlook is supported by the potential for stable to even improved economic and earnings growth compared to 2019. Naturally, there are also several market risks which could cause volatility to increase in the new year, including geopolitical risks, external shocks and an election year in the United States.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

Equity markets continued their momentum and rose in December, with global stocks advancing by close to 1.00% and UK equities advancing by around 2.50%. Emerging market equities outperformed their developed market counterparts, largely due to statements indicating that the first stage of a US-China trade deal is to be signed in January and, consequently, rose by almost 5.00%. With central banks remaining on hold after delivering the monetary accommodation demanded by markets earlier in 2019, the Manager waits to see how the global economy reacts.

The political scene in the UK was a dominant feature leading into the last month of the year, but with the large conservative majority attained in the general election on 12th December, UK assets rallied strongly. Although
the opinion polls had forecast a majority for Boris Johnson, the precise extent of his victory was not. The most reactive barometer of UK sentiment, GBP, rallied immediately as the result became known and finished the month 2.60% higher versus the US Dollar. Elsewhere, US trade rhetoric with China as well as with Eurozone countries remains a notable source of market volatility. Moving into 2020, there will likely be further attention paid on the political front, given the US presidential election on 3rd November as well as further Brexit milestones, with the first being Boris’ Deal Deadline at the end of January.

VAM Balanced Fund

Equity markets continued their momentum and rose in December, with global stocks advancing by close to 1.00% and UK equities advancing by around 2.50%. Emerging market equities outperformed their developed market counterparts, largely due to statements indicating that the first stage of a US-China trade deal is to be signed in January and, consequently, rose by almost 5.00%. With central banks remaining on hold after delivering the monetary accommodation demanded by markets earlier in 2019, the Manager waits to see how the global economy reacts.

The political scene in the UK was a dominant feature leading into the last month of the year, but with the large conservative majority attained in the general election on 12th December, UK assets rallied strongly. Although
the opinion polls had forecast a majority for Boris Johnson, the precise extent of his victory was not. The most reactive barometer of UK sentiment, GBP, rallied immediately as the result became known and finished the month 2.60% higher versus the US Dollar. Elsewhere, US trade rhetoric with China as well as with Eurozone countries remains a notable source of market volatility. Moving into 2020, there will likely be further attention paid on the political front, given the US presidential election on 3rd November as well as further Brexit milestones, with the first being Boris’ Deal Deadline at the end of January.

VAM Growth Fund

Equity markets continued their momentum and rose in December, with global stocks advancing by close to 1.00% and UK equities advancing by around 2.50%. Emerging market equities outperformed their developed market counterparts, largely due to statements indicating that the first stage of a US-China trade deal is to be signed in January and, consequently, rose by almost 5.00%. With central banks remaining on hold after delivering the monetary accommodation demanded by markets earlier in 2019, the Manager waits to see how the global economy reacts.

The political scene in the UK was a dominant feature leading into the last month of the year, but with the large conservative majority attained in the general election on 12th December, UK assets rallied strongly. Although
the opinion polls had forecast a majority for Boris Johnson, the precise extent of his victory was not. The most reactive barometer of UK sentiment, GBP, rallied immediately as the result became known and finished the month 2.60% higher versus the US Dollar. Elsewhere, US trade rhetoric with China as well as with Eurozone countries remains a notable source of market volatility. Moving into 2020, there will likely be further attention paid on the political front, given the US presidential election on 3rd November as well as further Brexit milestones, with the first being Boris’ Deal Deadline at the end of January.

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).

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