VAM Managed Funds (Lux) Commentaries

July 2019 (click to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 6.55% and the S&P 500 was up 7.05% for the full month. On a relative basis, the VAM Driehaus Fund’s returns were aided by the outperformance of its global smaller cap growth exposures and hindered by its emerging markets exposures.

 

In July, the economic and market environment continued to be consumed by monetary and trade policy. Both have arguably been weighing on economic conditions, which have in turn been headwinds for corporate earnings. Looking ahead, the outlook for equities should largely depend on how the market responds to the expected US rate cuts, whether the US and China can reach an actual trade deal that will put a huge uncertainty in the rearview mirror, whether US economic conditions can stabilise/improve as well as in China, Europe and elsewhere, and, as always, the strength of corporate earnings. As always, equity investors should continue to be prepared for equity market volatility, mindful of the uncertainties that persist around the globe.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

July’s equity returns were flattered by the weakness in Sterling, as the resolution of the UK’s domestic political leadership contest came to an end, and Sterling weakened over 4% against the US Dollar and around 2% against the Euro. This currency weakness pushed up the returns from global equities, which were roughly flat in USD, but up around 4% in Sterling.

 

Global bond yields continued to tumble as central banks moved to more dovish stances and the market priced in more easing. UK government bonds returned around 2% as yields fell further on global growth concerns, while both investment grade and high yield credit returned around 1%. Given the high expectations from the Federal Reserve’s rate cut announcement at the end of the month, the equity market was in a hard to please mood and promptly retraced some of the recent gains post the expected rate cut.

 

The Manager remains 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.

VAM Balanced Fund

July’s equity returns were flattered by the weakness in Sterling, as the resolution of the UK’s domestic political leadership contest came to an end, and Sterling weakened over 4% against the US Dollar and around 2% against the Euro. This currency weakness pushed up the returns from global equities, which were roughly flat in USD, but up around 4% in Sterling.

 

Global bond yields continued to tumble as central banks moved to more dovish stances and the market priced in more easing. UK government bonds returned around 2% as yields fell further on global growth concerns, while both investment grade and high yield credit returned around 1%. Given the high expectations from the Federal Reserve’s rate cut announcement at the end of the month, the equity market was in a hard to please mood and promptly retraced some of the recent gains post the expected rate cut.

 

The Manager remains 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.

VAM Growth Fund

July’s equity returns were flattered by the weakness in Sterling, as the resolution of the UK’s domestic political leadership contest came to an end, and Sterling weakened over 4% against the US Dollar and around 2% against the Euro. This currency weakness pushed up the returns from global equities, which were roughly flat in USD, but up around 4% in Sterling.

 

Global bond yields continued to tumble as central banks moved to more dovish stances and the market priced in more easing. UK government bonds returned around 2% as yields fell further on global growth concerns, while both investment grade and high yield credit returned around 1%. Given the high expectations from the Federal Reserve’s rate cut announcement at the end of the month, the equity market was in a hard to please mood and promptly retraced some of the recent gains post the expected rate cut.

 

The Manager remains 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.

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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